S.B. No. 1966
AN ACT
relating to debt cancellation agreements offered in connection with
motor vehicle retail installment contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 348.001, Finance Code, is amended by
adding Subdivision (1-a) to read as follows:
(1-a) "Debt cancellation agreement" means a retail
installment contract term or a contractual arrangement modifying a
retail installment contract term under which a retail seller or
holder agrees to cancel all or part of an obligation of the retail
buyer to repay an extension of credit from the retail seller or
holder on the occurrence of the total loss or theft of the motor
vehicle that is the subject of the retail installment contract but
does not include an offer to pay a specified amount on the total
loss or theft of the motor vehicle.
SECTION 2. Section 348.005, Finance Code, is amended to
read as follows:
Sec. 348.005. ITEMIZED CHARGE. An amount in a retail
installment contract is an itemized charge if the amount is not
included in the cash price and is the amount of:
(1) fees for registration, certificate of title, and
license and any additional registration fees charged by a full
service deputy under Section 502.114, Transportation Code;
(2) any taxes;
(3) fees or charges prescribed by law and connected
with the sale or inspection of the motor vehicle; and
(4) charges authorized for insurance, service
contracts, [or] warranties, or a debt cancellation agreement by
Subchapter C.
SECTION 3. Subchapter B, Chapter 348, Finance Code, is
amended by adding Section 348.124 to read as follows:
Sec. 348.124. DEBT CANCELLATION AGREEMENTS. (a) In
connection with a retail installment transaction under this
chapter, a retail seller may offer to the retail buyer a debt
cancellation agreement. The retail seller may not require that the
purchase of a debt cancellation agreement by the retail buyer be
made in order to enter into a retail installment transaction.
(b) A debt cancellation agreement is not considered an
insurance product.
(c) The amount charged for a debt cancellation agreement
made in connection with a retail installment contract must be
reasonable.
(d) In addition to other disclosures required by state or
federal law, the retail seller shall provide to the retail buyer a
separate notice in connection with the retail installment contract
stating that the retail buyer is not required to accept or provide a
debt cancellation agreement in order to purchase the motor vehicle
under a retail installment contract.
SECTION 4. Subsections (b) and (c), Section 348.208,
Finance Code, are amended to read as follows:
(b) A retail installment contract may include as a separate
charge an amount for:
(1) motor vehicle property damage or bodily injury
liability insurance;
(2) mechanical breakdown insurance;
(3) participation in a motor vehicle theft protection
plan;
(4) insurance to reimburse the retail buyer for the
amount computed by subtracting the proceeds of the buyer's basic
collision policy on the motor vehicle from the amount owed on the
vehicle if the vehicle has been rendered a total loss; [or]
(5) a warranty or service contract relating to the
motor vehicle; or
(6) a debt cancellation agreement if the agreement is
included as a term of a retail installment contract under Section
348.124.
(c) Notwithstanding any other law, service contracts and
debt cancellation agreements sold by a retail seller of a motor
vehicle to a retail buyer are not subject to Chapter 101 or 226,
Insurance Code.
SECTION 5. This Act takes effect September 1, 2009.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 1966 passed the Senate on
April 16, 2009, by the following vote: Yeas 31, Nays 0; and that
the Senate concurred in House amendment on May 12, 2009, by the
following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 1966 passed the House, with
amendment, on April 30, 2009, by the following vote: Yeas 144,
Nays 0, one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor