In short, it depends. In Texas, a lease may terminate when a building is condemned, but whether or not it does depends on the extent of the condemnation, the terms of the lease, and the impact on habitability .
Condemnation refers to the government’s exercise of eminent domain. Eminent domain is the power of the government to take private property for public use with just compensation. This can also be done if there is a declaration that a property is uninhabitable due to safety violations.
Under Texas Property Code Section 21.001 and the following sections that govern eminent domain, when a property is fully condemned and taken for public use, the lease typically terminates because the tenant can no longer occupy the premises.
In such cases, a residential tenant may be entitled to just compensation for the unexpired portion of the lease or any improvements that have been made to the property, depending on the lease terms and whether the tenant has a compensable interest.
If only part of the property was condemned, the lease may not automatically terminate. Courts will consider whether or not the partial taking substantially impairs the tenant’s ability to use the property as intended. If the condemnation renders the premises uninhabitable or unusable, then the lease may be deemed terminated by operation of law or under a condemnation clause in the lease agreement.
It is also worth noting that if a building is condemned for code violations, rather than for eminent domain, tenants may have the right to terminate the lease under habitability doctrines or local housing codes.
In either of the cases above, tenants should be sure to review their lease for specific condemnation provisions and set up a legal consultation in Texas with a Texas landlord-tenant lawyer who can evaluate their case and help them understand their rights and potential claims for relocation or compensation.
Is Rent Paid After the City Housing Authority or the Government Takes Over Returnable to Me?
Yes, in Texas, any rent that was paid after a property is condemned and taken over by a government entity, such as a city housing authority, is generally returnable to the tenant. This is especially true if the lease is terminated due to the condemnation.
Once the government takes legal title to the property through eminent domain, the tenant’s obligation to pay rent will also typically end. Then, any prepaid rent for the period after the taking may be subject to refund.
Once again, Texas law governing eminent domain is found in Texas Property Code Section 21.001 et seq., which outlines the exact procedures for condemnation and compensation. Although the statute primarily addresses property owners, tenants may also have a claim for compensation if their leasehold interest is affected.
In fact, courts have recognized that tenants may be entitled to recover the value of the unexpired lease term and any prepaid rent, particularly if the lease is terminated as a result of the condemnation. In order to seek a refund, tenants should do the following:
- Review their lease for any condemnation clause that outlines their legal rights and available remedies
- Contact the condemning authority to inquire about the process for filing a claim
- Consider consulting with an attorney knowledgeable in eminent domain law to help document losses and pursue compensation, especially if relocation costs or improvements are involved
What Happens if Only Part of the Land, Property, or Building Is Condemned in Texas?
When only part of a property is condemned in Texas, such as a partial taking for a public project, then the lease does not automatically terminate. Instead, the tenant’s rights will depend on the extent of the taking, the impact on the tenant’s use of the premises, and the terms of the lease agreement.
As noted above, if the partial condemnation substantially interferes with the tenant’s ability to use the property as intended, then the tenant may be entitled to terminate the lease or seek a reduction in rent.
Under Texas Property Code Chapter 21, tenants may have a compensable interest if their leasehold is affected. Courts will consider whether or not the remaining portion of the property still serves the tenant’s intended use. If not, the tenant may be released from further obligations and may also be eligible for compensation for the value of the unexpired lease term or any improvements that they made to the property.
Many commercial and residential leases include a condemnation clause, which outlines what happens in the event of a partial or full taking. These clauses often specify whether or not the lease terminates, whether rent is abated, and whether the tenant is entitled to any portion of the condemnation award.
If you’re a tenant that is facing partial condemnation, it is recommended to review your lease regarding the condemnation language present. There is likely a clause within the lease labeled “Tenants’ Rights Upon Condemnation” that will outline the legal remedies available and the procedures for getting the remedies. It is also recommended to consult an attorney to determine whether or not you can claim compensation or terminate the lease.
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Can a Tenant Recover for the Remaining Part of the Lease?
Yes, a tenant in Texas may be entitled to recover compensation for any unexpired portion of their lease if the property is condemned. This is especially true when the lease is terminated as a result of the taking.
This right stems from the legal principle that a leasehold interest is a form of property, and under Texas Property Code Chapter 21, tenants may be compensated for the loss of that interest when it is taken through eminent domain.
The amount recoverable typically reflects the market value of the leasehold, which is the difference between the rent the tenant is obligated to pay and the fair market rental value of the premises for the remainder of the lease term.
If the tenant was paying below-market rent, this “leasehold advantage” may have real monetary value. Tenants may also be eligible to recover for improvements they made to the property, relocation expenses, or other damages, depending on their circumstances and the terms of the lease.
However, this recovery is not automatic. If the lease includes a condemnation clause that waives the tenant’s right to compensation or provides for automatic termination upon condemnation, the tenant may be barred from recovering. It is important to note that courts in Texas generally uphold such clauses if they are clearly stated. Therefore, the lease agreement plays a critical role in determining whether a tenant can recover, and how much if they can.
How Often Do Condemnation Clauses Appear in Leases?
In Texas, condemnation clauses are regularly found in both residential and commercial lease agreements. They are even more common in long-term or commercial contexts. Condemnation provisions are designed to clarify what happens if the property is acquired by the government under eminent domain.
They typically address whether the lease ends upon condemnation and how any compensation is divided between the landlord and tenant. In commercial leases especially, condemnation clauses are often carefully drafted and negotiated to reflect how the parties want to manage risk. Although not legally required, these clauses are widely also used to help avoid disputes over rent obligations and entitlement to proceeds.
Without a condemnation clause, tenants may still have legal grounds to claim compensation for the loss of their leasehold interest under Texas law. However, the absence of clear terms can lead to uncertainty or legal battles. As such, a well-crafted condemnation clause helps both landlords and tenants know where they stand in the event of government action.
Do I Need To Contact a Landlord-Tenant Lawyer in Texas?
If you are a tenant that is at a property that is being condemned, then it is recommended that you immediately consult with an experienced Texas landlord-tenant lawyer. LegalMatch can assist you in locating and setting up a consultation with a landlord-tenant near you.
A lawyer will be able to help you determine what legal options you have under the terms of your lease, and they will also be able to help you pursue any available legal remedies. Having an attorney who is familiar with both state and federal law will greatly increase your chances of successfully recovering what you are entitled to under your lease. An attorney can also represent you in court, should a court hearing on the matter become necessary.