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Important reminders for coping with the impact of Hurricane Harvey

Synopsis

As many parts of Texas begin to assess damage from Hurricane Harvey/Tropical Storm Harvey, the Texas Apartment Association wants to remind members of some important considerations.


Key takeaways

  • Texas law prohibits charging excessive or exorbitant fees for certain life necessities, including housing, following a disaster.
  • TAA members should keep their property’s current situation in mind when dealing with September 1 rental due dates. There is no obligation to abate rent or accept late rent, but nothing precludes members from voluntarily abating all or part of the rent as a gesture of goodwill and compassion.
  • If you believe that catastrophic damage is substantial, or that performance of needed repairs poses a danger to residents, Paragraph 26.5 of the TAA Lease allows the owner to terminate the lease by giving residents at least 5 days’ written notice.
  • Filing insurance claims promptly when able is important, but there is a rash of misinformation circulating concerning a change in Texas law that takes effect September 1.

Hurricane Harvey/Tropical Storm Harvey has already caused unprecedented flooding in the Houston area, as well as substantial damage along the Texas coast and further inland. Although more rain and more damage is still anticipated, here are some important reminders from the Texas Apartment Association as our members begin to assess and deal with the storm’s damage.

Price gouging prohibited

Texas law prohibits charging excessive or exorbitant fees for certain life necessities, including housing, following a disaster. The Office of the Attorney General Consumer Protection line accepts price-gouging complaints.

Properties that use dynamic pricing should be careful not to automatically adjust rents in a way that may be perceived as price gouging.

Here is the relevant state law:

Section 17.46(b) of the Texas Deceptive Trade Practices-Consumer Protection Act provides that it is a false, misleading or deceptive act or practice to take advantage of a disaster declared by the Governor under Chapter 418, Government Code, by:

  1. Selling or leasing fuel, food, medicine or another necessity at an exorbitant or excessive price; or
  2. Demanding an exorbitant or excessive price in connection with the sale or lease of fuel, food, medicine or another necessity.

September 1 rent payments

Rental property owners should keep their property’s current situation in mind when dealing with September 1 rental due dates. Under the TAA Lease, there is no obligation to abate rent or accept late rent, but nothing precludes TAA members from voluntarily abating all or part of the rent as a gesture of goodwill and compassion.

Considerations may include the extent of damage on your property, the availability of your staff to accept rental payments, your plans to repair damage, as well as other factors. Ultimately, this is a business decision.

Termination due to natural disaster or catastrophe

If you believe that catastrophic damage is substantial, or that performance of needed repairs poses a danger to residents, Paragraph 26.5 of the TAA Lease allows the owner to terminate the lease by giving residents at least 5 days’ written notice. Find a sample notice for this purpose and a similar notice for tax-credit properties.

The Texas Property Code does not dictate how this notice should be delivered. You should attempt to deliver the notice to the resident by the best available means that will allow you an opportunity to prove that notice was delivered. See “Rental Housing Owners’ Rights and Legal Responsibilities after a Natural Disaster or Other Catastrophe.”

Insurance claims and changes effective September 1

Filing insurance claims promptly when able is important, but there is a rash of misinformation circulating concerning a change in Texas law that takes effect September 1. While damage assessments and documentation are key to both relief efforts and the claims process, protecting life and property should be your primary concern when conditions are still dangerous.

HB 1774, designed to limit lawsuit abuses in weather-related cases, goes into effect on September 1. According to the Texas Insurance Council, under this new property litigation law:

  • The claims process for filing a claim has not changed. The new law only impacts lawsuits filed after September 1, when there is a dispute between the insured and the insurer.
  • Consumers still have all legal remedies available under consumer protection laws in the event an insurer engages in bad-faith conduct.
  • The Texas Department of Insurance is available to handle any complaints about insurers.
  • The new law does not take away any right to sue and does not diminish any cause of action that a person has against an insurance company. HB 1774 does, however, require notice before a lawsuit is filed, and makes some other changes that impact lawsuits against insurers, including the penalty interest rate.
  • The pre-lawsuit notice is effective for all “actions filed on and after the effective date, which is September 1, 2017.” Any lawsuit filed after September 1, 2017, would be governed by the new law.

HB 1774 also only affects homeowners’ insurance claims, which does not cover flood or wind damage claims.

TAA members should contact their insurance companies directly to file claims, and work with your adjuster to identify all damages and coverages.

How you can help

The Texas Apartment Association is making a $10,000 donation to the American Red Cross to assist with Harvey relief efforts. The National Apartment Association also has pledged $10,000 to the American Red Cross.

If you’d like to help contribute to Harvey relief efforts, text REDCROSS to 90999 to donate $10 to American Red Cross Disaster Relief or visit The American Red Cross.

Please share any of your industry efforts with TAA and NAA by emailing Michelle Helmers at TAA (michelle@taa.org) or NAA (communications@naahq.org). Consider sharing your efforts on TAA’s Facebook page and tag any related social media posts #HelpForHouston.

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