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Landlord Tenant Law Update






Landlord-Tenant Law Update

September 17, 2009

Frederic M. Wolfram

Landlord and Tenant Obligations

The scope of this paper is to provide practical advice on how to represent landlords or tenants with regard to the issues addressed, supported by relevant legal authorities. The paper provides a quick reference to the rights and liabilities of landlords and tenants, in order to make it faster to advise clients on how to proceed. In advising residential landlords and tenants a major issue is the small amounts of money usually at stake, and the fact that most tenants are judgment proof. Theoretical rights, on both sides, must give way to practical solutions that do not cost the parties more in fees than what is at stake, or, end up costing the attorney through unpaid or uncharged time. Commercial landlords and tenants actually may be able to use some of the nuances of the law, since they are more likely to be able to afford the fight, so to speak. But even in the commercial context, by the time the landlord contacts the attorney, the tenant is many times without funds and all that remains is damage control.

A. Landlord obligations

1. Duty to deliver possession, to repair, to provide “quiet enjoyment”

Right to Possession

The right to possession is common sense. The tenant gets possession when the lease agreement says the tenant is to get possession. Unless otherwise modified in the lease agreement, the possession of the tenant is exclusive to the world.

The rule in Texas is that where a lease agreement provides that the premises are to be delivered into the tenant’s possession at a future date, the landlord thereby covenants that there will be no impediment to the tenant’s obtaining possession at the stipulated time. But the implied agreement does not relate to any period beyond the day when possession is agreed to be delivered. Thus, if a stranger trespasses on the premises after delivery date and obtains possession, withholding it from the tenant, the tenant’s remedy is against the stranger and not against the landlord. Hertzberg v. Beisenbach, 64 Tex. 262, 265 (1885).

Fabrique, Inc. v. Corman, 796 S.W.2d 790, 791–92 (Tex.App. — Dallas 1990) writ den. per curiam sub nom.Corman v. Fabrique, Inc., 806 S.W.2d 801 (Tex. 1991) appeal after remandCorman v. Fabrique, Inc., 1993 WL 189845 (Tex.App. — Dallas 1993, no writ).

A lease grants a tenant exclusive possession of the premises as against the owner. Holcombe v. Lorino, 124 Tex. 446, 79 S.W.2d 307, 310 (1935).

Levesque v. Wilkens, 57 S.W.3d 499, 504 (Tex.App. — Houston [14th Dist.] 2001, no pet.). The right of the owner to reenter during the lease must be set out in the lease. Levesque v. Wilkens, 57 S.W.3d 499, 505 (Tex.App. — Houston [14th Dist.] 2001, no pet.).

Trespass

A landlord who enters a leasehold without authority commits a trespass, and is liable for general damages, including replacement cost of any items damaged. SeePringle v. Nowlin, 629 S.W.2d 154, 157 (Tex.App. — Fort Worth 1982, writ ref. n.r.e.).

The trespass can be to realty or to personalty. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208–210 (Tex.App. — Corpus Christi 2002, no pet).

If a landlord engages in a continuing trespass, for example by placing a concrete wall on a parking lot in the leasehold, the tenant may obtain injunctive relief. Davis v. Blum’s, Inc., 158 S.E.2d 410, (Ga. 1967) cited in 49 Am.Jur.2d, Landlord and Tenant § 437 , n.5 (Electronic Ed. 2009).

Ouster – Trespass to Try Title, Forcible Detainer

A tenant may attempt to claim title to the leasehold, and may even acquire title in such event through adverse possession (10 year statute).

In such case, there must be a repudiation of title or ouster by the cotenant claiming adverse possession. Id. at 160; Southern Pine Lumber Co. v. Hart, 161 Tex. 357, 340 S.W.2d 775 (1961); Spiller v. Woodard, 809 S.W.2d at 627.

Amador v. Berrospe, 961 S.W.2d 205, 208 (Tex.App. — Houston [1st Dist.] 1996, pet den.).

Once the landlord-tenant relationship is established, possession by the tenant will not be considered adverse to the owner until: (1) there is repudiation of the relationship and the assertion of a claim of right adverse to the owner; and (2) notice of such repudiation is given to the owner. Louisiana Pacific Corp. v. Holmes, 94 S.W.3d 834, 839 (Tex.App. — San Antonio 2002, pet. denied). Joint or common possession by the claimant and the owner prevents the claimant’s possession from the requisite quality of exclusiveness. Id. Moreover, the estoppel of a tenant to deny his landlord’s title or to claim adversely against him may be asserted not only by his original lessor, but also those that succeed his title. Angelina County Lumber Co. v. Reinhardt, 270 S.W.2d 259, 263 (Tex.Civ.App. — Beaumont 1954, no writ).

Martin v. McDonnold, 247 S.W.3d 224, 236 (Tex.App. — El Paso 2006, no pet.)

A landlord faced with an ouster may establish title through a statutory trespass to try title action, Texas Property Code, Chapter 22, or may obtain possession through a forcible detainer action, Texas Property Code, Chapter 24. Caro v. Housing Authority of City of Austin, 794 S.W.2d 901, 903 (Tex.App. — Austin 1990, writ den.).

Landlord may dispossess or evict tenant from leasehold who does not pay rent, Texas Property Code § 24.005(a) and § 92.0081(b)(3)(temporary only), or who holds over, Texas Property Code § 24.005(a) and § 91.001.

Measure of Damages

Tenant does not have to pay rent when possession is denied.

If the landlord breaches its covenant to deliver possession, the tenant is relieved from paying rent on the premises and may recover damages. SeePenick v. Eddleman, 291 S.W. 194, 195 (Tex.Comm’n App.1927); Wicks v. Comves, 110 Tex. 532, 221 S.W. 938, passim (1920).

Fabrique, Inc. v. Corman, 796 S.W.2d 790, 792 (Tex.App. — Dallas 1990) writ den. per curiam sub nom.Corman v. Fabrique, Inc., 806 S.W.2d 801 (Tex. 1991) appeal after remandCorman v. Fabrique, Inc., 1993 WL 189845 (Tex.App. — Dallas 1993, no writ).

Tenant may recover loss of rental value and special damages, if any.

Ordinarily the measure of damage for breach of a covenant to deliver possession is the rental value of the property, and this is the measure of damage applied by the lower court in this case, but it is well settled that the lessee may also recover such special damages, if any, as naturally and proximately resulted from the breach.

Cauble v. Hanson, 224 S.W. 922, 925 (Tex.Civ.App. — El Paso 1920) affd. 249 S.W. 175 (Tex.Comm.App. 1923, judgment adopted).

Before a party to a lease contract can collect special damages, he must show that they were in contemplation of the parties either (1) at the time of making the contract or (2) at the time of the breach of the contract.

Frazier v. Wynn, 459 S.W.2d 895, 897 (Tex.Civ.App. — Amarillo 1970) rev. on other grounds 472 S.W.2d 750 (Tex. 1971) appeal after remand 492 S.W.2d 54 (Tex.Civ.App. — Amarillo 1973, writ ref. n.r.e.).

Generally, the injured lessee may recover from his landlord the difference between the market rental value of the leasehold for the unexpired term of the lease and the reserved rentals stipulated therein.

McNabb v. Taylor Oil Field Rental Co., 428 S.W.2d 714, 716–17 (Tex.Civ.App. — San Antonio 1968, ). However, the rental value measure of damages will not be helpful to a tenant unless the rental value is below market value. The theory is that if the rent is at market value, substitute space can be rented for the same amount, thus no damage.

Damages not naturally arising from a breach of contract, or not reasonably contemplated by the parties as likely to arise therefrom cannot be recovered, without allegation and proof of knowledge by the party breaking it of the special circumstances producing such damages. Gilley v. Pennington, 241 S.W. 202, 203-204 (Tex.Civ.App. — Texarkana 1922, no writ). In other words, the doctrine of Hadley v. Baxendale, 9 Ex.[ ] 341, 354 (1854) applies to damage claims for breach of lease. See Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex.1981), which cites Hadley v. Baxendale.

On breach of the lease, parties may sue for actual damages, or liquidated damages, but may not recover both. McCelvy v. Bell, 6 S.W.2d 390, 392. (Tex.Civ.App. — Amarillo 1928, no writ). If the liquidated damages provision provides for an excessive recovery, it may be unenforceable as a penalty. Community Development Service, Inc. v. Replacement Parts Manufacturing, Inc., 679 S.W.2d 721, 727 (Tex.App. — Houston [1st Dist.] 1984, no writ).

Breach of contract is not a tort, and will not support recovery of mental anguish, Stewart Title Guaranty Co. v. Aiello, 941 S.W.2d 68, 72 (Tex.1997) or punitive damages, Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986). However, if breach is accompanied by a tort, maliciously perpetrated, punitive damages may be recovered. Gonzalez v. Davila, 26 S.W.2d 718, 721 (Tex.Civ.App. — El Paso 1930, writ dismissed w.o.j.. Mental anguish may be considered in assessing punitive damages. Haile v. Coker, 258 S.W. 228, 229 (Tex.Civ.App. — Amarillo 1924, no writ).

For example, landlord who takes personal property of tenant without legal justification, commits conversion, which is a tort. Akin v. Santa Clara Land Co., Ltd., 34 S.W.3d 334, 344-345 (Tex.App. — San Antonio 2000, pet. den.). Conversion sounds in tort and will support punitive damages, and mental anguish may be considered in determining punitive damages. Winkle Chevy-Olds-Pontiac, Inc. v. Condon, 830 S.W.2d 740, 746 (Tex.App. — Corpus Christi 1992, writ dism.).

A landlord who temporarily and wrongfully denies a tenant access to the tenants personal property may be guilty of conversion of use. Texas law recognizes conversion of use, with the plaintiff being allowed to recover the value of the the loss of use of the item converted. Also, if the conversion was prompted by malice, punitive damages may be also recovered. Commercial Credit Equipment Corp. v. Elliott, 414 S.W.2d 35, 43 (Tex.Civ.App. — Eastland 1967, writ ref’d n.r.e.); Norris v. Bovina Feeders, Inc., 492 F.2d 502, 506 (5th Cir. 1974).

Other damages that a landlord might be liable for are conversion, assumption of a duty of care with respect to seized personal property, become an implied bailee, and invasion of privacy. Russell v. American Real Estate Corp., 89 S.W.3d 204, 210–212 (Tex.App. — Corpus Christi 2002, no pet).

Lessee has duty to mitigate damages, if possible. Frank v. Kuhnreich, 546 S.W.2d 844, 851 (Tex.Civ.App. — San Antonio 1977, writ ref. n.r.e.).

Duty to Repair

Commercial

Absent a lease provision, a landlord has no duty to make repairs. Flynn v. Pan American Hotel Co., 183 S.W.2d 446, 448 (Tex. 1944). However, if a landlord goes ahead and makes repairs, he is liable for injuries arising from his or his agents negligence. Id., 183 S.W.2d at 448. A covenant for the landlord to make repairs is never implied. Yarbrough v. Booher, 174 S.W.2d 47, 49 (Tex. 1943).

[W]e hold there is an implied warranty of suitability by the landlord in a commercial lease that the premises are suitable for their intended commercial purpose. This warranty means that at the inception of the lease there are no latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition. If, however, the parties to a lease expressly agree that the tenant will repair certain defects, then the provisions of the lease will control.

Davidow v. Inwood North Professional Group–Phase I, 747 S.W.2d 373, 377 (Tex. 1988). If the warranty is breached, the tenant does not have to pay rent during the breach of warranty. Neuro-Developmental Assoc. of Houston v. Corporate Pines Realty Corp., 908 S.W.2d 26, 28 (Tex.App. — Houston [1st Dist.] 1995, writ den.). The warranty of commercial suitability can be waived by “as is” clause. Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 911 (Tex. 2007).

Residential

Landlord is required to make repairs to conditions that “materially affects the physical health or safety of an ordinary tenant” and is required to have hot water heater that supplies hot water of at least 120? F. Texas Property Code § 92.052(a)(3). The duty to repair requires written notice from the tenant, on written leases requiring same, § 92.052(a)(1) and the tenant must be current on rent, § 92.052(a)(1). If the landlord fails to repair within seven days, § 92.056(d), after another notice, certified mail, from the tenant, § 92.056(b)(3), tenant may terminate lease, § 92.056(e)(1), or repair and deduct from rent, § 92.056(e)(2)-(3), § 92.0561, not to exceed one month’s rent at a time, or $500, whichever is greater. Duty to repair by landlord may be limited or waived in written lease under some circumstance. § 92.006(d)-(f). The Texas Property Code preempts common law implied warranty of habitability, Kamarath Bennett, 568 S.W.2d 658, 661 (Tex 1978), which, when it existed, could be waived, Id., 568 S.W.2d at 660, n.2.

Measure of Damages

Generally, the correct measure of damages which a tenant is entitled to recover of a landlord who has breached his covenant to repair is ‘the difference between the market rental value of the leasehold for the unexpired term of the lease and reserved rentals stipulated therein.’ Langham’s Estate v. Levy, 198 S.W.2d 747, 756 (Tex.Civ.App., Beaumont 1946, writ ref’d n.r.e.); 51C C.J.S. Landlord & Tenant § 247(2), p. 644, citing Rainwater v. McGrew, 181 S.W.2d 103 (Tex.Civ.App., Waco 1944, writ ref’d w.o.m.).

Damages for loss of anticipated profits may be recovered in such a case if contemplated by the parties. 35 Tex.Jur.2d, Landlord and Tenant, § 90, p. 582; Midkiff v. Benson, 235 S.W. 292, 294 (Tex.Civ.App., El Paso 1921, no writ); Oscar v. Sackville, 253 S.W. 651, 653 (Tex.Civ.App., Austin 1923, writ ref’d).

However, as contended under appellants’ first point of error, the tenant cannot recover lost profits and the market value of his lease also, for such would allow him a double recovery. As stated in Oscar v. Sackville, supra:

‘To permit a recovery for the loss of profits, and also an additional recovery for the difference in the rental value of the premises, in the condition they were and in the condition they should have been if the heating plant had been adequate, would allow a double recovery, since appellant would be made whole under her contract when she recovered the loss of profits to her business, without regard to the rental value of the leased premises.’

See also 52 C.J.S. Landlord & Tenant § 461(4)b, p. 341; and Weiss v. Mitchell, 58 S.W.2d 165, 166 (Tex.Civ.App., Dallas 1933, writ dism’d).

Birge v. Toppers Menswear, Inc., 473 S.W.2d 79, 84 (Tex. Civ. App. — Dallas 1971, writ ref. n.r.e.).

Implied Warranty of Quiet Enjoyment

It is well-settled that, in the absence of express language to the contrary, there is an implied warranty that the lessee shall have the quiet and peaceful enjoyment of the leased premises. L-M-S Inc. v. Blackwell, 149 Tex. 348, 233 S.W.2d 286, 289 (1950); HTM Rests., Inc. v. Goldman, Sachs & Co., 797 S.W.2d 326, 328 (Tex.App.-Houston [14th Dist.] 1990, writ den.).

Unless rights are reserved to the landlord in the lease, an owner’s entry onto the leased premises would be unlawful.

Four Brothers Boat Works, Inc. v. Tesoro Petroleum Companies, Inc., 217 S.W.3d 653, 665–666 (Tex.App. — Houston [14th Dist.] 2006, pet. den.)

As a general rule, a lessor relinquishes possession or occupancy of the premises to the lessee. See Restatement (second) of Torts § 356 (1965). The law is well settled that when land is leased, the lessee becomes the possessor and occupier of the land, and the lessor’s liability for dangerous conditions on the premises generally terminates. See Johnson County Sheriff’s Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex.1996) (holding that owner of rodeo arena where spectator was struck in the eye by a rock or dirt during a contest held by lessees owed no duty to the spectator and thus could not be liable for injury).

Levesque v. Wilkens, 57 S.W.3d 499, 504 (Tex.App. — Houston [14th Dist.] 2001, no pet.).

Traditionally, a tenant establishes breach of the warranty of quiet enjoyment by showing: (1) an intention of the landlord that the tenant no longer enjoy the premises; (2) a material act by the landlord that substantially interferes with the intended use and enjoyment of the premises; (3) permanent deprivation of the tenant’s use and enjoyment of the premises; and (4) abandonment of the premises within a reasonable time after the commission of the act.

Goldman v. Alkek, 850 S.W.2d 568, 571–72 (Tex.App. — Corpus Christi 1993, no writ). The elements of a claim for breach of implied warranty of quiet enjoyment are the same as a claim for a constructive eviction claim. Lazell v. Stone, 123 S.W.3d 6, 12, n.1 (Tex.App. — Houston [1st Dist.] 2003, pet. den.). A breach of the implied warranty of quiet enjoyment is actionable under Texas Business and Commerce Code § 17.50(a)(2), the Texas Deceptive Trade Practices Act (“DTPA”). A tenant would therefore want to plead the claim as breach of implied warranty.

An express warranty of quiet enjoyment abrogates implied warranty of quiet enjoyment. Exxon Corp. v. Atlantic Richfield Co., 678 S.W.2d 944, 947 (Tex.1984). The implied warranty of quiet enjoyment may be waived or replaced by express contract. L-M-S Inc. v. Blackwell, 233 S.W.2d 286, 289 (Tex. 1950); HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d 326, 328 (Tex. App. — Houston [14th Dist.] 1990, writ den.).

2. Security deposits

Follow the rules of notice and itemization. The trap for landlords is to miss deadlines or not send out correct itemization. Claims under security deposit laws sound in contract, not tort.

Deducting such charges from the deposits at most was a breach of the contracts to refund the deposits if at the end of the terms of the leases the tenants had fully performed. Unaccompanied by willful, malicious, or fraudulent conduct, breach of a contract alone will not support an award of punitive damages.

Orgain v. Butler, 478 S.W.2d 610, 613 (Tex.Civ.App. — Austin 1972, no writ). Breach of contract alone, even if malicious, will not support tort damages, or punitive damages. Also, the statutory penalties, § 92.109(a), § 93.011(a), are a form of punitive damages. A plaintiff can only get one form of punitive damages per claim. Birchfield v. Texarkana Memorial Hospital, 747 S.W.2d 361, 367 (Tex. 1987).

Commercial

Regulated by Texas Property Code §§ 93.004 – 93.012.

Residential

Regulated by Texas Property Code §§ 92.101 – 109.

a. To keep it or not to keep it – that is the question

A landlord will want to keep the security deposit on a defaulting tenant, in order to reduce losses. However, the security deposit does not cover all losses that may be incurred and its retention is regulated by specific statutory rules. A security deposit is designed to secure performance under the lease. § 93.004, § 92.101. Non-refundable fees, such as for repainting or cleaning, are not security deposits, but rent or additional consideration for the lease. Holmes v. Canlen Management Corp., 542 S.W.2d 199, 202 (Tex.Civ.App. — El Paso 1976, no writ). Apartment rules not incorporated by reference into lease will not support mandatory fees. Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ).

Commercial

Landlord may deduct “damages and charges” from security deposit. § 93.006(a). “Normal wear and tear” is on the landlord. § 93.006(b). Normal wear and tear is defined for commercial tenancies, but not residential tenancies. See § 92.104(b).

Landlord cannot assess a charge other than rent or repair unless in lease. § 93.012(a). No similar restriction is specified for residential tenancies. However, see Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ)(residential lease), which says no charge if not in the lease.

Residential

Landlord may deduct “damages and charges” from security deposit. § 92.104(a). Normal wear and tear is on the landlord. § 92.104(b). Normal wear and tear is not defined. See statutory definition for commercial tenancies at § 93.006(b). However, burden is on landlord to show damage by tenant.

In the absence of showing that damage to the apartments, for a broken door and a window screen, was caused by appellees or that the damage was more than ordinary wear and tear, appellees could not be held to answer for the damages. Bachrach v. Estefan, 184 S.W.2d 640 (Tex.Civ.App. — San Antonio 1945, no writ). Moreover, appellees were not insurers under the leases by reason of the provision that the tenants would yield and quit the ‘leased premises in as good a state and condition as reasonable use and wear thereof will permit.’ The leases, having been prepared by the landlords, will not be enlarged beyond the clear meaning of that language, and, if doubtful, the provisions excepting reasonable use and wear will be construed more strongly against the appellants as landlords. Fisher v. Temco Aircraft Corporation, 324 S.W.2d 571 (Tex.Civ.App. — Texarkana 1959, no writ).

Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ).

b. Choosing small claims or county court

In residential tenancies, most times, it is not cost effective to sue defaulting tenants, even those who tear up the property. Commercial tenants may cause more damage and may be solvent, so which court to file in has to be decided. For most small cases, filing suit in Small Claims Court would be the preferred route, though there are pitfalls also in going that route.

Small Claims Court [now modified by amendment and rule changes]

 

Jurisdictional limit is $10,000.00. Texas Government Code, § 28.003. Attorney’s fees count towards the jurisdictional limit. Chaison v. Maryland Casulaty Co., 105 S.W.2d 376, 376 (Tex.Civ.App. — Beaumont 1937, no writ). However, damages that accrue as a matter of time (such as interest and attorney’s fees after the filing of the original suit) do not count in jurisdictional limit, so long as original claim is for less than $10,000.00. Haginas v. Malbis Memorial Foundation, 349 S.W.2d 957, 959 (Tex.Civ.App. — Houston 1961) judgment affd. 354 S.W.2d 368 (Tex. 1962).

Hearings are informal, controlled by judge, and not subject to Texas Rules of Evidence and Texas Rules of Civil Procedure. “Reasonable” discovery is only allowed if permitted by the judge. Texas Government Code § 28.033.

Corporations may represent themselves without an attorney. Texas Government Code § 28.003(a). Warning. Attorney’s fees are a separate “ground of recovery” and must be plead below to be recovered on appeal.

“Appeal is in the manner provided by law for appeal from justice court to county court.” Texas Government Code § 28.052(b). Texas Rule Civil Procedure 574a (emphasis added) provides as follows:

Either party may plead any new matter in the county or district court which was not presented in the court below, but no new ground of recovery shall be set up by the plaintiff, nor shall any set-off or counterclaim be set up by the defendant which was not pleaded in the court below. The pleading thereof shall be in writing and filed in the cause before the parties have announced ready for trial.

Attorney’s fees are a separate ground of recovery. The Hamby Co. v. Palmer, 631 S.W. 589, 591–92 (Tex.App. — Amarillo 1982, no writ).

Change in the law. Appeal of Small Claims Court decision is still to County Court or County Court at Law, but on appeal the procedure is now governed by the Texas Rules of Civil Procedure and Texas Rules of Evidence. Texas Government Code § 28.053(b), effective September 1, 2009. Appeals from Small Claims Court can now proceed to the Court of Appeals, Texas Government Code § 28.053(d), effective September 1, 2009, overruling Sultan v. Mathew, 178 S.W.3d 747, 752–53 (Tex. 2005)(decided under prior law).

Other Trial Courts

The general jurisdiction of most County Courts at Law is $500.00 to $100,000.00. Texas Government Code § 25.0003(c)(1). Potter County does not have higher jurisdiction. Texas Government Code § 25.1902. Randall County does not have higher jurisdiction. Texas Government Code § 25.1932(a)(3). However, in some counties, the limits are higher (as in Dallas County, Texas Government Code § 25.0592(a)).

The District Courts have no upper jurisdictional limit, but have a lower limit of $500.00. Texas Government Code § 24.007, Texas Constitution, art. V, § 8. Chapa v. Spivey, 999 S.W.2d 833, 836 (Tex.App. — Tyler 1999, no writ); but see Arnold v. West Bend Co., 983 S.W.2d 365, 366, n.1 (Tex.App. — Houston [1st Dist.] 1998, no writ), holding jurisdictional lower limit is $20.01. Except for large commercial cases, staring in District Court would seem cost prohibitive.

3. Fair credit reporting

Landlords may file reports with credit reporting bureaus and make obtain credit information from credit bureaus regarding tenants or prospective tenants. Landlords, once in possession of credit information on a tenant or prospective tenant, may not misuse the information.

The FCRA [Federal Credit Reporting Act] prohibits all individuals, not just creditors, from misusing credit information, …

Lowe v. Surpas Resource Corp., 253 F.Supp.2d 1209, 1234 (D.Kan. 2003).

If a landlord takes “adverse action” against a tenant or prospective tenant based on information from a credit reporting agency, or from any third person “bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living,” the landlord must disclose such information. 15 U.S.C. § 1681m(a), (b). Mandatory disclosure if information is from credit reporting bureau, and if from third party, only on written request. Adverse action applicable to landlords and tenants is covered by 15 U.S.C. § 1681a(1)(K)(1)(B)(iv):

(iv) an action taken or determination that is–

(I) made in connection with an application that was made by, or a transaction that was initiated by, any consumer, or in connection with a review of an account under section 1681b(a)(3)(F)(ii) of this title; and

(II) adverse to the interests of the consumer.

Remedies. 15 U.S.C.

§ 1681n. Civil Liability for Willful Noncompliance

(a) In general. Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—

(1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

(3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

(b) Civil liability for knowing noncompliance. Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.

(c) Attorney’s fees. Upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 1681o. Civil Liability for Negligent Noncompliance

(a) In general. Any person who is negligent in failing to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—

(1) any actual damages sustained by the consumer as a result of the failure; and

(2) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

(b) Attorney’s fees. On a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

There are no common law remedies for misuse of credit information.

15 U.S.C. § 1681h(e) Limitation of liability

Except as provided in sections 1681n and 1681o of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g, 1681h, or 1681m of this title, or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report [FN2] except as to false information furnished with malice or willful intent to injure such consumer.

There are Texas criminal sanctions for knowingly giving false credit information to a credit reporting bureau.

Texas Finance Code § 391.002. Furnishing False Information; Penalty

(a) A person commits an offense if the person knowingly furnishes false information about another person’s creditworthiness, credit standing, or credit capacity to a credit reporting bureau.

(b) A credit reporting bureau commits an offense if the credit reporting bureau knowingly furnishes false information about a person’s creditworthiness, credit standing, or credit capacity to a third party.

(c) An offense under this section is a misdemeanor punishable by a fine of not more than $200.

B. Tenant: duty to occupy, abandonment, and holdover tenants and pay rent

Occupancy

Tenant under no obligation to demand or take possession of leased premises so long as the premises not repaired by landlord as agreed in the lease contract, and ready for occupancy by tenant. Langham’s Estate v. Levy, 198 S.W.2d 747, 755 (Tex.Civ.App. — Beaumont 1947, writ ref. n.r.e.).

For a residential tenant who fails to occupy the dwelling according to the lease, and a replacement tenant is found by the landlord, a landlord may retain and deduct from the security deposit and rent prepayment a contractual lease cancellation fee or actual expenses, including time spent by the landlord in finding a replacement tenant. Texas Property Code § 92.1031(b). If the tenant finds a replacement tenant before the lease period starts, landlord cannot offset. § 92.1031(a)(1). If the tenant defaults, it is just a contract remedy and the landlord can collect rent and attorney’s fees, plus any contractual reletting costs. If the lease is silent, any consequential damages claimed by landlord would be governed by Hadley v. Baxendale.

Abandonment

Abandonment of the lease by a tenant is a breach of the lease. However, contrary to older case law, Racke v. Anheuser-Busch Brewing Association, 42 S.W. 774, 775 (Galveston 1897, no writ), a commercial landlord must now mitigate damages, unless the lease provides otherwise. Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, (Tex. 1997):

We therefore recognize that a landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property, unless the commercial landlord and tenant contract otherwise.

The duty to mitigate is now statutory and may not be waived.

§ 91.006. LANDLORD’S DUTY TO MITIGATE DAMAGES.

(a) A landlord has a duty to mitigate damages if a tenant abandons the leased premises in violation of the lease.

(b) A provision of a lease that purports to waive a right or to exempt a landlord from a liability or duty under this section is void.

Holdover

If a tenant is holding over after the expiration of the lease, and the landlord elects to treat the tenant as a trespasser, the remedies provided by law to the landlord include a forcible detainer action to recover possession of the premises and an action for recovery of damages in a court of competent jurisdiction.

49 Tex.Jur.3d Landlord and Tenant § 294 (Electronic Ed. 2009)(citations omitted).

For holdover tenants, in forcible detainer actions, there is an additional notice provision in Texas Property Code § 24.005:

A landlord who files a forcible detainer suit on grounds that the tenant is holding over beyond the end of the rental term or renewal period must also comply with the tenancy termination requirements of Section 91.001.

Texas Property Code § 91.001(b)(3) requires notice of termination one month after notice is given (assuming a holdover tenant is on a month to month tenancy), unless the lease agreement says otherwise, § 91.001(e)(1), or the tenant has breached the contract, § 91.001(e)(2). If the tenant has paid all the rent and the lease does not prohibit holding over, it is difficult to argue that the lease has been breached. Therefore, landlords should always put into lease provisions allowing for short notice to vacate in case of holding over and also providing for holdover rent at a higher rate than the base lease.

A holdover tenant may be held liable for all loss or injury that is shown to have been the foreseeable consequence of his or her wrongful holding over. The measure of recovery is the market rental value of the premises, the reasonable rental value, or the reasonable value for the use of the premises for the holdover period. The rental value of the property is the value of the use of the property, and in many cases these two expressions are used interchangeably and synonymously. They are also used in the same sense as “mesne profits.” The contract price at which the property was previously rented to the offending tenant has nothing to do with the question of damages suffered by the landlord in the loss of the use of the premises after that contract terminated.

49 Tex.Jur.3d Landlord and Tenant § 295 (Electronic Ed. 2009)(citations omitted).

Special or consequential damages may be recovered on proof that the holdover tenant knew or should have known that the loss would result from his or her wrongful acts, but the owner may not recover both the rental value of the premises and the profits he or she could have made by the use of the premises, because the profits necessarily include the rental value of the premises.

49 Tex.Jur.3d Landlord and Tenant § 297 (Electronic Ed. 2009)(citations omitted). See Hadley v. Baxendale discussed above.

Rent

Failure to pay rent is a breach of contract or a default under the lease. Landlord can sue for amount of rent, plus reasonable attorney’s fees. Eviction for non-payment of rent is governed by Texas Property Code Chapter 24. A landlord may sue for rent and possession, but must give statutory notice set forth § 24.0051. There is a three day notice, unless the lease provides for a shorter period, before filing a forcible detainer suit. § 24.005(a). To recover attorney’s fees, the landlord must give 10 days notice before suit is filed. § 24.006(a).

For a tenant who owes rent, the landlord may change the locks (if the lease so provides), but may not lock the tenant out of the leasehold.

§ 92.0081. REMOVAL OF PROPERTY AND EXCLUSION OF RESIDENTIAL TENANT.

(b) A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process unless the exclusion results from: …

(3) changing the door locks on the door to the tenant’s individual unit of a tenant who is delinquent in paying at least part of the rent.

(c) If a landlord or a landlord’s agent changes the door lock of a tenant who is delinquent in paying rent, the landlord or the landlord’s agent must place a written notice on the tenant’s front door stating:

(1) an on-site location where the tenant may go 24 hours a day to obtain the new key or a telephone number that is answered 24 hours a day that the tenant may call to have a key delivered within two hours after calling the number;

(2) the fact that the landlord must provide the new key to the tenant at any hour, regardless of whether or not the tenant pays any of the delinquent rent; and

(3) the amount of rent and other charges for which the tenant is delinquent.

(d) A landlord may not intentionally prevent a tenant from entering the leased premises under Subsection (b)(3) unless:

(1) the landlord’s right to change the locks because of a tenant’s failure to timely pay rent is placed in the lease;

(2) the tenant is delinquent in paying all or part of the rent; and

(3) the landlord has locally mailed not later than the fifth calendar day before the date on which the door locks are changed or hand-delivered to the tenant or posted on the inside of the main entry door of the tenant’s dwelling not later than the third calendar day before the date on which the door locks are changed a written notice stating:

(A) the earliest date that the landlord proposes to change the door locks;

(B) the amount of rent the tenant must pay to prevent changing of the door locks;

(C) the name and street address of the individual to whom, or the location of the on-site management office at which, the delinquent rent may be discussed or paid during the landlord’s normal business hours; and

(D) in underlined or bold print, the tenant’s right to receive a key to the new lock at any hour, regardless of whether the tenant pays the delinquent rent.

(e) A landlord may not change the locks on the door of a tenant’s dwelling under Subsection (b)(3) on a day, or on a day immediately before a day, on which the landlord or other designated individual is not available, or on which any on-site management office is not open, for the tenant to tender the delinquent rent.

(e-1) A landlord who changes the locks or otherwise prevents a tenant from entering the tenant’s individual rental unit may not change the locks or otherwise prevent a tenant from entering a common area of residential rental property.

(f) A landlord who intentionally prevents a tenant from entering the tenant’s dwelling under Subsection (b)(3) must provide the tenant with a key to the changed lock on the dwelling without regard to whether the tenant pays the delinquent rent.

The rules are more favorable to a commercial landlord.

§ 93.002. INTERRUPTION OF UTILITIES, REMOVAL OF PROPERTY, AND EXCLUSION OF COMMERCIAL TENANT.

(c) A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process unless the exclusion results from:

(1) bona fide repairs, construction, or an emergency;

(2) removing the contents of premises abandoned by a tenant; or

(3) changing the door locks of a tenant who is delinquent in paying at least part of the rent.

(f) If a landlord or a landlord’s agent changes the door lock of a tenant who is delinquent in paying rent, the landlord or agent must place a written notice on the tenant’s front door stating the name and the address or telephone number of the individual or company from which the new key may be obtained. The new key is required to be provided only during the tenant’s regular business hours and only if the tenant pays the delinquent rent.

C. Foreclosure of the Premises: Obligations and Rights

A foreclosure of the premises terminates the tenancy, but the tenants become tenants at sufferance. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208 (Tex.App. — Corpus Christi 2002, no pet).

Texas Property Code § 24.005(b) provides a 30 day notice to vacate to a non-delinquent tenant.

If the occupant is a tenant at will or by sufferance, the landlord must give the tenant at least three days’ written notice to vacate before the landlord files a forcible detainer suit unless the parties have contracted for a shorter or longer notice period in a written lease or agreement. If a building is purchased at a tax foreclosure sale or a trustee’s foreclosure sale under a lien superior to the tenant’s lease and the tenant timely pays rent and is not otherwise in default under the tenant’s lease after foreclosure, the purchaser must give a residential tenant of the building at least 30 days’ written notice to vacate if the purchaser chooses not to continue the lease.

A mortgagor–landlord who remains in possession of real estate after a foreclosure is also tenant at sufferance. 52 C.J.S. Landlord & Tenant § 288 (Electronic Ed. 2008).

“A tenancy at sufferance cannot arise from agreement …” 52 C.J.S. Landlord & Tenant § 281 (Electronic Ed. 2008) citing to Willis v. Moore, 59 Tex. 628 (1883).

A tenant at sufferance holds possession “wrongfully.” Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990). 49 Am. Jur. 2d Landlord and Tenant § 124 (Electronic Ed. 2008).

A tenant at sufferance may be treated as a trespasser by the owner. Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990).

Texas does not have a statute regulating termination of a tenancy at sufferance which arises after a foreclosure. A tenancy at sufferance may be terminated by either party giving notice of termination.

Tenancies by sufferance are terminated by a proper demand for possession. However, apparently no notice to quit or demand for possession is necessary, because possession by a tenant at sufferance can be put to an end whenever the landlord, acting promptly, wishes.

49 Am. Jur. 2d Landlord and Tenant § 124 (Electronic Ed. 2008).

Since a tenant at sufferance is a wrongdoer, and in possession as a result of the landowner’s laches or neglect, the tenant has no term, and no estate or title, but only a naked possession without right, and wrongfully held. A tenant at sufferance acquires no permanent rights because the landowner neglects to disturb his or her possession, and the landowner is entitled to resume possession, and the tenant is entitled to quit, at any time without notice.

52 C.J.S. Landlord & Tenant § 282 (Electronic Ed. 2008).

However, the landlord is estopped from treating the tenant as one at sufferance and evicting him or her without notice if the landlord has given the tenant permission, expressly or impliedly, to remain in possession.

49 Am. Jur. 2d Landlord and Tenant § 293 (Electronic Ed. 2008).

A person who becomes a tenant at sufferance continues as such until there is some affirmative action by the landowner converting the tenancy into some other form. Where notice is unnecessary to terminate a tenancy at sufferance, the owner of the fee can terminate it by a simple demand for possession, or he or she can enter at any time, and put an end to the tenant’s holding.

52 C.J.S. Landlord & Tenant § 293 (Electronic Ed. 2008). However, see Russell v. American Real Estate Corp., 89 S.W.3d 204, 209 (Tex.App. — Corpus Christi 2002, no pet)(“Texas does not recognize ‘self-help repossession’ of real estate”).

After such notice is given, the possesser becomes a mere trespasser on the realty. There is thus a sharp distinction between how the tenancy terminates versus how possession may be changed. See Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990).

A trespasser who refuses to quit the property is subject to a forcible detainer lawsuit, since right of possession is the only issue in question. A forcible detainer suit is cumulative of other remedies, including tort remedies for trespass. Goggins v. Leo, 849 S.W.2d 373, 376 (Tex.App. — Houston [14th Dist.] 1993, no writ).

In the absence of a legally enforceable agreement, such as a lease or rental agreement or a contract to sell, an occupier of premises is at best a tenant at sufferance and at worst a trespasser. Under such circumstances, the record title owner of the premises would be entitled to possession, after notice and demand, by merely showing “sufficient evidence of ownership to demonstrate a superior right to immediate possession.” Goggins v. Leo, 849 S.W.2d 373, 377 (Tex.App.-Houston [14th Dist.] 1993, no writ).

Fandey v. Lee, 880 S.W.2d 164, 169 (Tex.App. — El Paso 1994, writ den.).

A holder of a mortgage cannot seize real property before a foreclosure. Lighthouse Church of Cloverleaf v. Texas Bank, 889 S.W.2d 595, 603 (Tex.App. — Houston [14th Dist.] 1994, writ den.)(emphasis added).

It is our conclusion that Texas law does not condone seizure of real property prior to foreclosure unless voluntarily relinquished by the debtor. In other words, Texas does not recognize “self-help repossession” of real estate. The Texas Property Code instead provides an orderly means for resolving disputes.

Lighthouse, 889 S.W.2d at 603, also says: “To remove a tenant by sufferance, the new owner must file a forcible detainer suit.” However, there is authority to the contrary.

In Texas one who is entitled to possession of land, but who is not in possession, may not forcibly take possession from another. Sinclair v. Sinclair, 60 Tex. 718, 7 S.W. 511 (1888), Chrone v. Gonzales, 215 S.W. 368 (Tex.Civ.App.1919, no writ). The rule seems to be, however, that if one entitled to possession can make peaceable entry upon the land, he may resort to peaceable means, short of force, as will render impracticable the further occupation of the land by the other person. See Heironimus v. Duncan, 11 Tex.Civ.App. 610, 33 S.W. 287 (1895, no writ), 6 A.L.R.3rd 177, 189-193.

Embry v. Bel-Aire Corp., 508 S.W.2d 469, 471 (Tex.Civ.App. — Austin 1974, writ ref. n.r.e.)(emphasis in original). Even if Lighthouse is correct with respect to possession by forcible detainer, it does not control as to termination of the tenancy at sufferance, and the fact that after such termination, a holdover tenant becomes a mere trespasser.

After a foreclosure, the new owner should exercise care in how the tenant is treated. An owner after foreclosure can be guilty of trespass to realty, trespass to personalty, conversion, assumption of a duty of care with respect to seized personal property, become an implied bailee, and invasion of privacy. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208–212 (Tex.App. — Corpus Christi 2002, no pet).

Involuntarily obtained services are subject to liability under the DTPA.

It is not necessary that the consumer who “acquires” the services be the one who sought the services. SeeAllied Towing v. Mitchell, 833 S.W.2d 577, 581-82 (Tex.App.–Dallas 1992, no writ) (involuntary acquisition of goods or services is enough to make party a consumer under DTPA); Nelson v. Schanzer, 788 S.W.2d 81, 86-87 (Tex.App.– Houston [14th Dist.] 1990, writ denied) (an involuntary bailor is a consumer under the Act).

D/FW Commercial Roofing Co., Inc. v. Mehra, 854 S.W.2d 182, 187 (Tex.App. — Dallas 1993, no writ).The scope of this paper is to provide practical advice on how to represent landlords or tenants with regard to the issues addressed, supported by relevant legal authorities. The paper provides a quick reference to the rights and liabilities of landlords and tenants, in order to make it faster to advise clients on how to proceed. In advising residential landlords and tenants a major issue is the small amounts of money usually at stake, and the fact that most tenants are judgment proof. Theoretical rights, on both sides, must give way to practical solutions that do not cost the parties more in fees than what is at stake, or, end up costing the attorney through unpaid or uncharged time. Commercial landlords and tenants actually may be able to use some of the nuances of the law, since they are more likely to be able to afford the fight, so to speak. But even in the commercial context, by the time the landlord contacts the attorney, the tenant is many times without funds and all that remains is damage control.

A. Landlord obligations

1. Duty to deliver possession, to repair, to provide “quiet enjoyment”

Right to Possession

The right to possession is common sense. The tenant gets possession when the lease agreement says the tenant is to get possession. Unless otherwise modified in the lease agreement, the possession of the tenant is exclusive to the world.

The rule in Texas is that where a lease agreement provides that the premises are to be delivered into the tenant’s possession at a future date, the landlord thereby covenants that there will be no impediment to the tenant’s obtaining possession at the stipulated time. But the implied agreement does not relate to any period beyond the day when possession is agreed to be delivered. Thus, if a stranger trespasses on the premises after delivery date and obtains possession, withholding it from the tenant, the tenant’s remedy is against the stranger and not against the landlord. Hertzberg v. Beisenbach, 64 Tex. 262, 265 (1885).

Fabrique, Inc. v. Corman, 796 S.W.2d 790, 791–92 (Tex.App. — Dallas 1990) writ den. per curiam sub nom.Corman v. Fabrique, Inc., 806 S.W.2d 801 (Tex. 1991) appeal after remandCorman v. Fabrique, Inc., 1993 WL 189845 (Tex.App. — Dallas 1993, no writ).

A lease grants a tenant exclusive possession of the premises as against the owner. Holcombe v. Lorino, 124 Tex. 446, 79 S.W.2d 307, 310 (1935).

Levesque v. Wilkens, 57 S.W.3d 499, 504 (Tex.App. — Houston [14th Dist.] 2001, no pet.). The right of the owner to reenter during the lease must be set out in the lease. Levesque v. Wilkens, 57 S.W.3d 499, 505 (Tex.App. — Houston [14th Dist.] 2001, no pet.).

Trespass

A landlord who enters a leasehold without authority commits a trespass, and is liable for general damages, including replacement cost of any items damaged. SeePringle v. Nowlin, 629 S.W.2d 154, 157 (Tex.App. — Fort Worth 1982, writ ref. n.r.e.).

The trespass can be to realty or to personalty. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208–210 (Tex.App. — Corpus Christi 2002, no pet).

If a landlord engages in a continuing trespass, for example by placing a concrete wall on a parking lot in the leasehold, the tenant may obtain injunctive relief. Davis v. Blum’s, Inc., 158 S.E.2d 410, (Ga. 1967) cited in 49 Am.Jur.2d, Landlord and Tenant § 437 , n.5 (Electronic Ed. 2009).

Ouster – Trespass to Try Title, Forcible Detainer

A tenant may attempt to claim title to the leasehold, and may even acquire title in such event through adverse possession (10 year statute).

In such case, there must be a repudiation of title or ouster by the cotenant claiming adverse possession. Id. at 160; Southern Pine Lumber Co. v. Hart, 161 Tex. 357, 340 S.W.2d 775 (1961); Spiller v. Woodard, 809 S.W.2d at 627.

Amador v. Berrospe, 961 S.W.2d 205, 208 (Tex.App. — Houston [1st Dist.] 1996, pet den.).

Once the landlord-tenant relationship is established, possession by the tenant will not be considered adverse to the owner until: (1) there is repudiation of the relationship and the assertion of a claim of right adverse to the owner; and (2) notice of such repudiation is given to the owner. Louisiana Pacific Corp. v. Holmes, 94 S.W.3d 834, 839 (Tex.App. — San Antonio 2002, pet. denied). Joint or common possession by the claimant and the owner prevents the claimant’s possession from the requisite quality of exclusiveness. Id. Moreover, the estoppel of a tenant to deny his landlord’s title or to claim adversely against him may be asserted not only by his original lessor, but also those that succeed his title. Angelina County Lumber Co. v. Reinhardt, 270 S.W.2d 259, 263 (Tex.Civ.App. — Beaumont 1954, no writ).

Martin v. McDonnold, 247 S.W.3d 224, 236 (Tex.App. — El Paso 2006, no pet.)

A landlord faced with an ouster may establish title through a statutory trespass to try title action, Texas Property Code, Chapter 22, or may obtain possession through a forcible detainer action, Texas Property Code, Chapter 24. Caro v. Housing Authority of City of Austin, 794 S.W.2d 901, 903 (Tex.App. — Austin 1990, writ den.).

Landlord may dispossess or evict tenant from leasehold who does not pay rent, Texas Property Code § 24.005(a) and § 92.0081(b)(3)(temporary only), or who holds over, Texas Property Code § 24.005(a) and § 91.001.

Measure of Damages

Tenant does not have to pay rent when possession is denied.

If the landlord breaches its covenant to deliver possession, the tenant is relieved from paying rent on the premises and may recover damages. SeePenick v. Eddleman, 291 S.W. 194, 195 (Tex.Comm’n App.1927); Wicks v. Comves, 110 Tex. 532, 221 S.W. 938, passim (1920).

Fabrique, Inc. v. Corman, 796 S.W.2d 790, 792 (Tex.App. — Dallas 1990) writ den. per curiam sub nom.Corman v. Fabrique, Inc., 806 S.W.2d 801 (Tex. 1991) appeal after remandCorman v. Fabrique, Inc., 1993 WL 189845 (Tex.App. — Dallas 1993, no writ).

Tenant may recover loss of rental value and special damages, if any.

Ordinarily the measure of damage for breach of a covenant to deliver possession is the rental value of the property, and this is the measure of damage applied by the lower court in this case, but it is well settled that the lessee may also recover such special damages, if any, as naturally and proximately resulted from the breach.

Cauble v. Hanson, 224 S.W. 922, 925 (Tex.Civ.App. — El Paso 1920) affd. 249 S.W. 175 (Tex.Comm.App. 1923, judgment adopted).

Before a party to a lease contract can collect special damages, he must show that they were in contemplation of the parties either (1) at the time of making the contract or (2) at the time of the breach of the contract.

Frazier v. Wynn, 459 S.W.2d 895, 897 (Tex.Civ.App. — Amarillo 1970) rev. on other grounds 472 S.W.2d 750 (Tex. 1971) appeal after remand 492 S.W.2d 54 (Tex.Civ.App. — Amarillo 1973, writ ref. n.r.e.).

Generally, the injured lessee may recover from his landlord the difference between the market rental value of the leasehold for the unexpired term of the lease and the reserved rentals stipulated therein.

McNabb v. Taylor Oil Field Rental Co., 428 S.W.2d 714, 716–17 (Tex.Civ.App. — San Antonio 1968, ). However, the rental value measure of damages will not be helpful to a tenant unless the rental value is below market value. The theory is that if the rent is at market value, substitute space can be rented for the same amount, thus no damage.

Damages not naturally arising from a breach of contract, or not reasonably contemplated by the parties as likely to arise therefrom cannot be recovered, without allegation and proof of knowledge by the party breaking it of the special circumstances producing such damages. Gilley v. Pennington, 241 S.W. 202, 203-204 (Tex.Civ.App. — Texarkana 1922, no writ). In other words, the doctrine of Hadley v. Baxendale, 9 Ex.[ ] 341, 354 (1854) applies to damage claims for breach of lease. See Mead v. Johnson Group, Inc., 615 S.W.2d 685, 687 (Tex.1981), which cites Hadley v. Baxendale.

On breach of the lease, parties may sue for actual damages, or liquidated damages, but may not recover both. McCelvy v. Bell, 6 S.W.2d 390, 392. (Tex.Civ.App. — Amarillo 1928, no writ). If the liquidated damages provision provides for an excessive recovery, it may be unenforceable as a penalty. Community Development Service, Inc. v. Replacement Parts Manufacturing, Inc., 679 S.W.2d 721, 727 (Tex.App. — Houston [1st Dist.] 1984, no writ).

Breach of contract is not a tort, and will not support recovery of mental anguish, Stewart Title Guaranty Co. v. Aiello, 941 S.W.2d 68, 72 (Tex.1997) or punitive damages, Jim Walter Homes, Inc. v. Reed, 711 S.W.2d 617, 618 (Tex.1986). However, if breach is accompanied by a tort, maliciously perpetrated, punitive damages may be recovered. Gonzalez v. Davila, 26 S.W.2d 718, 721 (Tex.Civ.App. — El Paso 1930, writ dismissed w.o.j.. Mental anguish may be considered in assessing punitive damages. Haile v. Coker, 258 S.W. 228, 229 (Tex.Civ.App. — Amarillo 1924, no writ).

For example, landlord who takes personal property of tenant without legal justification, commits conversion, which is a tort. Akin v. Santa Clara Land Co., Ltd., 34 S.W.3d 334, 344-345 (Tex.App. — San Antonio 2000, pet. den.). Conversion sounds in tort and will support punitive damages, and mental anguish may be considered in determining punitive damages. Winkle Chevy-Olds-Pontiac, Inc. v. Condon, 830 S.W.2d 740, 746 (Tex.App. — Corpus Christi 1992, writ dism.).

A landlord who temporarily and wrongfully denies a tenant access to the tenants personal property may be guilty of conversion of use. Texas law recognizes conversion of use, with the plaintiff being allowed to recover the value of the the loss of use of the item converted. Also, if the conversion was prompted by malice, punitive damages may be also recovered. Commercial Credit Equipment Corp. v. Elliott, 414 S.W.2d 35, 43 (Tex.Civ.App. — Eastland 1967, writ ref’d n.r.e.); Norris v. Bovina Feeders, Inc., 492 F.2d 502, 506 (5th Cir. 1974).

Other damages that a landlord might be liable for are conversion, assumption of a duty of care with respect to seized personal property, become an implied bailee, and invasion of privacy. Russell v. American Real Estate Corp., 89 S.W.3d 204, 210–212 (Tex.App. — Corpus Christi 2002, no pet).

Lessee has duty to mitigate damages, if possible. Frank v. Kuhnreich, 546 S.W.2d 844, 851 (Tex.Civ.App. — San Antonio 1977, writ ref. n.r.e.).

Duty to Repair

Commercial

Absent a lease provision, a landlord has no duty to make repairs. Flynn v. Pan American Hotel Co., 183 S.W.2d 446, 448 (Tex. 1944). However, if a landlord goes ahead and makes repairs, he is liable for injuries arising from his or his agents negligence. Id., 183 S.W.2d at 448. A covenant for the landlord to make repairs is never implied. Yarbrough v. Booher, 174 S.W.2d 47, 49 (Tex. 1943).

[W]e hold there is an implied warranty of suitability by the landlord in a commercial lease that the premises are suitable for their intended commercial purpose. This warranty means that at the inception of the lease there are no latent defects in the facilities that are vital to the use of the premises for their intended commercial purpose and that these essential facilities will remain in a suitable condition. If, however, the parties to a lease expressly agree that the tenant will repair certain defects, then the provisions of the lease will control.

Davidow v. Inwood North Professional Group–Phase I, 747 S.W.2d 373, 377 (Tex. 1988). If the warranty is breached, the tenant does not have to pay rent during the breach of warranty. Neuro-Developmental Assoc. of Houston v. Corporate Pines Realty Corp., 908 S.W.2d 26, 28 (Tex.App. — Houston [1st Dist.] 1995, writ den.). The warranty of commercial suitability can be waived by “as is” clause. Gym-N-I Playgrounds, Inc. v. Snider, 220 S.W.3d 905, 911 (Tex. 2007).

Residential

Landlord is required to make repairs to conditions that “materially affects the physical health or safety of an ordinary tenant” and is required to have hot water heater that supplies hot water of at least 120° F. Texas Property Code § 92.052(a)(3). The duty to repair requires written notice from the tenant, on written leases requiring same, § 92.052(a)(1) and the tenant must be current on rent, § 92.052(a)(1). If the landlord fails to repair within seven days, § 92.056(d), after another notice, certified mail, from the tenant, § 92.056(b)(3), tenant may terminate lease, § 92.056(e)(1), or repair and deduct from rent, § 92.056(e)(2)-(3), § 92.0561, not to exceed one month’s rent at a time, or $500, whichever is greater. Duty to repair by landlord may be limited or waived in written lease under some circumstance. § 92.006(d)-(f). The Texas Property Code preempts common law implied warranty of habitability, Kamarath Bennett, 568 S.W.2d 658, 661 (Tex 1978), which, when it existed, could be waived, Id., 568 S.W.2d at 660, n.2.

Measure of Damages

Generally, the correct measure of damages which a tenant is entitled to recover of a landlord who has breached his covenant to repair is ‘the difference between the market rental value of the leasehold for the unexpired term of the lease and reserved rentals stipulated therein.’ Langham’s Estate v. Levy, 198 S.W.2d 747, 756 (Tex.Civ.App., Beaumont 1946, writ ref’d n.r.e.); 51C C.J.S. Landlord & Tenant § 247(2), p. 644, citing Rainwater v. McGrew, 181 S.W.2d 103 (Tex.Civ.App., Waco 1944, writ ref’d w.o.m.).

Damages for loss of anticipated profits may be recovered in such a case if contemplated by the parties. 35 Tex.Jur.2d, Landlord and Tenant, § 90, p. 582; Midkiff v. Benson, 235 S.W. 292, 294 (Tex.Civ.App., El Paso 1921, no writ); Oscar v. Sackville, 253 S.W. 651, 653 (Tex.Civ.App., Austin 1923, writ ref’d).

However, as contended under appellants’ first point of error, the tenant cannot recover lost profits and the market value of his lease also, for such would allow him a double recovery. As stated in Oscar v. Sackville, supra:

‘To permit a recovery for the loss of profits, and also an additional recovery for the difference in the rental value of the premises, in the condition they were and in the condition they should have been if the heating plant had been adequate, would allow a double recovery, since appellant would be made whole under her contract when she recovered the loss of profits to her business, without regard to the rental value of the leased premises.’

See also 52 C.J.S. Landlord & Tenant § 461(4)b, p. 341; and Weiss v. Mitchell, 58 S.W.2d 165, 166 (Tex.Civ.App., Dallas 1933, writ dism’d).

Birge v. Toppers Menswear, Inc., 473 S.W.2d 79, 84 (Tex. Civ. App. — Dallas 1971, writ ref. n.r.e.).

Implied Warranty of Quiet Enjoyment

It is well-settled that, in the absence of express language to the contrary, there is an implied warranty that the lessee shall have the quiet and peaceful enjoyment of the leased premises. L-M-S Inc. v. Blackwell, 149 Tex. 348, 233 S.W.2d 286, 289 (1950); HTM Rests., Inc. v. Goldman, Sachs & Co., 797 S.W.2d 326, 328 (Tex.App.-Houston [14th Dist.] 1990, writ den.).

Unless rights are reserved to the landlord in the lease, an owner’s entry onto the leased premises would be unlawful.

Four Brothers Boat Works, Inc. v. Tesoro Petroleum Companies, Inc., 217 S.W.3d 653, 665–666 (Tex.App. — Houston [14th Dist.] 2006, pet. den.)

As a general rule, a lessor relinquishes possession or occupancy of the premises to the lessee. See Restatement (second) of Torts § 356 (1965). The law is well settled that when land is leased, the lessee becomes the possessor and occupier of the land, and the lessor’s liability for dangerous conditions on the premises generally terminates. See Johnson County Sheriff’s Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex.1996) (holding that owner of rodeo arena where spectator was struck in the eye by a rock or dirt during a contest held by lessees owed no duty to the spectator and thus could not be liable for injury).

Levesque v. Wilkens, 57 S.W.3d 499, 504 (Tex.App. — Houston [14th Dist.] 2001, no pet.).

Traditionally, a tenant establishes breach of the warranty of quiet enjoyment by showing: (1) an intention of the landlord that the tenant no longer enjoy the premises; (2) a material act by the landlord that substantially interferes with the intended use and enjoyment of the premises; (3) permanent deprivation of the tenant’s use and enjoyment of the premises; and (4) abandonment of the premises within a reasonable time after the commission of the act.

Goldman v. Alkek, 850 S.W.2d 568, 571–72 (Tex.App. — Corpus Christi 1993, no writ). The elements of a claim for breach of implied warranty of quiet enjoyment are the same as a claim for a constructive eviction claim. Lazell v. Stone, 123 S.W.3d 6, 12, n.1 (Tex.App. — Houston [1st Dist.] 2003, pet. den.). A breach of the implied warranty of quiet enjoyment is actionable under Texas Business and Commerce Code § 17.50(a)(2), the Texas Deceptive Trade Practices Act (“DTPA”). A tenant would therefore want to plead the claim as breach of implied warranty.

An express warranty of quiet enjoyment abrogates implied warranty of quiet enjoyment. Exxon Corp. v. Atlantic Richfield Co., 678 S.W.2d 944, 947 (Tex.1984). The implied warranty of quiet enjoyment may be waived or replaced by express contract. L-M-S Inc. v. Blackwell, 233 S.W.2d 286, 289 (Tex. 1950); HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d 326, 328 (Tex. App. — Houston [14th Dist.] 1990, writ den.).

2. Security deposits

Follow the rules of notice and itemization. The trap for landlords is to miss deadlines or not send out correct itemization. Claims under security deposit laws sound in contract, not tort.

Deducting such charges from the deposits at most was a breach of the contracts to refund the deposits if at the end of the terms of the leases the tenants had fully performed. Unaccompanied by willful, malicious, or fraudulent conduct, breach of a contract alone will not support an award of punitive damages.

Orgain v. Butler, 478 S.W.2d 610, 613 (Tex.Civ.App. — Austin 1972, no writ). Breach of contract alone, even if malicious, will not support tort damages, or punitive damages. Also, the statutory penalties, § 92.109(a), § 93.011(a), are a form of punitive damages. A plaintiff can only get one form of punitive damages per claim. Birchfield v. Texarkana Memorial Hospital, 747 S.W.2d 361, 367 (Tex. 1987).

Commercial

Regulated by Texas Property Code §§ 93.004 – 93.012.

Residential

Regulated by Texas Property Code §§ 92.101 – 109.

a. To keep it or not to keep it – that is the question

A landlord will want to keep the security deposit on a defaulting tenant, in order to reduce losses. However, the security deposit does not cover all losses that may be incurred and its retention is regulated by specific statutory rules. A security deposit is designed to secure performance under the lease. § 93.004, § 92.101. Non-refundable fees, such as for repainting or cleaning, are not security deposits, but rent or additional consideration for the lease. Holmes v. Canlen Management Corp., 542 S.W.2d 199, 202 (Tex.Civ.App. — El Paso 1976, no writ). Apartment rules not incorporated by reference into lease will not support mandatory fees. Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ).

Commercial

Landlord may deduct “damages and charges” from security deposit. § 93.006(a). “Normal wear and tear” is on the landlord. § 93.006(b). Normal wear and tear is defined for commercial tenancies, but not residential tenancies. See § 92.104(b).

Landlord cannot assess a charge other than rent or repair unless in lease. § 93.012(a). No similar restriction is specified for residential tenancies. However, see Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ)(residential lease), which says no charge if not in the lease.

Residential

Landlord may deduct “damages and charges” from security deposit. § 92.104(a). Normal wear and tear is on the landlord. § 92.104(b). Normal wear and tear is not defined. See statutory definition for commercial tenancies at § 93.006(b). However, burden is on landlord to show damage by tenant.

In the absence of showing that damage to the apartments, for a broken door and a window screen, was caused by appellees or that the damage was more than ordinary wear and tear, appellees could not be held to answer for the damages. Bachrach v. Estefan, 184 S.W.2d 640 (Tex.Civ.App. — San Antonio 1945, no writ). Moreover, appellees were not insurers under the leases by reason of the provision that the tenants would yield and quit the ‘leased premises in as good a state and condition as reasonable use and wear thereof will permit.’ The leases, having been prepared by the landlords, will not be enlarged beyond the clear meaning of that language, and, if doubtful, the provisions excepting reasonable use and wear will be construed more strongly against the appellants as landlords. Fisher v. Temco Aircraft Corporation, 324 S.W.2d 571 (Tex.Civ.App. — Texarkana 1959, no writ).

Orgain v. Butler, 478 S.W.2d 610, 615 (Tex.Civ.App. — Austin 1972, no writ).

b. Choosing small claims or county court

In residential tenancies, most times, it is not cost effective to sue defaulting tenants, even those who tear up the property. Commercial tenants may cause more damage and may be solvent, so which court to file in has to be decided. For most small cases, filing suit in Small Claims Court would be the preferred route, though there are pitfalls also in going that route.

Small Claims Court [now modified by amendment and rule changes]

 

Jurisdictional limit is $10,000.00. Texas Government Code, § 28.003. Attorney’s fees count towards the jurisdictional limit. Chaison v. Maryland Casulaty Co., 105 S.W.2d 376, 376 (Tex.Civ.App. — Beaumont 1937, no writ). However, damages that accrue as a matter of time (such as interest and attorney’s fees after the filing of the original suit) do not count in jurisdictional limit, so long as original claim is for less than $10,000.00. Haginas v. Malbis Memorial Foundation, 349 S.W.2d 957, 959 (Tex.Civ.App. — Houston 1961) judgment affd. 354 S.W.2d 368 (Tex. 1962).

Hearings are informal, controlled by judge, and not subject to Texas Rules of Evidence and Texas Rules of Civil Procedure. “Reasonable” discovery is only allowed if permitted by the judge. Texas Government Code § 28.033.

Corporations may represent themselves without an attorney. Texas Government Code § 28.003(a). Warning. Attorney’s fees are a separate “ground of recovery” and must be plead below to be recovered on appeal.

“Appeal is in the manner provided by law for appeal from justice court to county court.” Texas Government Code § 28.052(b). Texas Rule Civil Procedure 574a (emphasis added) provides as follows:

Either party may plead any new matter in the county or district court which was not presented in the court below, but no new ground of recovery shall be set up by the plaintiff, nor shall any set-off or counterclaim be set up by the defendant which was not pleaded in the court below. The pleading thereof shall be in writing and filed in the cause before the parties have announced ready for trial.

Attorney’s fees are a separate ground of recovery. The Hamby Co. v. Palmer, 631 S.W. 589, 591–92 (Tex.App. — Amarillo 1982, no writ).

Change in the law. Appeal of Small Claims Court decision is still to County Court or County Court at Law, but on appeal the procedure is now governed by the Texas Rules of Civil Procedure and Texas Rules of Evidence. Texas Government Code § 28.053(b), effective September 1, 2009. Appeals from Small Claims Court can now proceed to the Court of Appeals, Texas Government Code § 28.053(d), effective September 1, 2009, overruling Sultan v. Mathew, 178 S.W.3d 747, 752–53 (Tex. 2005)(decided under prior law).

Other Trial Courts

The general jurisdiction of most County Courts at Law is $500.00 to $100,000.00. Texas Government Code § 25.0003(c)(1). Potter County does not have higher jurisdiction. Texas Government Code § 25.1902. Randall County does not have higher jurisdiction. Texas Government Code § 25.1932(a)(3). However, in some counties, the limits are higher (as in Dallas County, Texas Government Code § 25.0592(a)).

The District Courts have no upper jurisdictional limit, but have a lower limit of $500.00. Texas Government Code § 24.007, Texas Constitution, art. V, § 8. Chapa v. Spivey, 999 S.W.2d 833, 836 (Tex.App. — Tyler 1999, no writ); but see Arnold v. West Bend Co., 983 S.W.2d 365, 366, n.1 (Tex.App. — Houston [1st Dist.] 1998, no writ), holding jurisdictional lower limit is $20.01. Except for large commercial cases, staring in District Court would seem cost prohibitive.

3. Fair credit reporting

Landlords may file reports with credit reporting bureaus and make obtain credit information from credit bureaus regarding tenants or prospective tenants. Landlords, once in possession of credit information on a tenant or prospective tenant, may not misuse the information.

The FCRA [Federal Credit Reporting Act] prohibits all individuals, not just creditors, from misusing credit information, …

Lowe v. Surpas Resource Corp., 253 F.Supp.2d 1209, 1234 (D.Kan. 2003).

If a landlord takes “adverse action” against a tenant or prospective tenant based on information from a credit reporting agency, or from any third person “bearing upon the consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living,” the landlord must disclose such information. 15 U.S.C. § 1681m(a), (b). Mandatory disclosure if information is from credit reporting bureau, and if from third party, only on written request. Adverse action applicable to landlords and tenants is covered by 15 U.S.C. § 1681a(1)(K)(1)(B)(iv):

(iv) an action taken or determination that is–

(I) made in connection with an application that was made by, or a transaction that was initiated by, any consumer, or in connection with a review of an account under section 1681b(a)(3)(F)(ii) of this title; and

(II) adverse to the interests of the consumer.

Remedies. 15 U.S.C.

§ 1681n. Civil Liability for Willful Noncompliance

(a) In general. Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—

(1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

(3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

(b) Civil liability for knowing noncompliance. Any person who obtains a consumer report from a consumer reporting agency under false pretenses or knowingly without a permissible purpose shall be liable to the consumer reporting agency for actual damages sustained by the consumer reporting agency or $1,000, whichever is greater.

(c) Attorney’s fees. Upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

§ 1681o. Civil Liability for Negligent Noncompliance

(a) In general. Any person who is negligent in failing to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—

(1) any actual damages sustained by the consumer as a result of the failure; and

(2) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney’s fees as determined by the court.

(b) Attorney’s fees. On a finding by the court that an unsuccessful pleading, motion, or other paper filed in connection with an action under this section was filed in bad faith or for purposes of harassment, the court shall award to the prevailing party attorney’s fees reasonable in relation to the work expended in responding to the pleading, motion, or other paper.

There are no common law remedies for misuse of credit information.

15 U.S.C. § 1681h(e) Limitation of liability

Except as provided in sections 1681n and 1681o of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g, 1681h, or 1681m of this title, or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report [FN2] except as to false information furnished with malice or willful intent to injure such consumer.

There are Texas criminal sanctions for knowingly giving false credit information to a credit reporting bureau.

Texas Finance Code § 391.002. Furnishing False Information; Penalty

(a) A person commits an offense if the person knowingly furnishes false information about another person’s creditworthiness, credit standing, or credit capacity to a credit reporting bureau.

(b) A credit reporting bureau commits an offense if the credit reporting bureau knowingly furnishes false information about a person’s creditworthiness, credit standing, or credit capacity to a third party.

(c) An offense under this section is a misdemeanor punishable by a fine of not more than $200.

B. Tenant: duty to occupy, abandonment, and holdover tenants and pay rent

Occupancy

Tenant under no obligation to demand or take possession of leased premises so long as the premises not repaired by landlord as agreed in the lease contract, and ready for occupancy by tenant. Langham’s Estate v. Levy, 198 S.W.2d 747, 755 (Tex.Civ.App. — Beaumont 1947, writ ref. n.r.e.).

For a residential tenant who fails to occupy the dwelling according to the lease, and a replacement tenant is found by the landlord, a landlord may retain and deduct from the security deposit and rent prepayment a contractual lease cancellation fee or actual expenses, including time spent by the landlord in finding a replacement tenant. Texas Property Code § 92.1031(b). If the tenant finds a replacement tenant before the lease period starts, landlord cannot offset. § 92.1031(a)(1). If the tenant defaults, it is just a contract remedy and the landlord can collect rent and attorney’s fees, plus any contractual reletting costs. If the lease is silent, any consequential damages claimed by landlord would be governed by Hadley v. Baxendale.

Abandonment

Abandonment of the lease by a tenant is a breach of the lease. However, contrary to older case law, Racke v. Anheuser-Busch Brewing Association, 42 S.W. 774, 775 (Galveston 1897, no writ), a commercial landlord must now mitigate damages, unless the lease provides otherwise. Austin Hill Country Realty, Inc. v. Palisades Plaza, Inc., 948 S.W.2d 293, (Tex. 1997):

We therefore recognize that a landlord has a duty to make reasonable efforts to mitigate damages when the tenant breaches the lease and abandons the property, unless the commercial landlord and tenant contract otherwise.

The duty to mitigate is now statutory and may not be waived.

§ 91.006. LANDLORD’S DUTY TO MITIGATE DAMAGES.

(a) A landlord has a duty to mitigate damages if a tenant abandons the leased premises in violation of the lease.

(b) A provision of a lease that purports to waive a right or to exempt a landlord from a liability or duty under this section is void.

Holdover

If a tenant is holding over after the expiration of the lease, and the landlord elects to treat the tenant as a trespasser, the remedies provided by law to the landlord include a forcible detainer action to recover possession of the premises and an action for recovery of damages in a court of competent jurisdiction.

49 Tex.Jur.3d Landlord and Tenant § 294 (Electronic Ed. 2009)(citations omitted).

For holdover tenants, in forcible detainer actions, there is an additional notice provision in Texas Property Code § 24.005:

A landlord who files a forcible detainer suit on grounds that the tenant is holding over beyond the end of the rental term or renewal period must also comply with the tenancy termination requirements of Section 91.001.

Texas Property Code § 91.001(b)(3) requires notice of termination one month after notice is given (assuming a holdover tenant is on a month to month tenancy), unless the lease agreement says otherwise, § 91.001(e)(1), or the tenant has breached the contract, § 91.001(e)(2). If the tenant has paid all the rent and the lease does not prohibit holding over, it is difficult to argue that the lease has been breached. Therefore, landlords should always put into lease provisions allowing for short notice to vacate in case of holding over and also providing for holdover rent at a higher rate than the base lease.

A holdover tenant may be held liable for all loss or injury that is shown to have been the foreseeable consequence of his or her wrongful holding over. The measure of recovery is the market rental value of the premises, the reasonable rental value, or the reasonable value for the use of the premises for the holdover period. The rental value of the property is the value of the use of the property, and in many cases these two expressions are used interchangeably and synonymously. They are also used in the same sense as “mesne profits.” The contract price at which the property was previously rented to the offending tenant has nothing to do with the question of damages suffered by the landlord in the loss of the use of the premises after that contract terminated.

49 Tex.Jur.3d Landlord and Tenant § 295 (Electronic Ed. 2009)(citations omitted).

Special or consequential damages may be recovered on proof that the holdover tenant knew or should have known that the loss would result from his or her wrongful acts, but the owner may not recover both the rental value of the premises and the profits he or she could have made by the use of the premises, because the profits necessarily include the rental value of the premises.

49 Tex.Jur.3d Landlord and Tenant § 297 (Electronic Ed. 2009)(citations omitted). See Hadley v. Baxendale discussed above.

Rent

Failure to pay rent is a breach of contract or a default under the lease. Landlord can sue for amount of rent, plus reasonable attorney’s fees. Eviction for non-payment of rent is governed by Texas Property Code Chapter 24. A landlord may sue for rent and possession, but must give statutory notice set forth § 24.0051. There is a three day notice, unless the lease provides for a shorter period, before filing a forcible detainer suit. § 24.005(a). To recover attorney’s fees, the landlord must give 10 days notice before suit is filed. § 24.006(a).

For a tenant who owes rent, the landlord may change the locks (if the lease so provides), but may not lock the tenant out of the leasehold.

§ 92.0081. REMOVAL OF PROPERTY AND EXCLUSION OF RESIDENTIAL TENANT.

(b) A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process unless the exclusion results from: …

(3) changing the door locks on the door to the tenant’s individual unit of a tenant who is delinquent in paying at least part of the rent.

(c) If a landlord or a landlord’s agent changes the door lock of a tenant who is delinquent in paying rent, the landlord or the landlord’s agent must place a written notice on the tenant’s front door stating:

(1) an on-site location where the tenant may go 24 hours a day to obtain the new key or a telephone number that is answered 24 hours a day that the tenant may call to have a key delivered within two hours after calling the number;

(2) the fact that the landlord must provide the new key to the tenant at any hour, regardless of whether or not the tenant pays any of the delinquent rent; and

(3) the amount of rent and other charges for which the tenant is delinquent.

(d) A landlord may not intentionally prevent a tenant from entering the leased premises under Subsection (b)(3) unless:

(1) the landlord’s right to change the locks because of a tenant’s failure to timely pay rent is placed in the lease;

(2) the tenant is delinquent in paying all or part of the rent; and

(3) the landlord has locally mailed not later than the fifth calendar day before the date on which the door locks are changed or hand-delivered to the tenant or posted on the inside of the main entry door of the tenant’s dwelling not later than the third calendar day before the date on which the door locks are changed a written notice stating:

(A) the earliest date that the landlord proposes to change the door locks;

(B) the amount of rent the tenant must pay to prevent changing of the door locks;

(C) the name and street address of the individual to whom, or the location of the on-site management office at which, the delinquent rent may be discussed or paid during the landlord’s normal business hours; and

(D) in underlined or bold print, the tenant’s right to receive a key to the new lock at any hour, regardless of whether the tenant pays the delinquent rent.

(e) A landlord may not change the locks on the door of a tenant’s dwelling under Subsection (b)(3) on a day, or on a day immediately before a day, on which the landlord or other designated individual is not available, or on which any on-site management office is not open, for the tenant to tender the delinquent rent.

(e-1) A landlord who changes the locks or otherwise prevents a tenant from entering the tenant’s individual rental unit may not change the locks or otherwise prevent a tenant from entering a common area of residential rental property.

(f) A landlord who intentionally prevents a tenant from entering the tenant’s dwelling under Subsection (b)(3) must provide the tenant with a key to the changed lock on the dwelling without regard to whether the tenant pays the delinquent rent.

The rules are more favorable to a commercial landlord.

§ 93.002. INTERRUPTION OF UTILITIES, REMOVAL OF PROPERTY, AND EXCLUSION OF COMMERCIAL TENANT.

(c) A landlord may not intentionally prevent a tenant from entering the leased premises except by judicial process unless the exclusion results from:

(1) bona fide repairs, construction, or an emergency;

(2) removing the contents of premises abandoned by a tenant; or

(3) changing the door locks of a tenant who is delinquent in paying at least part of the rent.

(f) If a landlord or a landlord’s agent changes the door lock of a tenant who is delinquent in paying rent, the landlord or agent must place a written notice on the tenant’s front door stating the name and the address or telephone number of the individual or company from which the new key may be obtained. The new key is required to be provided only during the tenant’s regular business hours and only if the tenant pays the delinquent rent.

C. Foreclosure of the Premises: Obligations and Rights

A foreclosure of the premises terminates the tenancy, but the tenants become tenants at sufferance. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208 (Tex.App. — Corpus Christi 2002, no pet).

Texas Property Code § 24.005(b) provides a 30 day notice to vacate to a non-delinquent tenant.

If the occupant is a tenant at will or by sufferance, the landlord must give the tenant at least three days’ written notice to vacate before the landlord files a forcible detainer suit unless the parties have contracted for a shorter or longer notice period in a written lease or agreement. If a building is purchased at a tax foreclosure sale or a trustee’s foreclosure sale under a lien superior to the tenant’s lease and the tenant timely pays rent and is not otherwise in default under the tenant’s lease after foreclosure, the purchaser must give a residential tenant of the building at least 30 days’ written notice to vacate if the purchaser chooses not to continue the lease.

A mortgagor–landlord who remains in possession of real estate after a foreclosure is also tenant at sufferance. 52 C.J.S. Landlord & Tenant § 288 (Electronic Ed. 2008).

“A tenancy at sufferance cannot arise from agreement …” 52 C.J.S. Landlord & Tenant § 281 (Electronic Ed. 2008) citing to Willis v. Moore, 59 Tex. 628 (1883).

A tenant at sufferance holds possession “wrongfully.” Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990). 49 Am. Jur. 2d Landlord and Tenant § 124 (Electronic Ed. 2008).

A tenant at sufferance may be treated as a trespasser by the owner. Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990).

Texas does not have a statute regulating termination of a tenancy at sufferance which arises after a foreclosure. A tenancy at sufferance may be terminated by either party giving notice of termination.

Tenancies by sufferance are terminated by a proper demand for possession. However, apparently no notice to quit or demand for possession is necessary, because possession by a tenant at sufferance can be put to an end whenever the landlord, acting promptly, wishes.

49 Am. Jur. 2d Landlord and Tenant § 124 (Electronic Ed. 2008).

Since a tenant at sufferance is a wrongdoer, and in possession as a result of the landowner’s laches or neglect, the tenant has no term, and no estate or title, but only a naked possession without right, and wrongfully held. A tenant at sufferance acquires no permanent rights because the landowner neglects to disturb his or her possession, and the landowner is entitled to resume possession, and the tenant is entitled to quit, at any time without notice.

52 C.J.S. Landlord & Tenant § 282 (Electronic Ed. 2008).

However, the landlord is estopped from treating the tenant as one at sufferance and evicting him or her without notice if the landlord has given the tenant permission, expressly or impliedly, to remain in possession.

49 Am. Jur. 2d Landlord and Tenant § 293 (Electronic Ed. 2008).

A person who becomes a tenant at sufferance continues as such until there is some affirmative action by the landowner converting the tenancy into some other form. Where notice is unnecessary to terminate a tenancy at sufferance, the owner of the fee can terminate it by a simple demand for possession, or he or she can enter at any time, and put an end to the tenant’s holding.

52 C.J.S. Landlord & Tenant § 293 (Electronic Ed. 2008). However, see Russell v. American Real Estate Corp., 89 S.W.3d 204, 209 (Tex.App. — Corpus Christi 2002, no pet)(“Texas does not recognize ‘self-help repossession’ of real estate”).

After such notice is given, the possesser becomes a mere trespasser on the realty. There is thus a sharp distinction between how the tenancy terminates versus how possession may be changed. See Bockelmann v. Marynick, 788 S.W.2d 569, 571 (Tex. 1990).

A trespasser who refuses to quit the property is subject to a forcible detainer lawsuit, since right of possession is the only issue in question. A forcible detainer suit is cumulative of other remedies, including tort remedies for trespass. Goggins v. Leo, 849 S.W.2d 373, 376 (Tex.App. — Houston [14th Dist.] 1993, no writ).

In the absence of a legally enforceable agreement, such as a lease or rental agreement or a contract to sell, an occupier of premises is at best a tenant at sufferance and at worst a trespasser. Under such circumstances, the record title owner of the premises would be entitled to possession, after notice and demand, by merely showing “sufficient evidence of ownership to demonstrate a superior right to immediate possession.” Goggins v. Leo, 849 S.W.2d 373, 377 (Tex.App.-Houston [14th Dist.] 1993, no writ).

Fandey v. Lee, 880 S.W.2d 164, 169 (Tex.App. — El Paso 1994, writ den.).

A holder of a mortgage cannot seize real property before a foreclosure. Lighthouse Church of Cloverleaf v. Texas Bank, 889 S.W.2d 595, 603 (Tex.App. — Houston [14th Dist.] 1994, writ den.)(emphasis added).

It is our conclusion that Texas law does not condone seizure of real property prior to foreclosure unless voluntarily relinquished by the debtor. In other words, Texas does not recognize “self-help repossession” of real estate. The Texas Property Code instead provides an orderly means for resolving disputes.

Lighthouse, 889 S.W.2d at 603, also says: “To remove a tenant by sufferance, the new owner must file a forcible detainer suit.” However, there is authority to the contrary.

In Texas one who is entitled to possession of land, but who is not in possession, may not forcibly take possession from another. Sinclair v. Sinclair, 60 Tex. 718, 7 S.W. 511 (1888), Chrone v. Gonzales, 215 S.W. 368 (Tex.Civ.App.1919, no writ). The rule seems to be, however, that if one entitled to possession can make peaceable entry upon the land, he may resort to peaceable means, short of force, as will render impracticable the further occupation of the land by the other person. See Heironimus v. Duncan, 11 Tex.Civ.App. 610, 33 S.W. 287 (1895, no writ), 6 A.L.R.3rd 177, 189-193.

Embry v. Bel-Aire Corp., 508 S.W.2d 469, 471 (Tex.Civ.App. — Austin 1974, writ ref. n.r.e.)(emphasis in original). Even if Lighthouse is correct with respect to possession by forcible detainer, it does not control as to termination of the tenancy at sufferance, and the fact that after such termination, a holdover tenant becomes a mere trespasser.

After a foreclosure, the new owner should exercise care in how the tenant is treated. An owner after foreclosure can be guilty of trespass to realty, trespass to personalty, conversion, assumption of a duty of care with respect to seized personal property, become an implied bailee, and invasion of privacy. Russell v. American Real Estate Corp., 89 S.W.3d 204, 208–212 (Tex.App. — Corpus Christi 2002, no pet).

Involuntarily obtained services are subject to liability under the DTPA.

It is not necessary that the consumer who “acquires” the services be the one who sought the services. SeeAllied Towing v. Mitchell, 833 S.W.2d 577, 581-82 (Tex.App.–Dallas 1992, no writ) (involuntary acquisition of goods or services is enough to make party a consumer under DTPA); Nelson v. Schanzer, 788 S.W.2d 81, 86-87 (Tex.App.– Houston [14th Dist.] 1990, writ denied) (an involuntary bailor is a consumer under the Act).

D/FW Commercial Roofing Co., Inc. v. Mehra, 854 S.W.2d 182, 187 (Tex.App. — Dallas 1993, no writ).