H.B. No. 2797 amends the Local Government Code by adding a new subchapter that outlines the authority of home-rule municipalities in Texas to regulate the occupancy of dwelling units. The bill specifies that municipalities cannot adopt or enforce zoning ordinances that limit the number of occupants in a dwelling unit based on age, familial status, occupation, relationship status, or the degree of relatedness among occupants. However, it allows municipalities to impose occupancy limits that are not more restrictive than one occupant per sleeping room with a minimum floor area of 70 square feet, plus one additional occupant for every additional 50 square feet of floor area in the same room.

Additionally, the bill clarifies that municipalities can still enforce health and safety standards related to occupancy, such as those found in building and fire codes, and it prohibits municipalities from requiring real estate brokers or agents to submit leases for review to determine the number of unrelated occupants. The legislation also states that it does not affect the ability of property owners' associations to enforce their own rules or deed restrictions. Property owners may take legal action against municipalities for violations of this subchapter, with the possibility of recovering damages and attorney's fees. The act is set to take effect on September 1, 2025.

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