Post-Harvey - What are tenants’ and landlords’ rights for terminating a lease due to storm damage?

The following information is from Texas Association of Realtors. Always consult an attorney for legal advice.

Paragraph 25 of TAR’s Residential Lease deals with casualty loss, which includes a loss due to weather events, such as Harvey.

If the property is deemed partially or completely uninhabitable, Paragraph 25 references the Texas Property Code Section 92.054 for guidance, which provides the following:

• For damage resulting from an insured casualty loss, the period for repairs doesn’t start until the landlord receives the insurance proceeds;
• If the damage from the casualty loss renders the property “totally unusable for residential purposes” and the tenant doesn’t cause the loss, either the landlord or the tenant may terminate the lease by giving written notice to the other party prior to the completion of the repairs. The tenant would be entitled to a prorated refund of rent from the date the tenant moves out, and the security deposit would be accounted for or refunded to the tenant pursuant to the relevant sections of the Property Code; and
• If the casualty loss renders the property “partially unusable for residential purposes” and the loss isn’t caused by the tenant, the tenant is entitled to a reduction of rent in an amount proportionate to the extent the property is unusable, but only upon a county or district court judgment. The landlord and the tenant may agree otherwise in a written lease.

Paragraph 25 also clarifies that any proceeds paid in connection with the casualty loss is the property of the landlord.

TAR’s Residential Leasing and Property Management Agreement also includes provisions related to casualty loss. Paragraph 4E prohibits a broker from filing a casualty loss claim with the carrier insuring the property but allows a broker to communicate with the carrier to facilitate the landlord’s casualty loss claim. Additionally, if the landlord requests that the broker coordinate or communicate with the insurance carrier, paragraph 11G authorizes the broker to receive compensation for such services in an amount agreed upon by the parties.

Additional legal resouces related to Harvey can be accessed from the State Bar of Texas at texasbar.com/disasters.

Legal Disclaimer: The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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