San Antonio Court of Appeals Decision Limits Shifting of Costs for Damages to Rental Units

San Antonio Texas Real Estate Attorney Trey Wilson wrote:

As real estate lawyers in San Antonio, Texas, we frequently receive calls relating to disputes between landlords and tenants over which party has responsibility to pay for damage to a rental property or its contents (usually the tenant's personal property).  Liability is frequently determined by reviewing the express terms of the lease and a simple assessment of which party caused or permitted the damages.  

Sometimes, however, it is unclear who (if anybody) caused the damages. On other occasions, it is clear that neither the landlord nor the tenant caused the damages (think criminal acts of uninvited third parties, Acts of God, etc.).  In these cases, Chapter 92 of the Texas Property Code and the lease's specific damages provisions are closely scrutinized, as both speak to assigning liability. However, as recently articulated by the Fourth Court of Appeals, there do exist limits on the rights of parties to contract (by lease) for liability for damages.

In Philadelphia Indem. Ins. Co. v. White, 421 SW 3d 252 (Tex. App. -- San Antonio, 2013), the Fourth Court was confronted with a lease that expressly imposed contractual liability on the tenant for all damages not caused by the landlord. During the term of this lease, a tenant-owned dryer malfunctioned, causing a fire in the tenant's rental unit and several neighboring units.  The landlord's insurance carrier paid for damages, and then filed suit against the tenant on a subrogation claim. A jury determined that the tenant was not negligent in causing the fire, but that she had breached the lease when she failed to pay the landlord for damages upon demand.  In essence, the jury determined that the tenant had not negligently caused the fire, but, nevertheless, was bound to pay the landlord for damages because the landlord was not responsible for causing the fire, either.  The trial court disagreed with the jury, and entered Judgment NOV.

On appeal, the Fourth Court affirmed the trial court based upon its finding that the lease was void as against public policy, because all it required to impose liability on a tenant was a showing that the damage was not caused by the landlord. Specifically, the Court stated: 

We believe the public policy of Texas, as expressed in the Property Code, is that tenants may be held responsible for damages they, their cotenants, or their guests cause, and a landlord and tenant have the freedom to contractually agree a tenant will pay for specific kinds of repair without a showing that the tenant caused the damage. See Churchill Forge, 61 S.W.3d at 370-73. Absent from this legislatively-expressed public policy is the imposition of contractual liability on a tenant for any and all damages to the apartment complex whenever the damages are not caused by the landlord. 

White, 421 SW 3d at 258. In discussion leading to this conclusion, the Court cited TEX. PROP.CODE § 92.006, but recognized that the statute applied only to specifically enumerated  kinds of repairs that the parties can, by contract, shift the duty to pay for from the landlord to the tenant. Ostensibly, leases that purport to shift other (or all ) liability to the tenant may be void.

When drafting or negotiating a residential lease agreement, it is incumbent on the parties to recognize the limitations that Chapter 92 of the Texas Property Code imposes on the ability of parties to freely contract regarding (among other things) liability for general damages to the rental unit.