Texas 2009 - 81st Regular

Texas Senate Bill SB1965 Compare Versions

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1	1	S.B. No. 1965
2	2
3	3
4	4	AN ACT
5	5	relating to the regulation of retail installment contracts for
6	6	commercial vehicles.
7	7	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	8	SECTION 1. Subsection (f), Section 307.051, Finance Code,
9	9	is amended to read as follows:
10	10	(f) Collateral protection insurance does not include
11	11	insurance coverage that:
12	12	(1) is purchased by the creditor for which the debtor
13	13	is not charged;
14	14	(2) is purchased at the inception of a credit
15	15	transaction in which the debtor is a party or to which the debtor
16	16	agrees, whether or not costs are included in a payment plan under
17	17	the credit transaction;
18	18	(3) is maintained by the creditor for the protection
19	19	of collateral that comes into the possession or control of the
20	20	creditor through foreclosure, repossession, or a similar event;
21	21	(4) is credit insurance, mortgage protection
22	22	insurance, insurance issued to cover the life or health of the
23	23	debtor, or any other insurance maintained to cover the inability or
24	24	failure of the debtor to make payment under the credit agreement;
25	25	(5) is title insurance; [or]
26	26	(6) is flood insurance required to be placed by
27	27	creditors under Section 102, National Flood Insurance Act of 1968
28	28	(42 U.S.C. Section 4012a); or
29	29	(7) is insurance on a commercial vehicle securing a
30	30	retail installment contract under Chapter 348.
31	31	SECTION 2. Subsection (a), Section 341.502, Finance Code,
32	32	is amended to read as follows:
33	33	(a) A contract for a loan under Chapter 342, a retail
34	34	installment transaction under Chapter 348 other than a contract for
35	35	a commercial vehicle, or a home equity loan regulated by the Office
36	36	of Consumer Credit Commissioner must be:
37	37	(1) written in plain language designed to be easily
38	38	understood by the average consumer; and
39	39	(2) printed in an easily readable font and type size.
40	40	SECTION 3. Section 348.001, Finance Code, is amended by
41	41	adding Subdivision (1-a) to read as follows:
42	42	(1-a) "Commercial vehicle" means a motor vehicle that
43	43	is not used primarily for personal, family, or household use. The
44	44	term includes:
45	45	(A) a motor vehicle with a gross vehicular weight
46	46	of 10,001 pounds or more;
47	47	(B) a motor vehicle that will be owned by a
48	48	corporation, limited liability company, limited partnership, or
49	49	other business entity formed, organized, or registered in this
50	50	state, another state, or another country; and
51	51	(C) a motor vehicle that will be part of a fleet
52	52	of five or more vehicles owned by the same person.
53	53	SECTION 4. Subchapter A, Chapter 348, Finance Code, is
54	54	amended by adding Section 348.0015 to read as follows:
55	55	Sec. 348.0015. PRESUMPTION REGARDING NONCOMMERCIAL
56	56	VEHICLES; EXCEPTION. (a) A motor vehicle that is not described by
57	57	Section 348.001(1-a)(A), (B), or (C) or a motor vehicle that is of a
58	58	type typically used for personal, family, or household use, as
59	59	determined by finance commission rule, is presumed not to be a
60	60	commercial vehicle.
61	61	(b) Notwithstanding Subsection (a), if a retail buyer
62	62	represents in writing that a motor vehicle is not for personal,
63	63	family, or household use, or that the vehicle is for commercial use,
64	64	a retail seller or holder to whom the representation is made may
65	65	rely on that representation unless the retail seller or holder, as
66	66	applicable, has actual knowledge that the representation is not
67	67	true.
68	68	SECTION 5. Subchapter A, Chapter 348, Finance Code, is
69	69	amended by adding Section 348.0051 to read as follows:
70	70	Sec. 348.0051. CONTRACTS FOR COMMERCIAL VEHICLES;
71	71	ADDITIONAL CHARGES PERMITTED. (a) Notwithstanding Sections
72	72	348.004 and 348.005 and in addition to the amounts allowed under
73	73	those sections, the following amounts may be included as an
74	74	itemized charge or in the cash price in a retail installment
75	75	contract for a commercial vehicle:
76	76	(1) any fees prescribed by law;
77	77	(2) any amounts charged by a titling or registration
78	78	service relating to the sale;
79	79	(3) any other amount agreed to by the retail buyer and
80	80	retail seller, including amounts payable to the retail seller or
81	81	another person for the provision of goods or services relating to:
82	82	(A) the commercial vehicle;
83	83	(B) the sale or use of the commercial vehicle; or
84	84	(C) the retail buyer's business in which the
85	85	commercial vehicle will be used; and
86	86	(4) an amount paid to the retail seller or other person
87	87	as consideration for the agreement of the holder of the retail
88	88	installment contract to waive:
89	89	(A) all or part of the difference between the
90	90	amount owed under a retail installment contract and the amount paid
91	91	under a physical damage insurance policy maintained by the retail
92	92	buyer or its assign, in the event the vehicle is a total loss;
93	93	(B) all or part of the amount owed under the
94	94	retail installment contract, in the event of the death of the retail
95	95	buyer; or
96	96	(C) one or more payments owed under the retail
97	97	installment contract, in the event of the disability of the retail
98	98	buyer.
99	99	(b) If a charge under Subsection (a)(4) is included in the
100	100	contract, the contract and any agreement to waive an amount
101	101	described by Subsection (a)(4) must each conspicuously disclose
102	102	that the waiver is optional.
103	103	(c) Notwithstanding any other law, the amount described by
104	104	Subsection (a)(4) is not a charge for insurance, and the sale,
105	105	provision, or waiving of a balance owed or other action relating to
106	106	a waiver of all or part of the amount owed under a retail
107	107	installment contract for a commercial vehicle is not considered
108	108	insurance or engaging in the business of insurance.
109	109	SECTION 6. Subsections (c) and (d), Section 348.006,
110	110	Finance Code, are amended to read as follows:
111	111	(c) For a documentary fee to be included in the principal
112	112	balance of a retail installment contract:
113	113	(1) the retail seller must charge the documentary fee
114	114	to cash buyers and credit buyers;
115	115	(2) the documentary fee may not exceed:
116	116	(A) $50 for a motor vehicle retail installment
117	117	contract; or
118	118	(B) an [a reasonable] amount agreed to in writing
119	119	by the retail seller and retail buyer for a [heavy] commercial
120	120	vehicle retail installment contract; and
121	121	(3) the buyer's order and the retail installment
122	122	contract must include:
123	123	(A) a statement of the amount of the documentary
124	124	fee; and
125	125	(B) except for a buyer's order or retail
126	126	installment contract for a commercial vehicle, in reasonable
127	127	proximity to the place in each where the amount of the documentary
128	128	fee is disclosed, the following notice in type that is bold-faced,
129	129	capitalized, underlined, or otherwise conspicuously set out from
130	130	surrounding written material:
131	131	"A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE
132	132	IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING
133	133	DOCUMENTS AND PERFORMING SERVICES RELATING TO THE CLOSING OF A
134	134	SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50 FOR A MOTOR VEHICLE
135	135	CONTRACT [OR A REASONABLE AMOUNT AGREED TO BY THE PARTIES FOR A
136	136	HEAVY COMMERCIAL VEHICLE CONTRACT]. THIS NOTICE IS REQUIRED BY
137	137	LAW."
138	138	(d) Except for a retail installment contract for a
139	139	commercial vehicle, if [If] the language primarily used in an oral
140	140	sales presentation is not the same as the language in which the
141	141	retail installment contract is written, the retail seller shall
142	142	furnish to the retail buyer a written statement containing the
143	143	notice set out in Subsection (c)(3)(B) in the language primarily
144	144	used in the oral sales presentation.
145	145	SECTION 7. Section 348.007, Finance Code, is amended by
146	146	amending Subsection (a) and adding Subsection (a-2) to read as
147	147	follows:
148	148	(a) Except as otherwise provided by this section, each
149	149	[Each] retail installment transaction is subject to this chapter.
150	150	(a-2) A retail installment transaction in which a retail
151	151	buyer purchases a commercial vehicle is only subject to the
152	152	following provisions of this chapter:
153	153	(1) Subchapter A, unless expressly stated otherwise;
154	154	(2) Subchapter B, except Sections 348.102 and 348.123;
155	155	(3) Subchapter C, except Sections 348.204(b),
156	156	348.206, 348.209, and 348.210;
157	157	(4) Subchapter D;
158	158	(5) Subchapter E, except Section 348.407; and
159	159	(6) Subchapter F, except Sections 348.504(a)(2),
160	160	348.514, 348.516, and 348.517.
161	161	SECTION 8. Subsection (c), Section 348.102, Finance Code,
162	162	is amended to read as follows:
163	163	(c) A retail installment contract that provides for a
164	164	variable contract rate must set out the method by which the rate is
165	165	computed. [A contract for a heavy commercial vehicle is not
166	166	required to set out the total amount of the time price
167	167	differential.]
168	168	SECTION 9. Section 348.109, Finance Code, is amended to
169	169	read as follows:
170	170	Sec. 348.109. ACCELERATION OF DEBT MATURITY. A retail
171	171	installment contract may not authorize the holder to accelerate the
172	172	maturity of all or a part of the amount owed under the contract
173	173	unless:
174	174	(1) the retail buyer is in default in the performance
175	175	of any of the buyer's obligations; [or]
176	176	(2) the holder believes in good faith that the
177	177	prospect of buyer's payment or performance is impaired; or
178	178	(3) if the retail installment contract is for a
179	179	commercial vehicle, the retail buyer or an affiliate of the retail
180	180	buyer is in default in its obligations under another financing
181	181	agreement or leasing agreement held by the same holder or an
182	182	affiliate of the holder.
183	183	SECTION 10. Section 348.208, Finance Code, is amended by
184	184	adding Subsections (d), (e), and (f) to read as follows:
185	185	(d) In addition to a charge for insurance coverage under
186	186	Subsection (a) or (b), a retail installment contract for a
187	187	commercial vehicle may include a charge for insurance coverage
188	188	relating to:
189	189	(1) the commercial vehicle;
190	190	(2) the use of the commercial vehicle; or
191	191	(3) the retail installment contract.
192	192	(e) Insurance coverage under Subsection (d) may be provided
193	193	only by:
194	194	(1) an insurer authorized under the Insurance Code to
195	195	engage in the business of insurance in this state; or
196	196	(2) if permitted under the Insurance Code, a surplus
197	197	lines insurer eligible to provide the insurance under Chapter 981,
198	198	Insurance Code.
199	199	(f) A retail installment contract for a commercial vehicle
200	200	must set forth the amount of each charge for insurance coverage
201	201	under Subsection (d) and the type of the coverage provided for that
202	202	charge.
203	203	SECTION 11. Subsection (b), Section 348.213, Finance Code,
204	204	is amended to read as follows:
205	205	(b) A policy of insurance described by Subsection (a) must
206	206	comply with the applicable requirements of Sections 348.201,
207	207	348.203, and 348.208, and, except if the policy relates to a retail
208	208	installment contract for a commercial vehicle, Section 348.209.
209	209	SECTION 12. The changes in law provided by this Act apply
210	210	only to a retail installment contract entered into on or after the
211	211	effective date of this Act. A retail installment contract entered
212	212	into before the effective date of this Act is governed by the law in
213	213	effect on the date the contract was entered into, and the former law
214	214	remains in effect for that purpose.
215	215	SECTION 13. This Act takes effect September 1, 2009.
216	216	______________________________ ______________________________
217	217	President of the Senate Speaker of the House
218	218	I hereby certify that S.B. No. 1965 passed the Senate on
219	219	April 16, 2009, by the following vote: Yeas 31, Nays 0.
220	220	______________________________
221	221	Secretary of the Senate
222	222	I hereby certify that S.B. No. 1965 passed the House on
223	223	May 15, 2009, by the following vote: Yeas 144, Nays 0, one
224	224	present not voting.
225	225	______________________________
226	226	Chief Clerk of the House
227	227	Approved:
228	228	______________________________
229	229	Date
230	230	______________________________
231	231	Governor