USA – TEXAS Law and Practice Contributed by: Taylor Cooksey, Philip Kinkaid, Serena Kramer and David Brooks, Cokinos | Young
tenancies, the Property Code imposes limita - tions on a landlord’s ability to lock out a tenant or cut off their utilities, and requires landlords to return security deposits within a specified time. 6.16 Effect of the Tenant’s Insolvency A tenant becoming insolvent may be an event of default under a lease, entitling the landlord to pursue legal remedies. However, the practical impact of a tenant’s insolvency depends primari - ly on whether the tenant has filed for bankruptcy. Under bankruptcy law, an automatic stay arises the moment a tenant files for bankruptcy, which prohibits a landlord from evicting the tenant regardless of what the lease provides. Upon fil - ing for bankruptcy, a tenant (or bankruptcy trus - tee) has 120 days to accept or reject the lease; this period may be extended for an additional 90 days for good cause. During this period, a land - lord cannot evict a tenant without the approval of the bankruptcy court. 6.17 Right to Occupy After Termination or Expiry of a Lease A tenant’s right to occupy the premises after ter - mination or expiration typically depends on the terms of the lease. It is common for commercial leases to contain a holdover provision, which may allow a tenant to remain on the premises after expiration on agreed-upon terms. For leas - es without a holdover provision, a tenant does not have a right under Texas law to remain on the property after the termination or expiration of the lease. However, such a right may arise if the tenant continues to pay rent and the landlord continues to accept such payments. 6.18 Right to Assign a Leasehold Interest Under Texas law, a tenant does not have the right to assign its leasehold interest without the landlord’s consent. However, most commercial
leases will include assignment provisions permit - ting assignment to certain types of pre-approved assignees. The most common requirements that landlords impose on assignments include the right to review the proposed assignee’s finan - cial strength, the requirement that the assignee assumes the tenant’s obligations in writing, and (in the case of many assignees) an agreed per - sonal guaranty. 6.19 Right to Terminate a Lease For commercial leases, each party usually has the right to terminate the lease if the other par - ty defaults and fails to cure its default within a specified period of time. If a landlord terminates due to a tenant default and the tenant refuses to leave, the landlord must evict the tenant via judicial process. For residential leases, in addition to termination due to a landlord default, tenants have the right to terminate the lease under certain conditions, such as if: • the landlord has failed to keep the property habitable; • the tenant is a victim of domestic violence; • the landlord fails to provide essential services; or • the tenant is in the military and is called to active duty. 6.20 Registration Requirements Leases in Texas do not need to be registered with local or state authorities. They must be executed by the parties or their authorised representa - tives, but no witnesses or acknowledgements are required. Leases are usually not recorded in property records; however, memoranda of leas - es are sometimes recorded, particularly in the case of ground leases or other significant leases. A memorandum of lease must be executed and
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