Saturday, January 31, 2009

Texas Landlord Remedies for Commercial Rent and Anticipatory Breach and Abandonment

If you are a commercial property owner in Texas and the tenant tells you they are leaving mid lease term, what are the options for the landlord? The Texas Supreme Court set out a Texas landlord's options for abandonment and breach of the lease as follows:

The Landlord has four causes of action against a tenant for breach of the lease and abandonment. First, the landlord can maintain the lease, suing for rent as it becomes due. Second, the landlord can treat the breach as an anticipatory repudiation, repossess, and sue for the present value of future rentals reduced by the reasonable cash market value of the property for the remainder of the lease term. Third, the landlord can treat the breach as anticipatory, repossess, release the property, and sue the tenant for the difference between the contractual rent and teh amount recived from the new tenant. Fourth, the landlord can declare the lease forfeited (if the lease so provides) and relieve the tenant of liability for future rent.

Austin Hill Country, 948 SW2d at 299-300.

It should be remembered that under Texas Property Code Sec. 91.006, a Texas landlord has a duty to mitigate (in other words, try to relet the premises). However, the actual burden of proof is on the tenant to show that the landlord failed to mitigate and also show the amount that could have been saved but for the landlord's failure to mitigate. Id.

Recovery of past rent is a rental "arrearage" while recovery of future rent is considered "future damages". PRC Kentron, Inc. v. First City Center Associates, II, 762 SW2d 279, 281 and 288 (Tex.App.-Dallas 1988, writ denied). A prevaling landlord may also recover reasonable attorneys fees. West Anderson Plaza v. Exxon Mehdi Feyznia, 876 SW2d 528, 537 (Tex. App.-Austin 1994, no writ).

It should also be noted that a Texas statutory landlord's liens in the personal property may be affected by the abandonment of the property. A landlord may need to seek a distress warrant under Texas Property Code Sec. 54.025, since a statutory landlord's lien only lasts for one month after the day the tenant abandons the property under Texas Property Code Section 54.024.

The landlord needs to select a remedy, however, since choosing to terminate a lease may eliminate the ability to recover future damages. It is suggested that a Texas landlord consult with an attorney to evaluate these options.

Changing Locks on Residential Tenants in Texas: A Dangerous Business

Texas Property Code Section 92.0081 sets out the procedures for the removal of property and lockouts on residential property. Here are some practical tips:

1. A landlord may not remove a door, window, or attic hatchway cover unless it is done pursuant to a prompt repair of the premises. In other words, you can't just take a door off to "encourage" a tenant to leave. See Texas Property Code Sec. 92.0081(a).

2. If a landlord changes the door lock of a tenant that is delinquent in rent, it must be done according to the procedures set out in Texas Property Code Sec. 92.0081(c). Namely, the landlord must place a notice that (1) states an on site location where the tenant can 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) states the fact that the landlord must provide the new key to the tenant at any hour, regardless of whether the tenant pays any of the delinquent rent; and (3) the amount of rent and other charges for which the tenant is delinquent. The landlord must also, prior to changing the locks, send a warning, either mailed five days before the lock change, or hand delivered three days before the lock change, that states the date of the anticipated lock change, the amount of rent owed that must be paid to prevent the lock out, and the name and street address of the individual to whom, or the location of the onsite management office, at which the delinquent rent may be paid during the landlord's normal business hours. The lock change may not occur on a day or day before the landlord is not available or the onsite management office is not open for the tenant to pay the delinquency. The key must be provided to the tenant whether or not the tenant pays the rent. If the tenant doesn't show, the landlord must leave a notice of the day/time they showed up, along with the address for the location of the key during normal business hours. See Texas Property Code Sec. 91.0081(d)-(g).

3. If a residential landlord violates Texas Property Code Sec. 91.0081, the tenant may recover possession of the premises or terminate the lease, and a civil penalty of one month's rent plus $500, actual damages, court costs and reasonable attorney fees, less any delinquent rent or other sums owed to landlord. If the landlord does not allow tenant to use the key to enter the property regardless of paying the rent, the tenant is entitled to one month's rent as a civil penalty.

Thus, residential property lockouts are very risky endeavors and should be done with the consultation of an attorney after reviewing sections of the Texas Property Code.

Eviction Tips in Travis County

1. The landlord should review Texas Property Code Sec. 24.005 for the notice requirements before delivering the notice to vacate.

2. An eviction action should be filed in the justice precinct where the rental property is located.

3. The landlord generally will be required to wait three days after the eviction notice is delivered before filing the eviction action, unless the lease shortens the notice requirements.

4. The notice to vacate needs to be in writing and should be unconditional. It should tell the tenant to vacate unconditionally and by a date certain.

5. When filing, an attorney will need 1) a copy of the lease; 2) a copy of the notice to vacate; 3) filing fees; 4) service fees; 5) all contact information known for the tenant.

6. All parties to the lease, even those that are not currently residing in the property, should be named in the suit.

7. A suit for rent may be filed with the eviction suit if the amount due is within the jurisdiction of the justice court, which is currently $10,000. Charges for items other than rent cannot be joined with the suit for eviction.

8. Be prepared. The trial for the suit for eviction will be set on the day the case is filed.