Bills expected to raise tenant late fees advance in Texas House and Senate

As the Texas Legislature swings into high gear, we’ll be covering committee hearings and votes on key bills related to housing. Follow updates and our full bill tracker here.

This week at the Texas Legislature, companion bills regulating the fees for tenants behind on their rent moved closer to passage. HB 1821 by Rep. Travis Clardy was approved by the House Business & Industry Committee, while SB 921 by Sen. Charles Perry was left pending after a hearing in the Senate Committee on Business & Commerce.

The bills propose setting a cap on the fees charged to tenants after initially failing to pay rent on time, and subsequent daily fees until the rent is paid. Doing so would replace the current language in the state property code that requires late fees to be limited to a “reasonable estimate of uncertain damages to the landlord…that result from late payment of rent.”

As we have previous written, advocates are concerned that setting a cap would not limit excessive late fees but rather incentivize landlords to increase fees up to the new legal limit, rather than set fees based on a “reasonable estimate of damages.” Houston attorney Marty Weber testified before the House committee that because the actual daily damage late rent causes landlords is only around $5, “It is impossible under current law for an apartment owner to justify a $75 or $100 late fee.”

Setting a higher legal cap could change that. The bills would set the initial fee cap at 8 percent of monthly rent – well above the current industry standard, as noted by the Austin American-Statesman.

“No matter what the limit is set at, people will push it — just look at how we drive,” Texas Housers fair housing planner Charlie Duncan said at the hearing for HB 1821.

Moreover, the proposed legislation sets a cap on subsequent daily fees that also well exceeds what landlords typically charge. According to Austin Tenants’ Council executive director Juliana Gonzales, the usual daily fee assessed in Austin is around $10. The bills’ original language sets the daily cap at 2 percent of monthly rent – or $20 a day for a $1,000 apartment.

A committee substitute on HB 1821 lowers the daily cap to 1 percent and adds a limit of 15 days for daily fees, after advocates testified that the original legislation would permit landlords to charge tenants in perpetuity. The new version, while slightly more tenant-friendly, still sets such a high cap on initial fees that it is unlikely to sway advocates.

SB 921 still includes the original caps of 8 percent initial and 2 percent daily, with no daily fee limit.

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