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.

Members of the Texas Association of REALTORS® can call the TAR Legal Hotline at 800-873-9155 with questions about the law and related matters. Your prospects and clients can access legal resources related to Harvey from the State Bar of Texas at texasbar.com/disasters.