Revisions were made to the Seller’s Disclosure Notice, Residential Lease, and Residential Lease for a Multi-Family Property Unit due to actions during the 86th Texas Legislature.
Revised Residential Lease (TXR 2001) and Residential Lease for a Multi-Family Property Unit (TXR 2011)
Senate Bill 1414, which Texas REALTORS® supported in the 2019 legislative session, amended the section in Chapter 92 of the Texas Property Code regulating fees for the late payment of rent.
Collection of late fees is prohibited until any portion of the rent has remained unpaid for two full days after the original due date.
Previously, late fees were allowed after one day.
There is now a safe harbor where if late fees do not exceed a certain percentage, the fee is automatically considered reasonable under the law. Any late fee is still required to be reasonable. Under the safe harbor, for a rental dwelling located in a structure with no more than four dwelling units, a late fee is considered reasonable if the fee is not more than 12% of the amount of rent for the rental period under the lease.
For example: The tenant’s monthly rent is $1,000, and the tenant fails to timely pay rent. To fall under the safe harbor, the total amount of late fees the landlord collects for that late rent payment should be no more than $120.
For a rental dwelling located in a structure that contains more than four dwelling units, a late fee is considered reasonable if the fee is not more than 10% of the amount of rent for the rental period under the lease.
A late fee that does not fall under the safe harbor can still be considered reasonable. Staying under the safe harbor limits automatically makes those fees reasonable. But even a late fee exceeding those limits can be considered reasonable, as long as the fee is in line with the damages to the landlord that might reasonably result from the late payment of rent. For example, those damages could include the cost associated with the collection of a late payment.
A tenant may request a written statement of his late fee. The tenant can ask for a written statement of whether he owes a late fee and, if so, the amount of that fee. The landlord must provide the statement to the tenant through a means regularly used for written communication between the landlord and the tenant.
For example, if the landlord and tenant usually communicate by email, that would be the way to deliver the written statement. A landlord’s failure to respond, however, doesn’t affect the tenant’s liability for any late fee owed to the landlord.
The amendments apply to leases entered into or renewed on or after September 1, 2019. Changes have been made to the Residential Lease (TXR 2001) and the Residential Lease for a Multi-Family Property Unit (TXR 2011) to reflect the increase in the number of days that the rent must remain unpaid before collecting a late fee. You can view the redline changes on the Adopted Forms page of intinent.com. Other minor changes have been made as a result of additional legislation.
Revised Seller’s Disclosure Notice (TXR 1406)
Questions were added to the Seller’s Disclosure Notice (TXR 1406) due to bills supported by Texas REALTORS® and passed during the 86th Texas Legislature. These questions concern flooding, such as whether the seller’s property is located wholly or partly in a 100-year or 500-year floodplain, whether the seller has ever filed a claim for flood damage, whether the property has sustained water damage not due to flooding, if the property has present flood coverage, if there was previous flooding due to a failure/breach of a reservoir, and if there has been previous water penetration into a structure on the property due to a natural flood event.
The revised version of the Seller’s Disclosure Notice must be used in transactions when the sales contract is executed after September 1, 2019. You can see a redlined version of the Seller’s Disclosure Notice in the Adopted Forms page on intinent.com.