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Filing Lawsuit for Tenants’ Withholding Last Month’s Rent- Property Code § 92.108

austin_small_claims_courtFor the first time, I sued a tenant in small claims court for not paying last month’s rent and was awarded triple damages. Tenant failed to give proper written notice, breached lease by vacating early, and did not pay last month’s rent. We had previously filed an eviction lawsuit and received an eviction judgment for rents in arrears. We filed a second small claims lawsuit for damages, reletting fee, lost rents, and triple damages for not paying last month’s rent.

When filing an eviction lawsuit, a judge will only award a judgment for past due rents. Late fees, reletting fees, future rents, and damages will not be considered in eviction court. A landlord must file a small claims lawsuit to pursue rents from breach of contract, damages, and late fees.

Texas is a very friendly landlord state and has property codes to protect landlord. Under no circumstances are tenants allowed to pay the last month’s rent using security deposit. Texas property code § 92.108 states:

Notices About Security Deposits:
(1)Property code § 92.108 provides that a tenant may not withhold payment of any portion of the last month’s rent on grounds that the security deposit is security deposit for unpaid rent.

(2)Bath faith violations of § 92.108 may subject tenant to liability up to 3 times the rent wrongfully withheld and the landlord’s reasonable attorney’s fees.

We use a TAR lease (Texas Association of Realtors). This language is included on page 3 and 4 of the lease agreement. See a sample copy on our forms page.

If a tenant loses a job or has a financial burden, we always try and work things out. We only file an eviction lawsuit if tenant is not able to pay rent and has no income. We normally don’t proceed with filing a second small claims lawsuit. However, this tenant was dishonest and promised to pay rent. Instead, monthly rent funds were used to pay security deposit for another property. For more details on the eviction process, see our blog article regarding eviction process.

We also recommend filing an abstract of judgment if you receive a judgment in court. The JP court will issue a judgment in eviction court or small claims court. It is only a few dollars more for judge to provide you an abstract of judgment, and we recommend filing the abstract judgment in county court house of subject property. Filing the abstract judgment at county court house gives you an additional layer of protection if tenant(s) ever purchase or sell a home.

Most lenders require a new title policy before approving a mortgage. A title policy is issued by a title company and protects the buyer from any previous clouds or liens on title. This insures buyer will have a clear title when they purchase property. Title company will do a title search for any liens or judgments. A recorded abstract judgment will be discovered in the title search for that county. All liens and judgments must be satisfied before a title policy is issued. The buyer’s lender will not approve a mortgage unless a title company issues title policy and all liens are satisfied.

Filing an abstract judgment or having two judgments does not guarantee payment. Most Justice of the Peace courts will report judgments to credit bureaus. Many tenants are judgment proof because they have no assets, don’t own a home, and most likely will never purchase a home. However, a judgment will lower the tenant’s fico score and hopefully notify a future property manager, apartment, or owner of eviction or judgment when screening tenant(s).

Many times, professional Austin property managers can discover a breach of lease or eviction when screening tenants. Many Austin property managers and apartments subscribe to tenant performance services which have a database for eviction files, names screened by previous landlords, and rental history. For rent by owners face the greatest risk of not being able to adequately screen a tenant. Many times, the tenants with multiple evictions or poor rental history will seek homes being leased by owners for this very reason. For more information about filing an eviction, click here to read my eviction article.

If you have any questions, please call us at 512-257-9836. Our office provides sales, leasing, property management, and mortgage services.

Posted by: elenadrakeknight on April 7, 2013
Posted in: Uncategorized