Texas Realtors Residential Lease

Topics Covered

Part One: Realities of Residential Leasing in Texas
Part Two: Condition of Leased Property
Part Three: Landlord’s Duties of Repair and Maintenance
Part Four: Tenant Remedies for Landlord’s Failure to Repair
Part Five: Tenant’s Duties of Repair and Maintenance
Part Six: Catastrophic Loss or Damage During the Lease

PART ONE:
REALITIES OF RESIDENTIAL LEASING IN TEXAS

The Texas Realtors Lease

This article examines the Texas Realtors Lease (form TXR-2001, referred to as the TXR lease) alongside Chapter 92 of the Property Code which governs residential tenancies. The goal is to highlight certain deficiencies in the TXR lease (from the standpoint of the tenant) and suggest special provisions to cure these deficiencies.

No Standard Lease Form in Texas

Even though the Texas Realtors lease is prevalent in residential leasing, there is no truly standard or required residential lease form in Texas. The TXR lease is optional and its terms are negotiable. Moreover, the parties are always free to agree to a custom residential lease of their own.

Paragraph 34K expressly states “This lease is negotiable between the parties.” In spite of this, the Texas Realtors lease is often presented by real estate agents and landlords as a mandatory standard form that must be signed as is. This does not reflect standardization, it reflects a disparity in knowledge and bargaining power.

Many other residential lease forms are available. The State Bar offers a residential lease, as does the Houston Association of Realtors. Many real estate lawyers have their own custom-drafted leases they offer to their clients. All of these are legitimate.

Hard Facts about Residential Leasing in Texas

(1) Agents and brokers often misleadingly present the TXR residential lease to prospective tenants as being standard and mandatory.

(2) Tenants in Texas often lack the knowledge and market power required to meaningfully negotiate the terms of a residential lease.

(3) Most residential leases in Texas contain no clear repair or maintenance policy, and this includes the TXR lease.

(4) Most residential properties are leased in Texas without a professional inspection. When combined with the as-is nature of the TXR lease, this makes acceptance of property condition (including major systems such as electrical, mechanical, plumbing, HVAC, foundation, and the roof) a gamble.

(5) Most often, agents, brokers, and landlords have not read the TXR lease that they insist that a prospective tenant must sign.

(6) Many agents, brokers, and landlords cease working with a prospective tenant who seeks legal advice on a residential lease. The false assertion is made that lawyers are not allowed in residential transactions.

Hard Facts about the TXR Residential Lease

(1) The TXR lease is NOT MANDATORY. It is only one of many legitimate lease forms available in Texas.

(2) The TXR lease IS NEGOTIABLE. It clearly states: “This lease is negotiable between the parties” (paragraph 34K).

(3) The TXR lease expressly provides that the property is LEASED “AS IS” with no assurances that major systems are in good condition or in working order (paragraph 15). Also, the TXR lease application states that the “Landlord makes NO EXPRESS OR IMPLIED WARRANTIES as to the Property’s condition.”

(4) The TXR lease contains NO REQUIREMENT TO DISCLOSE DEFECTS, adverse conditions, or other material facts. There no disclosure of property condition form as is required by the Property Code in home sales.

(5) The TXR lease NOT obligate the landlord to deliver the property with utilities on. A residence is useless without electricity and water, yet paragraph 11 of the lease states in bold that the landlord makes no warranty that utilities are even available.

(6) The TXR lease DOES NOT CONTAIN A COMPREHENSIVE REPAIR POLICY. There is no general duty on the part of the landlord to make routine repairs, perform routine maintenance, or otherwise keep the property in good condition. Instead, repairs and maintenance are entirely at the landlord’s discretion unless the condition “materially affects the physical health or safety of an ordinary tenant” (paragraph 18D, which is the minimum standard of Prop. Code Sec. 92.052).

(7) The TXR lease expressly EXCLUDES AIR CONDITIONING as an emergency repair (paragraph 18A). The landlord may choose to fix or not fix the air conditioning unit at landlord’s discretion, even in summer.

(8) The TXR lease provides NO TIMELINE FOR COMPLETION OF REPAIRS unless the condition materially affects the physical health or safety of an ordinary tenant—and then the timeline is vague (a “diligent effort” and a “reasonable time” per Prop. Code 92.052).

(9) The TXR lease affords NO EASY ADMINISTRATIVE APPEAL or recourse to any rental rights agency. If a landlord fails or refuses to make repairs, the tenant’s legal recourse is to bring an expensive lawsuit.

(10) The TXR lease provides that IT IS TENANT’S OBLIGATION TO REPAIR A STORM-DAMAGED HOME and then return it to the landlord in the same condition as it was received, normal wear and tear excepted (paragraph 16A).

(11) The TXR lease, like all contracts in Texas, is given its PLAIN MEANING unless its terms are expressly overridden by statute or public policy. Thus the TXR lease provisions concerning “as is” and “no express or implied warranties” mean exactly what they say.

(12) The TXR lease (unlike the TREC contract for residential home sales) self-servingly FAILS TO ADVISE a prospective tenant to consult an attorney before signing.

PART TWO:
CONDITION OF LEASED PROPERTY

No Inspection, Only a Tour

When purchasing a home, the prospective buyer is usually allowed an option period to conduct inspections. This is not common practice in residential leasing, where tenants usually take only a superficial tour while a landlord’s agent impatiently taps her feet.

Not only is there no organized pre-lease inspection, there is no obligation on the part of the landlord to provide a property condition disclosure form as is the case with residential sales.

TXR Lease is “As Is”

The TXR lease application (form 2003) states that the “Landlord makes no express or implied warranties as to the Property’s condition.” Paragraph 15A of the TXR lease adds “Tenant accepts the Property ‘as is’ and Landlord is under no obligation to make any changes upon Tenant viewing the Property.” Any change the tenant may want to make to this provision (including an agreement by the landlord to make repairs) must be inserted into paragraph 15B or it is waived.

Does leasing a residence “as is” (with all faults) reflect the reality of what real-world tenants expect in the 2020s? Certainly not.

The neo-feudal conveyance of an “as is” residential leasehold with (1) no standardized disclosure of defects or material facts and (2) minimal or non-existent landlord repair obligations is glaringly inconsistent with both the expectations and interests of modern residential tenants.

The home’s roof may leak, the plumbing may be obstructed, and the walls may be full of mold; still, in Texas, the landlord makes no assurances regarding any of these matters.

The DTPA Overrides

Even though the TXR lease misleadingly claims to be “as is” and without assurances as to property condition, a residential landlord in Texas is still obligated under the DTPA to disclose defects, adverse conditions and other material facts that could reasonably affect the tenant’s decision to lease or not the lease the home. Deceptive Trade Practices Act, Chap. 17, Tex. Bus. & Com. Code.

There is no clause (including an “as is” clause) that can lawfully be included in a residential lease that enables or permits non-disclosure by the landlord of known defects, adverse conditions, and material facts. This constitutes consumer fraud under the DTPA. Again, however, the tenant’s remedy is to hire a lawyer to file an expensive lawsuit.

Value of a Special Provisions Addendum

Any contract can be amended by a custom Special Provisions Addendum. The following are two examples of special provisions that could better align the TXR lease with tenant expectations.

(1) Major Systems: Unless otherwise expressly agreed, Landlord agrees to deliver all major systems on the Property (including electrical, mechanical, plumbing, HVAC, foundation, and roof) and appliances (if any are included) in good and working condition with no known material problems, defects, needed repairs, or deferred maintenance that are not fully disclosed to Tenant in advance of lease signing.

(2) Agreement to Disclose Defects: Landlord agrees to disclose known defects, material facts, and adverse conditions affecting the Property in advance of lease signing. This applies notwithstanding that the Lease may be “as is” and without warranty, express or implied. Tenant is relying upon Landlord’s agreement to make full disclosure. Were this not the case, Tenant would not lease the Property.

A Special Provisions Addendum to the TXR lease should be drafted by an attorney. However, as noted above, a prospective tenant should be prepared for heavy pushback from realtors and landlords if an attorney becomes involved in a residential transaction.

PART THREE:
LANDLORD’S DUTIES OF REPAIRS AND MAINTENANCE

No General Duty to Repair or Maintain

The TXR lease does not include a general duty on the part of the landlord to make routine repairs, perform routine maintenance, or otherwise keep the property in good condition.

This stunning fact is true even though paragraph 18 the TXR lease requires the tenant to notify the landlord of needed repairs. Thus there is a tenant duty to notify but there is no duty on the part of the landlord to act in response, at least to routine maintenance.

Surprisingly, the only party expressly obligated under the TXR lease to maintain the property is the tenant (see paragraphs 17 and 18). Paragraph 17A describes “Tenant’s General [Maintenance] Responsibilities.” There is no comparable paragraph that describes maintenance or repair responsibilities on the part of the landlord. Except for 17B(3)(a) which offers an option (a box to check) if the landlord is to maintain the yard, a general duty of the landlord to repair or maintain the property is absent from the TXR text.

Unless a residential lease expressly states otherwise, routine repair and maintenance issues that do not materially affect the physical health or safety of an ordinary tenant may be addressed (if at all) entirely at the discretion of the landlord and without remedy or recourse on the part of the tenant. This is the position of the TXR lease.

Except for threats to health or safety, the landlord under a TXR lease may disregard the tenant’s repair requests with impunity.

The Odd Inclusion of Paragraph 18D

Paragraph 18D of the TXR lease does provide that the landlord will pay for repairs occurring as a result of the HVAC system, the water heater, and water penetration from structural defects. However, stating the landlord has must pay for a certain repair is not the same as saying that the landlord has an obligation to make the repair in the first place. In fact, paragraph 18C(1) of the lease provides that repairs are made (if at all) at the landlord’s sole discretion.

The TXR lease effectively states that the landlord will pay for certain routine repairs if, in the landlord’s sole discretion, he chooses to make them at all.

Finally, note paragraph 18 of the TXR lease: “If Tenant is delinquent in rent at the time a repair notice is given, Landlord is not obligated to make the repair.”

Landlord’s Statutory Duty to Repair

A residential landlord’s statutory repair duty only arises under limited circumstances:

Prop. Code Sec. 92.052. Landlord’s Duty to Repair or Remedy

(a) A landlord shall make a diligent effort to repair or remedy a condition if: (1) the tenant specifies the condition in a notice. . .; (2) the tenant is not delinquent in the payment of rent at the time notice is given; and (3) the condition: (A) materially affects the physical health or safety of an ordinary tenant; or (B) arises from the landlord’s failure to provide and maintain [a water heater].

(b) Unless the condition was caused by normal wear and tear, the landlord does not have a duty . . . to repair or remedy a condition caused by: (1) the tenant; (2) a lawful occupant in the tenant’s dwelling; (3) a member of the tenant’s family; or (4) a guest or invitee of the tenant.

(c) This subchapter does not require the landlord: (1) to furnish utilities from a utility company if as a practical matter the utility lines of the company are not reasonably available; or (2) to furnish security guards.

(d) The tenant’s notice under Subsection (a) must be in writing only if the tenant’s lease is in writing and requires written notice.

Prop. Code Sec. 92.053(a-b). Burden of Proof

[T]he tenant has the burden of proof in any action to enforce the landlord’s duty to repair under Section 92.052. [However, if] If the landlord does not provide a written explanation for delay in performing a duty to repair or remedy on or before the fifth day after receiving from the tenant a written demand for an explanation, the landlord has the burden of proving that he made a diligent effort to repair and that a reasonable time for repair did not elapse.

Presumption of Tenant Fault

Note that the statute places the burden of proof on the tenant in any action against the landlord for failure to repair. Also, the tenant is presumed to be at fault when a repair is required. Property Code Sections 92.052-53 “taken together . . . create a presumption [that any] damage to [the leased premises] under the tenant’s control was caused by the tenant and the tenant must prove otherwise. Absent such proof, the landlord has no duty to repair. . . .” Philadelphia Indem. Ins. v. White, 490 S.W.3d 468 (Tex. 2016).

Property Must be Returned in Same Condition

Under the TXR lease, a tenant is required to surrender the property in the same condition as when it was received, normal wear and tear excepted. If compliance with this provision requires the tenant to make significant unreimbursed repairs, then so be it.

PART FOUR:
TENANT REMEDIES FOR LANDLORD’S
FAILURE TO REPAIR

Tenant Recourse

Under Texas law and the TXR lease, the tenant has no ready remedy or recourse if the landlord fails to make routine, ordinary repairs. There are no lease provisions to cite, no steps for a tenant to take, no regulatory body with which to file a complaint. Meanwhile, full rent continues to accrue.

Unless a repair materially affects the physical health or safety of an ordinary tenant (an extreme case), a Texas landlord can take months to perform routine repairs—or avoid making such repairs at all.

Tenant’s Repair and Deduct Remedy

Property Code Chapter 92 includes a highly restricted repair and deduct remedy in Section 92.0561. The tenant may contract (on his own) to make certain repairs only if:

(1) the landlord has failed in his duty under Section 92.052 to remedy a condition that materially affects the physical health or safety of an ordinary tenant—i.e., in extreme situations, not circumstances that involve less urgency;

(2) proper written notice has been given;

(3) the landlord has failed to make the repair within a reasonable time or has not made a diligent effort; and

(4) the tenant is not delinquent in rent.

For purposes of determining what constitutes a reasonable time, Section 92.056(b)5(d) specifies a presumption of 7 days but that is easily rebuttable by the landlord.

Repair and Deduct is a Shallow Remedy

The remedy of repair and deduct is seldom effectively invoked in the real world—not just because it is cumbersome to execute but because most families are forced out by a serious habitability issue by the time this remedy can be implemented. Also, tenants understandably hesitate to spend their limited funds on a property owned by a wealthier landlord, particularly when the repair (say, an air conditioning unit) involves thousands of dollars.

Finally, by the time repair and deduct becomes available, the parties are almost always personally at odds and the situation has collapsed into acrimony and threats of litigation. Neither party is interested in working together anymore. Accordingly, as a practical tenant tool, the repair and deduct statute is largely ineffective.

PART FIVE:
TENANT’S DUTIES OF REPAIR AND MAINTENANCE

Tenant’s Repair Duties

The tenant’s obligations in this area are contained in paragraphs 17 and 18. Oddly, other than an admonition to keep the property clean and sanitary, the lease states no general duty of care on the part of the tenant or obligation to avoid waste and damage. Instead, paragraph 17 lists specific obligations and specific prohibitions. Tenant must:

(1) keep the Property clean and sanitary;
(2) promptly dispose of all garbage in appropriate receptacles;
(3) supply and change heating and air conditioning filters per manufacturer’s instructions;
(4) supply and replace all light bulbs, fluorescent tubes, and batteries for smoke alarms, carbon monoxide detectors, garage door openers, ceiling fan remotes, and other devices (of the same type and quality that are in the Property on the Commencement Date);
(5) maintain appropriate levels of necessary chemicals or matter in any water softener;
(6) take action to promptly eliminate any dangerous condition on the Property;
(7) take all necessary precautions to prevent broken water pipes due to freezing or other causes;
(8) replace any lost or misplaced keys;
(9) pay any periodic, preventive, or additional extermination costs desired by Tenant, including treatment for bed bugs, unless otherwise required by law;
(10) remove any standing water;
(11) know the location and operation of the main water cut-off valve and all electric breakers and how to switch the valve or breakers off at appropriate times to mitigate any potential damage;
(12) water the foundation of the Property at reasonable and appropriate times;
(13) supply and change water filtration systems, including but not limited to, refrigerator water filters; and
(14) promptly notify Landlord, in writing, of all needed repairs.

Paragraph 17B adds that the duty of watering and “mowing, fertilizing, and trimming the yard; (b) controlling pests and weeds in the yard; and (c) removing debris from the yard” unless the parties expressly agree that the landlord will maintain the yard.

Tenant Prohibitions

According to paragraph 17D, Tenant may not:

(1) remove any part of the Property or any of Landlord’s personal property from the Property;
(2) remove, change, add, or rekey any lock;
(3) make holes in the woodwork, floors, or walls, except that a reasonable number of small nails may be used to hang pictures in sheetrock and grooves in paneling;
(4) permit any water furniture on the Property;
(5) install additional phone or video cables, outlets, antennas, satellite receivers, or alarm systems;
(6) alter, replace or remove flooring material, paint, or wallpaper;
(7) install, change, or remove any: fixture, appliance, or non-real-property item listed in Paragraph 2;
(8) keep or permit any hazardous material on the Property such as flammable or explosive materials;
(9) keep or permit any material or item which causes any liability or fire and extended insurance coverage to be suspended or canceled or any premiums to be increased;
(10) dispose of any environmentally detrimental substance (for example, motor oil or radiator fluid) on the Property;
(11) cause or allow any lien to be filed against any portion of the Property; or
(12) disconnect or intentionally damage any carbon monoxide detector, or otherwise violate any local ordinance requiring a carbon monoxide detector in the Property.

Instead of stating a general tenant duty of care, the TXR lease would appear to rely on paragraph 16’s surrender clause: “When this lease ends, Tenant will surrender the Property in the same condition as when received, normal wear and tear excepted. Tenant will leave the Property in a clean condition free of all trash, debris, and any personal property.”

PART SIX:
CATASTROPHIC DAMAGE DURING THE LEASE

Landlord: No Duty to Repair and Restore

The issue of what happens if the improvements on the property are substantially destroyed by natural disaster (hurricane, flood, fire, or freeze) should be of interest to every residential tenant in Texas. When this occurs—and it often does—who has the duty to repair and restore the property? To what degree and in what time frame? If the home is substantially uninhabitable, does the tenant’s obligation to pay rent continue? What happens to the tenant’s security deposit?

Unless a lease expressly states otherwise, a landlord has no general duty to repair and restore a catastrophically damaged residence that has been leased to a tenant. Neither the TXR lease nor the Property Code include such a requirement.

Paragraph 25 of the TXR lease merely incorporates the baseline minimum standard of the Property Code: the landlord has a duty to make repairs after a disaster ONLY if proper notice is given AND the property is total unusable as a residence AND if insurance proceeds are paid:

Prop. Code Sec. 92.054. Casualty Loss [to Rental Property]

(a) If a condition results from an insured casualty loss, such as fire, smoke, hail, explosion, or a similar cause, the period for repair does not begin until the landlord receives the insurance proceeds.

(b) If after a casualty loss the [property is] totally unusable for residential purposes and if the casualty loss is not caused by the negligence or fault of the tenant, a member of the tenant’s family, or a guest or invitee of the tenant, either the landlord or the tenant may terminate the lease by giving written notice to the other any time before repairs are completed.

If the lease is terminated, the tenant is entitled only to a pro rata refund of rent from the date the tenant moves out and to a refund of any security deposit otherwise required by law.

(c) If after a casualty loss the rental premises are partially unusable [then] the tenant is entitled to reduction in the rent in an amount proportionate to the extent the premises are unusable because of the casualty, but only on judgment of a county or district court. A landlord and tenant may agree otherwise in a written lease.

Drawbacks of the Casualty Loss Statute

Several key points are worth noting about this highly-deficient statute:

(1) the landlord has no duty to commence restoration of a damaged property unless it is totally unusable as a residence and even then not before casualty insurance proceeds are received—which could take months;

(2) the statute appears to assume that a duty (or at least a willingness) to repair and restore exists, which is not the case with the TXR lease since the text expressly provides that repairs are made (if at all) at the landlord’s sole discretion—and discretion is not a duty;

(3) the statute assumes (but does not require) that the landlord actually carries casualty insurance, and in sufficient amounts for the right category of loss—which may not be the case;

(4) the statute assumes (but does not require) that insurance proceeds will be applied to repair and restoration of the property—when it is clear that loss payees divert insurance proceeds all the time;

(5) the statute assumes that the insurer will in good faith pay the entire damage claim—when in fact payment may be partial or denied altogether; and

(6) the statute prescribes total unusability as a standard for termination—a subjective, lawsuit-spawning criterion if there ever was one.

What does “totally unusable” mean?

If the pipes have burst and the home is without running water and likely to remain so for weeks, is the property totally unusable within the meaning of the statute? If air conditioning fails and the landlord declines to fix it, is the home totally unusable in a Houston summer? Is a tenant justified in terminating the lease in such instances? Under the express text of the TXR lease, the answer is absolutely not. Under the statute, a strict reading suggests the answer is probably not. Meanwhile, the tenant and his family may be forced out of the residence and without a place to live.

Note also that the tenant is entitled to a prorated rebate of rent monies paid only if there is a suit followed by the judgment of a county or district court. This puts the tenant in the inequitable position of filing an expensive lawsuit to secure a fair remedy that should be clearly set forth in any equitable lease agreement.

Does the tenant have a walk-away remedy?

Can the tenant walk away from a heavily damaged rental home without being culpable of abandonment? Yes, but only in the most extreme circumstances, and only if it is indisputable that the property is “totally unusable for residential purposes and if the casualty loss is not caused by the negligence or fault of the tenant, a member of the tenant’s family, or a guest or invitee of the tenant . . . [in which case] either the landlord or the tenant may terminate the lease by giving written notice to the other any time before repairs are completed.” Prop. Code Sec. 92.054(b).

Paragraph16B(3) of the TXR lease puts the Tenant in breach for abandonment (whether or not notice of termination has been given) if the Tenant walks away from a property that has not, in the opinion of the landlord, been rendered totally unusable for residential purposes. The landlord might argue that some marginal utility remains even if the property has been so seriously and substantially damaged that no normal person would choose to live in it. Result? Without a lawsuit to decide the matter, the tenant continues to be liable for rent on the damaged property even though he and his family are now out of the house and paying for other accommodations.

Tenant’s Obligation to Repair and Restore

It gets worse for the tenant under the TXR lease. According to paragraph 16A, when the lease ends, the tenant must “surrender the Property in the same condition [italics added] as when received, normal wear and tear excepted.” This amounts to nothing less than a legal obligation on the part of the tenant to repair and restore a catastrophically damaged property back to the condition in which it was received (normal wear and tear excepted). There is no exception to this obligation in the case natural disaster during the lease term.

Under the TXR lease, it is the tenant—not the landlord—who has an affirmative obligation to repair and restore the home to its prior condition before surrendering it, even if the home has literally burned to the ground.

Proposed Special Provisions

The following are two examples of custom special provisions that could substantially improve the tenant’s position if there is catastrophic loss or damage. Note that the standard employed below is substantially uninhabitable rather than totally unusable, used alongside a specific time limit which is absent from the TXR lease:

(1) Substantial Uninhabitability: If the Property is made substantially uninhabitable by major casualty loss or natural disaster (flood, freeze, fire, failure of the grid resulting in prolonged absence of utilities, or the like)—and the Property cannot practicably be repaired or restored to substantial habitability within 10 days—then the Lease will automatically end without culpability for abandonment and without fees to Tenant, forfeiture of Tenant’s deposit, credit damage to Tenant, or any other adverse action against Tenant so long as Tenant has fully performed the Lease up to the date of the loss or disaster. After expiration of the 10-day period, Tenant shall have no further obligation to occupy or pay rent on the Property. Tenant shall not have a duty to repair, remediate, or restore the Property after such a loss or disaster. This provision applies irrespective of the presence or absence of Landlord’s casualty insurance coverage or payment thereon.

(2) Prolonged Cessation of Utilities: If water, electricity, gas, or the HVAC unit are not working for any reason (other than the fault of Tenant) for 10 consecutive days or for 20 days (consecutive or not) within any 30-day period, then the Lease will terminate automatically without requirement of termination notice or payment of fees by the Tenant and without forfeiture of tenant’s deposit or harm to Tenant’s credit. After such termination, Tenant will have no further obligation to occupy or pay rent on the Property. Tenant shall NOT have a duty to repair, remediate, or restore the Property after such a utility failure.

(3)Effect on Security Deposit: Major Casualty loss not the fault of Tenant shall not entitle Landlord to confiscate the Security Deposit. A proper accounting and refund must still be made pursuant to Chap. 92 of the Property Code.

Conclusion

The purpose of this article has been to mention several glaring deficiencies in both the Texas Realtors Residential Lease and Chapter 92 of the Property Code. However, this discussion has by no means touched upon all such deficiencies, nor has it mentioned all possible tenant-favorable special provisions that could be included.

The TXR lease is voluntary and, by its own terms, entirely negotiable. Tenants and their agents should consider taking this to heart and utilizing a special provisions addendum to mitigate the landlord-oriented bias of this very one-sided instrument.