New Laws Affecting Property Managers
Several bills with consequences for property managers were passed into law during the regular session of the 82nd Texas Legislature, including:
Control of rent. SB 747, the TREC Housekeeping Bill, closes a licensing loophole by requiring real estate licenses for third parties who control the acceptance of deposits or rent from a resident of a single-family residential property unit. Effective: Sept. 1, 2011
Pauper’s affidavit. HB 1111 requires the justice court on request to immediately issue a writ of possession, without hearing, if a tenant fails to pay the initial rent deposit into the justice court registry within five days of the date the tenant filed the pauper’s affidavit. Effective: Jan. 1, 2012
Smoke alarms and fire extinguishers. HB 1168 requires at least one smoke alarm in each bedroom or in the room used for sleeping, in the case of an efficiency unit. In addition, if multiple bedrooms are served by the same hallway, there must be a smoke alarm in the hallway; and if the unit has more than one level, there must be a smoke alarm on each level. If the dwelling was occupied as a residence before Sept. 1, 2011, or a certificate of occupancy was issued before that date, a smoke alarm may be powered by battery and is not required to be interconnected with other smoke alarms.
Also, if a landlord has installed a 1A10BC residential fire extinguisher or other non-rechargeable fire extinguisher, the landlord must inspect the fire extinguisher at the beginning of a tenant’s possession and within a reasonable time after receiving a written request from the tenant. Finally, a landlord at the landlord’s expense is required to repair or replace a non-functioning fire extinguisher, one that does not have the correct pressure as recommended by the manufacturer, or one the tenant has used for a legitimate purpose. Effective: Sept. 1, 2011
Certificate of occupancy. HB 1862 provides remedies to a tenant against a landlord if a municipality or county revokes a certificate of occupancy because of a landlord’s failure to maintain the premises. Effective: Sept. 1, 2011
Change to the Fair Credit Reporting Act affect property managers
What’s the change?
The FCRA already requires a landlord to provide an applicant with notice of any adverse action (Adverse Action Notice) taken based on information obtained from the applicant’s consumer report. The amendment goes one step further by requiring the disclosure of an applicant’s credit score when the adverse action is based in whole or in part on the applicant’s credit score. This change became effective on July 21, 2011.
What does this mean for property managers?
If you take an adverse action based on an applicant’s credit score, you must adhere to the credit score disclosure requirements. Remember that an adverse action includes any action taken that is unfavorable to the applicant, which may include denying an applicant or requiring a higher security deposit.
How to comply?
You must disclose the following:
- the numerical credit score used in making the credit decision
- the range of possible credit scores under the model used
- the top 4 key factors that adversely affected the applicant’s credit score (or the top 5 if the “number of inquiries” made with respect to that consumer report is a key factor)
- the date on which the credit score was created
- the name of the person or entity that provided the credit score
When are the credit score disclosure requirements not applicable?
If you use other information in an applicant’s consumer report but not the credit score to base your decision, you will not be subject to the credit score disclosure requirements. However, you still have to provide the Adverse Action Notice that was already required under the FCRA. Also, if you use a tenant-screening company that creates its own model that is not a credit score, you are not subject to the credit score disclosure requirements.
For more information, click here or call the Legal Hotline at 800-873-9155.
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