S.B. No. 1965
AN ACT
relating to the regulation of retail installment contracts for
commercial vehicles.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subsection (f), Section 307.051, Finance Code,
is amended to read as follows:
(f) Collateral protection insurance does not include
insurance coverage that:
(1) is purchased by the creditor for which the debtor
is not charged;
(2) is purchased at the inception of a credit
transaction in which the debtor is a party or to which the debtor
agrees, whether or not costs are included in a payment plan under
the credit transaction;
(3) is maintained by the creditor for the protection
of collateral that comes into the possession or control of the
creditor through foreclosure, repossession, or a similar event;
(4) is credit insurance, mortgage protection
insurance, insurance issued to cover the life or health of the
debtor, or any other insurance maintained to cover the inability or
failure of the debtor to make payment under the credit agreement;
(5) is title insurance; [or]
(6) is flood insurance required to be placed by
creditors under Section 102, National Flood Insurance Act of 1968
(42 U.S.C. Section 4012a); or
(7) is insurance on a commercial vehicle securing a
retail installment contract under Chapter 348.
SECTION 2. Subsection (a), Section 341.502, Finance Code,
is amended to read as follows:
(a) A contract for a loan under Chapter 342, a retail
installment transaction under Chapter 348 other than a contract for
a commercial vehicle, or a home equity loan regulated by the Office
of Consumer Credit Commissioner must be:
(1) written in plain language designed to be easily
understood by the average consumer; and
(2) printed in an easily readable font and type size.
SECTION 3. Section 348.001, Finance Code, is amended by
adding Subdivision (1-a) to read as follows:
(1-a) "Commercial vehicle" means a motor vehicle that
is not used primarily for personal, family, or household use. The
term includes:
(A) a motor vehicle with a gross vehicular weight
of 10,001 pounds or more;
(B) a motor vehicle that will be owned by a
corporation, limited liability company, limited partnership, or
other business entity formed, organized, or registered in this
state, another state, or another country; and
(C) a motor vehicle that will be part of a fleet
of five or more vehicles owned by the same person.
SECTION 4. Subchapter A, Chapter 348, Finance Code, is
amended by adding Section 348.0015 to read as follows:
Sec. 348.0015. PRESUMPTION REGARDING NONCOMMERCIAL
VEHICLES; EXCEPTION. (a) A motor vehicle that is not described by
Section 348.001(1-a)(A), (B), or (C) or a motor vehicle that is of a
type typically used for personal, family, or household use, as
determined by finance commission rule, is presumed not to be a
commercial vehicle.
(b) Notwithstanding Subsection (a), if a retail buyer
represents in writing that a motor vehicle is not for personal,
family, or household use, or that the vehicle is for commercial use,
a retail seller or holder to whom the representation is made may
rely on that representation unless the retail seller or holder, as
applicable, has actual knowledge that the representation is not
true.
SECTION 5. Subchapter A, Chapter 348, Finance Code, is
amended by adding Section 348.0051 to read as follows:
Sec. 348.0051. CONTRACTS FOR COMMERCIAL VEHICLES;
ADDITIONAL CHARGES PERMITTED. (a) Notwithstanding Sections
348.004 and 348.005 and in addition to the amounts allowed under
those sections, the following amounts may be included as an
itemized charge or in the cash price in a retail installment
contract for a commercial vehicle:
(1) any fees prescribed by law;
(2) any amounts charged by a titling or registration
service relating to the sale;
(3) any other amount agreed to by the retail buyer and
retail seller, including amounts payable to the retail seller or
another person for the provision of goods or services relating to:
(A) the commercial vehicle;
(B) the sale or use of the commercial vehicle; or
(C) the retail buyer's business in which the
commercial vehicle will be used; and
(4) an amount paid to the retail seller or other person
as consideration for the agreement of the holder of the retail
installment contract to waive:
(A) all or part of the difference between the
amount owed under a retail installment contract and the amount paid
under a physical damage insurance policy maintained by the retail
buyer or its assign, in the event the vehicle is a total loss;
(B) all or part of the amount owed under the
retail installment contract, in the event of the death of the retail
buyer; or
(C) one or more payments owed under the retail
installment contract, in the event of the disability of the retail
buyer.
(b) If a charge under Subsection (a)(4) is included in the
contract, the contract and any agreement to waive an amount
described by Subsection (a)(4) must each conspicuously disclose
that the waiver is optional.
(c) Notwithstanding any other law, the amount described by
Subsection (a)(4) is not a charge for insurance, and the sale,
provision, or waiving of a balance owed or other action relating to
a waiver of all or part of the amount owed under a retail
installment contract for a commercial vehicle is not considered
insurance or engaging in the business of insurance.
SECTION 6. Subsections (c) and (d), Section 348.006,
Finance Code, are amended to read as follows:
(c) For a documentary fee to be included in the principal
balance of a retail installment contract:
(1) the retail seller must charge the documentary fee
to cash buyers and credit buyers;
(2) the documentary fee may not exceed:
(A) $50 for a motor vehicle retail installment
contract; or
(B) an [a reasonable] amount agreed to in writing
by the retail seller and retail buyer for a [heavy] commercial
vehicle retail installment contract; and
(3) the buyer's order and the retail installment
contract must include:
(A) a statement of the amount of the documentary
fee; and
(B) except for a buyer's order or retail
installment contract for a commercial vehicle, in reasonable
proximity to the place in each where the amount of the documentary
fee is disclosed, the following notice in type that is bold-faced,
capitalized, underlined, or otherwise conspicuously set out from
surrounding written material:
"A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE
IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING
DOCUMENTS AND PERFORMING SERVICES RELATING TO THE CLOSING OF A
SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50 FOR A MOTOR VEHICLE
CONTRACT [OR A REASONABLE AMOUNT AGREED TO BY THE PARTIES FOR A
HEAVY COMMERCIAL VEHICLE CONTRACT]. THIS NOTICE IS REQUIRED BY
LAW."
(d) Except for a retail installment contract for a
commercial vehicle, if [If] the language primarily used in an oral
sales presentation is not the same as the language in which the
retail installment contract is written, the retail seller shall
furnish to the retail buyer a written statement containing the
notice set out in Subsection (c)(3)(B) in the language primarily
used in the oral sales presentation.
SECTION 7. 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, 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 Section 348.407; and
(6) Subchapter F, except Sections 348.504(a)(2),
348.514, 348.516, and 348.517.
SECTION 8. Subsection (c), Section 348.102, Finance Code,
is amended to read as follows:
(c) A retail installment contract that provides for a
variable contract rate must set out the method by which the rate is
computed. [A contract for a heavy commercial vehicle is not
required to set out the total amount of the time price
differential.]
SECTION 9. Section 348.109, Finance Code, is amended to
read as follows:
Sec. 348.109. ACCELERATION OF DEBT MATURITY. A retail
installment contract may not authorize the holder to accelerate the
maturity of all or a part of the amount owed under the contract
unless:
(1) the retail buyer is in default in the performance
of any of the buyer's obligations; [or]
(2) the holder believes in good faith that the
prospect of buyer's payment or performance is impaired; or
(3) if the retail installment contract is for a
commercial vehicle, the retail buyer or an affiliate of the retail
buyer is in default in its obligations under another financing
agreement or leasing agreement held by the same holder or an
affiliate of the holder.
SECTION 10. Section 348.208, Finance Code, is amended by
adding Subsections (d), (e), and (f) to read as follows:
(d) In addition to a charge for insurance coverage under
Subsection (a) or (b), a retail installment contract for a
commercial vehicle may include a charge for insurance coverage
relating to:
(1) the commercial vehicle;
(2) the use of the commercial vehicle; or
(3) the retail installment contract.
(e) Insurance coverage under Subsection (d) may be provided
only by:
(1) an insurer authorized under the Insurance Code to
engage in the business of insurance in this state; or
(2) if permitted under the Insurance Code, a surplus
lines insurer eligible to provide the insurance under Chapter 981,
Insurance Code.
(f) A retail installment contract for a commercial vehicle
must set forth the amount of each charge for insurance coverage
under Subsection (d) and the type of the coverage provided for that
charge.
SECTION 11. Subsection (b), Section 348.213, Finance Code,
is amended to read as follows:
(b) A policy of insurance described by Subsection (a) must
comply with the applicable requirements of Sections 348.201,
348.203, and 348.208, and, except if the policy relates to a retail
installment contract for a commercial vehicle, Section 348.209.
SECTION 12. The changes in law provided by this Act apply
only to a retail installment contract entered into on or after the
effective date of this Act. A retail installment contract entered
into before the effective date of this Act is governed by the law in
effect on the date the contract was entered into, and the former law
remains in effect for that purpose.
SECTION 13. This Act takes effect September 1, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1965 passed the Senate on
April 16, 2009, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1965 passed the House on
May 15, 2009, by the following vote: Yeas 144, Nays 0, one
present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor