HBA-DMH C.S.H.B. 2803 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2803
By: Uresti
Business & Industry
4/16/2001
Committee Report (Amended)



BACKGROUND AND PURPOSE 

Security deposit handling requirements have been established for landlords
and tenants of residential rental property.  However, under current law, no
liability exists for a commercial landlord that does not release a security
deposit.  House Bill 2803 establishes similar security deposit handling
requirements for landlords and tenants of commercial rental property. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2803 amends the Property Code to establish provisions for the
handling of a security deposit intended primarily to secure performance
under a lease of commercial rental property equivalent to existing
provisions established for residential rental property.  The bill provides
that a person who no longer owns an interest in the rental premises remains
liable for a security deposit received while the person was the owner until
the new owner delivers to the tenant a signed statement acknowledging that
the new owner has received and is responsible for the tenant's security
deposit and specifying the exact dollar amount of the deposit.  The amount
of the security deposit is the greater of:  

_the amount provided in the tenant's lease; or 

_the amount provided in an estoppel certificate prepared by the owner at
the time the lease was executed or prepared by the new owner at the time
the commercial property is transferred.  

EFFECTIVE DATE

September 1, 2001.

EXPLANATION OF AMENDMENTS

Committee Amendment No. 1 requires a landlord to refund the security
deposit to the tenant not later than the 60th day after the tenant
surrenders the premises and provides notice of the tenant's forwarding
address.  The amendment deletes the provision stating that a requirement
that a tenant give advance notice of surrender as a condition for refunding
the security deposit is effective only if the requirement is underlined or
is printed in conspicuous bold print in the lease.