H.B. No. 2438
AN ACT
relating to requirements regarding motor vehicle retail
installment transactions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 348.001(3), Finance Code, is amended to
read as follows:
(3) "Holder" means a person who is:
(A) a retail seller; or
(B) the assignee or transferee of [if] a retail
installment contract [or the outstanding balance under the contract
is sold or otherwise transferred, the person to whom it is sold or
otherwise transferred].
SECTION 2. Section 348.007, Finance Code, is amended by
amending Subsection (a) and adding Subsection (a-2) to read as
follows:
(a) Except as otherwise provided by this section, each
[Each] retail installment transaction is subject to this chapter.
(a-2) A retail installment transaction in which a retail
buyer purchases a commercial vehicle is only subject to the
following provisions of this chapter:
(1) Subchapter A, except Section 348.0091 or unless
expressly stated otherwise;
(2) Subchapter B, except Sections 348.102 and 348.123;
(3) Subchapter C, except Sections 348.204(b),
348.206, 348.209, and 348.210;
(4) Subchapter D;
(5) Subchapter E, except Sections 348.404(d) and
348.407; and
(6) Subchapter F, except Sections 348.504(a)(2),
348.514, 348.516, and 348.517.
SECTION 3. Subchapter A, Chapter 348, Finance Code, is
amended by adding Section 348.0091 to read as follows:
Sec. 348.0091. DISCLOSURE OF EQUITY IN TRADE-IN MOTOR
VEHICLE. (a) A retail seller may not accept a trade-in motor
vehicle for a motor vehicle sold under a retail installment
contract unless the retail seller provides to the retail buyer,
before the buyer signs the contract, a completed disclosure of
trade-in equity form prescribed by this section.
(b) The finance commission shall by rule adopt a standard
form for the disclosure of the equity in a retail buyer's trade-in
motor vehicle.
(c) The form adopted by the finance commission under
Subsection (b), at a minimum, must:
(1) contain:
(A) the name of the retail buyer;
(B) the name, address, and telephone number of
the retail seller;
(C) the make, model, year, and vehicle
identification number of the trade-in motor vehicle;
(D) the date of the retail installment
transaction;
(E) the amount offered by the retail seller to
the retail buyer for the trade-in motor vehicle;
(F) the amount the retail buyer owes on the
trade-in motor vehicle as of the date of the retail installment
transaction;
(G) a statement indicating whether the retail
buyer's equity in the trade-in motor vehicle is positive or
negative;
(H) a disclosure containing substantially
similar words to the following: "If the EQUITY amount is NEGATIVE,
the value the retail seller is offering you for your trade-in motor
vehicle is less than what you currently owe on your trade-in. The
amount of negative equity may be further reduced by the amount of
any cash down payment and manufacturer's rebate and may be included
in the amount financed under your retail installment contract as an
itemized charge.";
(I) the cash price of the vehicle being purchased
under the retail installment transaction; and
(J) the amount financed under the retail
installment contract;
(2) include a space for the signature of both the
retail seller and retail buyer and the printed name of the retail
seller; and
(3) be signed and dated by the retail seller and retail
buyer.
(d) The retail seller is solely responsible for the content
and delivery of the disclosure form required by Subsection (a). An
assignee of a retail installment contract may not be held
responsible for a retail seller's failure to comply with the
requirements of this section.
(e) This section does not create a private right of action.
The commissioner has exclusive jurisdiction to enforce this
section.
SECTION 4. Section 348.004(a), Finance Code, is amended to
read as follows:
(a) The cash price is the price at which the retail seller
offers in the ordinary course of business to sell for cash the goods
or services that are subject to the transaction. An advertised
price does not necessarily establish a cash price.
SECTION 5. Sections 348.104(b), (c), (d), and (h), Finance
Code, are amended to read as follows:
(b) The add-on charge is $7.50 per $100 per year on the
principal balance for[:
[(1)] a new [domestic] motor vehicle, other than a
heavy commercial vehicle, designated by the manufacturer by a model
year that is not earlier than the year in which the sale is made[; or
[(2) a new foreign motor vehicle, other than a heavy
commercial vehicle].
(c) The add-on charge is $10 per $100 per year on the
principal balance for:
(1) a new [domestic] motor vehicle not covered by
Subsection (b);
(2) a used [domestic] motor vehicle designated by the
manufacturer by a model year that is not more than two years before
the year in which the sale is made; or
(3) [a used foreign motor vehicle that is not more than
two years old; or
[(4)] a new or used heavy commercial vehicle
designated by the manufacturer by a model year that is not more than
two years before the year in which the sale is made [old].
(d) The add-on charge is $12.50 per $100 per year on the
principal balance for a used motor vehicle not covered by
Subsection (c) that is[:
[(1)] a [domestic] motor vehicle designated by the
manufacturer by a model year that is not more than four years before
the year in which the sale is made[; or
[(2) a foreign motor vehicle that is not more than four
years old].
(h) For the purpose of a computation under this section, 16
[15] or more days of a month may be considered a full month.
SECTION 6. Section 348.404, Finance Code, is amended by
amending Subsection (b) and adding Subsection (d) to read as
follows:
(b) A retail seller, in connection with a retail installment
transaction, may:
(1) advance money to retire:
(A) an amount owed against a motor vehicle used
as a trade-in or a motor vehicle owned by the buyer that has been
declared a total loss by the buyer's insurer; or
(B) the retail buyer's outstanding obligation
under a motor vehicle lease contract, a credit transaction for the
purchase of a motor vehicle, or another retail installment
transaction; and
(2) finance repayment of that money in a retail
installment contract.
(d) A retail seller may include money advanced under
Subsection (b) in the retail installment contract only if it is
included as an itemized charge and may disclose money advanced
under Subsection (b) in any manner permitted by 12 C.F.R. Part 226
(Regulation Z) adopted under the Truth in Lending Act (15 U.S.C.
Section 1601 et seq.). Section 349.003 does not apply to this
subsection. This subsection does not create a private right of
action. The commissioner has exclusive jurisdiction to enforce
this subsection.
SECTION 7. Section 348.408, Finance Code, is amended by
adding Subsection (c) to read as follows:
(c) A retail seller must pay in full the outstanding balance
of a vehicle traded in not later than the 25th day after the date
that:
(1) the retail installment contract is signed by the
retail buyer and the retail buyer receives delivery of the motor
vehicle; and
(2) the retail seller receives delivery of the motor
vehicle traded in and the necessary and appropriate documents to
transfer title from the buyer.
SECTION 8. Section 348.501, Finance Code, is amended by
amending Subsection (b) and adding Subsection (c) to read as
follows:
(b) A person who is required to hold a license under this
chapter must ensure that each office at which retail installment
transactions are made, serviced, held, or collected under this
chapter is licensed or otherwise authorized to make, service, hold,
or collect retail installment transactions in accordance with this
chapter and rules implementing this chapter.
(c) A person may not use any device, subterfuge, or pretense
to evade the application of this section.
SECTION 9. Section 348.513(a), Finance Code, is amended to
read as follows:
(a) The finance commission may adopt rules to:
(1) enforce this chapter; or
(2) modify the standard form as required by Section
348.0091 to:
(A) conform to the provisions of the Truth in
Lending Act (15 U.S.C. Section 1601 et seq.) or a regulation issued
under authority of that Act;
(B) address any official commentary or other
interpretation by a federal agency relating to the Truth in Lending
Act (15 U.S.C. Section 1601 et seq.) or a regulation issued under
authority of that Act; or
(C) address a judicial interpretation by a state
or federal court relating to the Truth in Lending Act (15 U.S.C.
Section 1601 et seq.) or a regulation issued under authority of that
Act.
SECTION 10. Sections 348.514(c) and (d), Finance Code, are
amended to read as follows:
(c) During an examination or investigation the commissioner
or the commissioner's representative may administer oaths and
examine any person under oath on any subject pertinent to a matter
that the commissioner is authorized or required to consider,
investigate, or secure information about under this chapter.
(d) All information relating to the examination or
investigation process [Information obtained under this section] is
confidential, including:
(1) information obtained from the license holder;
(2) the examination report;
(3) instructions and attachments; and
(4) correspondence between the license holder and the
commissioner or the commissioner's representative relating to an
examination or investigation of the license holder.
SECTION 11. The heading to Section 348.517, Finance Code,
is amended to read as follows:
Sec. 348.517. LICENSE HOLDER'S RECORDS; DOCUMENT RETENTION
REQUIREMENTS.
SECTION 12. Section 348.517(b), Finance Code, is amended to
read as follows:
(b) A license holder shall keep the record until the later
of:
(1) the fourth [third] anniversary of the date of the
[last payment was made on the] retail installment transaction; or
(2) the second anniversary of the date on which the
final entry is made in the record.
SECTION 13. (a) As soon as practicable after the effective
date of this Act, the Finance Commission of Texas shall adopt the
form required by Section 348.0091, Finance Code, as added by this
Act.
(b) Notwithstanding Section 348.0091, Finance Code, as
added by this Act, a retail seller is not required to comply with
that section until the Finance Commission of Texas prescribes the
form required by that section.
SECTION 14. (a) Except as provided by Subsection (b) of
this section, this Act takes effect September 1, 2009.
(b) Section 348.007, Finance Code, as amended by this Act,
takes effect only if House Bill 4361 or Senate Bill 1965, proposed
by the 81st Legislature, Regular Session, 2009, relating to the
regulation of retail installment contracts for commercial
vehicles, is passed and becomes law. If neither bill becomes law,
the change in law made by this Act to Section 348.007, Finance Code,
has no effect.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 2438 was passed by the House on May
11, 2009, by the following vote: Yeas 144, Nays 0, 3 present, not
voting; and that the House concurred in Senate amendments to H.B.
No. 2438 on May 29, 2009, by the following vote: Yeas 142, Nays 0,
2 present, not voting.
______________________________
Chief Clerk of the House
I certify that H.B. No. 2438 was passed by the Senate, with
amendments, on May 27, 2009, by the following vote: Yeas 31, Nays
0.
______________________________
Secretary of the Senate
APPROVED: __________________
Date
__________________
Governor