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Once the property is rented to someone else, the tenant is not
liable for additional rent unless the unit is sublet. If the
property stands vacant for several days, weeks or months the
landlord will be able to deduct from the deposit the actual
amount of rent the landlord lost until a new tenant starts
paying. If the property remains vacant for a period that is
longer than is covered by the security deposit, then the
landlord can hold the tenant liable for the lost rent covering
the lease term until someone does move in so long as the
landlord makes reasonable efforts to lease the property. The
landlord can also charge for re-renting costs such as
advertising.
Some leases have a reletting fee written into the contract. This
fee can be as much as one month’s rent. A tenant may
successfully challenge their landlord about this arbitrary
amount based on the fact that security deposits are meant to be
used to cover actual financial losses.
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If a landlord
spends the equivalent of the reletting fee to re-rent the
apartment, then that is a legitimate charge. However, if a
landlord runs a $50 ad, re-rents the place quickly and loses no
rent but tries to charge the tenant the whole reletting fee,
that may be considered a penalty and unenforceable under Texas
law.
Some leases state that the tenant “forfeits”, or loses, the
security deposit if the lease is breached or broken. Just
because something is written in a lease does not mean that it is
enforceable under Texas property law. If the tenant must break a
lease and wants advice, call the Austin Tenants’ Council (ATC)
(If in Austin, check your local directory) or consult
a Texas attorney for more information.
Can the Deposit be Used in Place of the Last Month's Rent?
The security deposit law also contains a protection for
landlords. Normally, the tenant cannot deduct the security
deposit from the last month’s rent without the landlord’s
written permission. If the tenant withholds part of the rent and
claims that the security deposit makes up the balance, that
action will be in violation of the law. The landlord can sue the
tenant for three times the amount wrongfully withheld plus court
costs and reasonable attorney’s fees. However, the court must
find that the tenant acted in bad faith in order to award the
landlord these damages.
The only time a tenant may use the security deposit in place of
the last month's rent is when the tenant terminates the lease
under the repair law.
Foreclosure
In the event of foreclosure or bankruptcy of the
landlord, a tenant's claim to the security deposit takes
priority over any creditor or trustee claim to the landlord's
assets. See ATC's brochure, Foreclosures in the State of Texas,
for more information.
What if Rental Unit Changes Ownership?
If a new owner buys a house or apartment, and it is
tenant-occupied at the time, all lease agreements and deposits
should be transferred from the previous owner to the new owner.
This means the new owner will be responsible for the return of
the security deposit. However, the old owner remains liable for
a security deposit until the new owner gives the tenant a
statement acknowledging receipt of the deposit. Unless there are
records of the move-in inventory, the new owner will probably
not be able to establish the condition of the unit when the
tenant moved in. Therefore, it may be difficult for a new owner
to deduct damages from the tenant's security deposit. The new
owner should not keep any part of the deposit for damages unless
the new owner can prove that the tenant damaged the unit.
Pet Deposit
The Texas Property Code does not address pet deposits
but it is assumed the same rules apply. One difference between a
security deposit and a pet deposit is that the landlord can
legally withhold all or part of the pet deposit if agreed to in
the lease contract.
Tenant Remedies
If the security deposit or itemized list is not mailed
within 30 days after the tenant vacates the premises and turns
in a forwarding address, the tenant has several options: the
tenant can attempt to recover the deposit through mediation or
the tenant can sue the landlord. A landlord can be held liable
for $100, three times the amount of the deposit which is
wrongfully withheld, reasonable attorney’s fees and court
costs if the tenant can show the landlord acted in bad faith.
However, we suggest that the tenant first give the landlord an
opportunity to pay the money owed by sending a demand letter by
certified mail.
ATC has form letters that tenants can pick up from the ATC office
and ATC website or they can write their own. The letter should
include the tenant's current and previous addresses, the date
the premises were vacated, the amount of the security deposit,
and a statement that if the deposit is not returned within 10
days from the day the landlord receives the letter the tenant
will pursue legal remedies.
If a tenant signed a TAA lease contract, the tenant can also
file a complaint with the Apartment Association's Dispute
Resolution Committee. The Committee will make a decision based
on documentation submitted by both the tenant and landlord. If
they rule in favor of the tenant, the landlord will be
instructed to refund all or part of the deposit. The committee
will not review a complaint if the tenant is currently talking
with an attorney or if the tenant is in the process of pursuing
legal action.
Which Court is the Best?
When less than $5000 is involved, the tenant can sue
without a lawyer by going to the local Justice of the Peace
office. One cannot waive part of an amount due in order to get
within the jurisdiction of a particular court.
Within the Justice of the Peace office are two Courts: Justice
Court and Small Claims Court. The jurisdiction of these two
courts overlap. The major difference is that Small Claims Court
is less formal and the rules of procedure and evidence are
relaxed. Justice Court is governed by the Texas Rules of Civil
Procedure and Texas Rules of Evidence; it is much more formal.
In court, the major problem the judge faces is determining which
side is right based on the evidence presented in court. The
tenant should bring copies of the lease, deposit receipts,
cancelled checks, the move-in and move-out inventories, the
letter given to the landlord with the forwarding address, the
demand letter, and any other materials that will be helpful in
providing evidence in the case. In addition, any witnesses that
are important to the case must be present.
Is an Attorney Necessary?
Although it is not necessary to have an attorney in
Justice Court, if the landlord has an attorney, the tenant will
be at a disadvantage. It is not impossible for the tenant to
win, though, if the tenant has evidence and witnesses as
indicated above. If the tenant decides to hire an attorney and
wins the suit, the court can also award attorney’s fees if the
landlord acted in bad faith or the lease provides for attorneys
fees to the prevailing party. If unsure, the tenant can always
obtain legal advice from an attorney before pursuing the matter.
Keep in mind that the judge will not treat a case differently
because someone is or is not represented by an attorney.
See Also READ
TEXAS SECURITY DEPOSITS, PART 1
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