HBA-MPM H.B. 2911 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2911 By: Reyna, Arthur Business & Industry 4/8/2001 Introduced BACKGROUND AND PURPOSE Current law contains provisions which create a liability for a landlord who fails to return a security deposit to a tenant under a residential lease. However, there are no similar provisions for a commercial tenancy. House Bill 2911 requires a landlord to return a security deposit to a tenant under a commercial lease within a certain time frame after the tenant no longer occupies the 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 2911 amends the Property Code to require a landlord to refund a security deposit under a commercial lease to a tenant on or before the 30th day after the tenant surrenders the premises, unless the tenant fails to provide a forwarding address. A requirement that a tenant give advance notice of surrender as a condition for the refund of a security deposit is effective only if the requirement is underlined or printed in conspicuous bold print in the lease. The bill specifies that a tenant's claim to the security deposit takes priority over the claim of any creditor of the landlord, including a trustee in bankruptcy. The bill authorizes a landlord before returning the deposit to deduct damages and charges for which the tenant is legally liable under the lease or that result from a breach of the lease. The landlord is required to provide the tenant with a written description and itemized list of all deductions. The landlord is not required to supply this information if the tenant still owes rent when the premises are surrendered and no controversy exists concerning the amount of rent owed. H.B. 2911 provides that if the owner's interest in the premises is terminated, the new owner is liable for the return of a security deposit to a tenant unless the property was acquired by a real estate mortgage lienholder by foreclosure. The person who no longer owns an interest in the premises remains liable for a security deposit received while still in ownership of the property until the new owner delivers to the tenant a statement acknowledging that the new owner has received and is responsible for the security deposit. The bill provides a method for calculating the amount of the security deposit and requires a landlord to keep accurate records of all security deposits. H.B. 2911 prohibits a tenant from withholding payment of any portion of the last month's rent on grounds that the security deposit is security for unpaid rent. The bill provides that a tenant who violates this provision is liable to the landlord for an amount equal to three times the amount of rent withheld and the landlord's reasonable attorney's fees in a suit to recover the rent. The bill specifies that a landlord who wrongfully withholds a security deposit is liable for an amount equal to the sum of $100, three times the portion of the deposit withheld, and the tenant's reasonable attorney's fees incurred in a suit to recover the deposit. The bill specifies that a landlord who in bad faith does not provide a written description of damages and charges forfeits the right to withhold any portion of a security deposit or to bring suit against a tenant for damages to the premises and is liable for the tenant's reasonable attorney's fees. The bill specifies that the landlord has the burden of proof in a suit brought by a tenant regarding the wrongful retention of a security deposit. EFFECTIVE DATE September 1, 2001.