USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, Philip Kinkaid, Serena Kramer and David Brooks, Cokinos | Young
contract directly for specified utilities and/or tel - ecommunications services. 6.11 Payment of Property Taxes A tenant of a single-tenant property will typically be responsible for the payment of real estate taxes applicable to the property. This may be accomplished by the tenant agreeing to pay taxes directly to the taxing authority, or the land - lord may be required to pay taxes and then seek reimbursement from the tenant. For multi-tenant properties, landlords will be responsible for the payment of applicable real estate taxes, but tenants will usually be required to reimburse their pro rata share. 6.12 Insurance Issues Tenants in single-tenant buildings are usually required to carry property insurance, covering physical damage to the premises, and liability insurance, which provides financial protection in case the tenant is found liable for injury or dam - age to people or property. In multi-tenant buildings, landlords will carry property insurance, although it is often not actually a lease obligation, while tenants will be required to carry liability insurance covering their premises and may be required to carry property insurance insuring their personal property within the premises. Commercial tenants in Texas have largely been unable to recover damages attributable to COVID-19 under business interruption insur - ance policies, as most business interruption insurance policies only covered losses resulting from interruption of business caused by a direct physical loss or damage to covered property. Several recent cases have found that COVID-19
did not cause a direct physical loss or damage to property. 6.13 Restrictions on the Use of Real Estate Landlords may and usually do impose restric - tions on how a tenant may use its premises, by specifying the tenant’s permitted use in the lease and prohibiting the tenant from using the premises for any other purpose without the land - lord’s consent. Restrictive covenants (ie, private restrictions on the use of real property often imposed by a developer or property owner) and local zoning laws also limit how a tenant may use its premises. 6.14 Tenant’s Ability to Alter and Improve Real Estate Tenant alteration rights are freely negotiable in Texas and typically vary depending on the type of premises and/or lease. For a ground lease, a tenant may be required to construct its own building, while under a multi-tenant lease a ten - ant may be completely prohibited from making any alterations without the landlord’s consent. Landlords may impose any conditions they desire, but the most common are the right to review plans and the right to approve the ten - ant’s contractors. 6.15 Specific Regulations The Texas Property Code has separate rules for residential and commercial leases. For residen - tial leases, the Property Code imposes numer - ous obligations on landlords for the protection of tenants’ rights and their health and safety, and provides tenants with remedies for certain land - lord violations. All leases that are not for residential purposes are classified as commercial leases, and are much less heavily regulated. For commercial
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