By: Truitt (Senate Sponsor - Harris) H.B. No. 2559
(In the Senate - Received from the House April 20, 2011;
April 26, 2011, read first time and referred to Committee on
Business and Commerce; May 3, 2011, reported favorably by the
following vote: Yeas 8, Nays 0; May 3, 2011, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to commercial motor vehicle installment sales.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 14.107(b), Finance Code, is amended to
read as follows:
(b) The finance commission by rule shall set the fees for
licensing and examination, as applicable, under Chapter 342, 347,
348, 351, 353, or 371 at amounts or rates necessary to recover the
costs of administering those chapters. The rules may provide that
the amount of a fee charged to a license holder is based on the
volume of the license holder's regulated business and other key
factors. The commissioner may provide for collection of a single
annual fee from a person licensed under Chapter 342, 347, 348, 351,
or 371 to include amounts due for both licensing and examination.
SECTION 2. Sections 303.001(b) and (c), Finance Code, are
amended to read as follows:
(b) A contract that is subject to Chapter 342, 345, 347,
[or] 348, or 353, including a contract for an open-end account, may,
as an alternative to an interest rate or amount of time price
differential allowed under that chapter, provide for a simple or
precomputed rate or amount of time price differential that does not
exceed the applicable ceiling provided by this chapter or by the
equivalent yield authorized by Chapter 342, 345, 347, [or] 348, or
353.
(c) Except as inconsistent with this chapter, a party to a
contract that is subject to Chapter 342, 345, 347, [or] 348, or 353,
or the party's assignee, has all rights, duties, and obligations
under the applicable chapter, including those relating to refund
credits on prepayment or acceleration.
SECTION 3. Section 303.002, Finance Code, is amended to
read as follows:
Sec. 303.002. WEEKLY CEILING. The parties to a written
agreement may agree to an interest rate, or in an agreement
described by Chapter 345, 347, [or] 348, or 353, an amount of time
price differential producing a rate, that does not exceed the
applicable weekly ceiling.
SECTION 4. Section 303.402(a), Finance Code, is amended to
read as follows:
(a) A person who contracts for, charges, or receives under a
contract subject to Chapter 342, 345, 346, 347, [or] 348, or 353,
including a contract for an open-end account, a rate or amount of
time price differential that exceeds the maximum applicable rate or
amount authorized by the applicable chapter or this chapter is
subject to a penalty for that violation determined under Chapter
349.
SECTION 5. Section 307.051(f), 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;
(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 353 [348].
SECTION 6. Section 341.502(a), 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 7. Section 348.001(1-a), Finance Code, as added by
Chapter 238 (S.B. 1965), Acts of the 81st Legislature, Regular
Session, 2009, and Section 348.001(2), Finance Code, are amended to
read as follows:
(1-a) "Commercial vehicle" has the meaning assigned by
Section 353.001 [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].
(2) "Heavy commercial vehicle" has the meaning
assigned by Section 353.001 [means:
[(A) a truck or truck tractor that:
[(i) has a gross vehicular weight of 19,000
pounds or more; and
[(ii) is not used primarily for personal,
family, or household use; or
[(B) a trailer or semitrailer designed for use in
combination with a vehicle described by Paragraph (A)].
SECTION 8. Section 348.0015(a), Finance Code, is amended to
read as follows:
(a) A motor vehicle that is not described by Section
353.001(1)(A) [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.
SECTION 9. Section 348.006(c), Finance Code, is 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) for a motor vehicle retail installment
contract other than a contract for a commercial vehicle,] a
reasonable amount agreed to by the retail seller and retail buyer
for the documentary services; [or
[(B) for a commercial vehicle retail installment
contract, an amount agreed to in writing by the retail seller and
retail buyer;] and
(3) [except for a buyer's order or retail installment
contract for a commercial vehicle,] the buyer's order and the
retail installment contract must include:
(A) a statement of the amount of the documentary
fee; and
(B) 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 RELATING TO THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED A
REASONABLE AMOUNT AGREED TO BY THE PARTIES. THIS NOTICE IS REQUIRED
BY LAW."
SECTION 10. Section 348.007, Finance Code, is amended by
adding Subsection (d) to read as follows:
(d) A retail installment transaction in which a retail buyer
purchases a motor vehicle that is a commercial vehicle is not
subject to this chapter and is subject to Chapter 353 if the retail
installment contract states that Chapter 353 applies.
SECTION 11. Sections 348.104(b) and (c), 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 a new 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.
(c) The add-on charge is $10 per $100 per year on the
principal balance for:
(1) a new motor vehicle not covered by Subsection (b);
or
(2) a used 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 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].
SECTION 12. Section 348.107(a), Finance Code, is amended to
read as follows:
(a) A retail installment contract may provide that if an
installment remains unpaid after the [10th day after the maturity
of the installment for a heavy commercial vehicle or after the] 15th
day after the maturity of the installment [for any other motor
vehicle] the holder may collect:
(1) a delinquency charge that does not exceed five
percent of the amount of the installment; or
(2) interest on the amount of the installment accruing
after the maturity of the installment and until the installment is
paid in full at a rate that does not exceed the maximum rate
authorized for the contract.
SECTION 13. 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 14. Section 348.120(b), Finance Code, is amended to
read as follows:
(b) On a contract for a motor vehicle [other than a heavy
commercial vehicle] the minimum amount of the refund credit is
computed by:
(1) subtracting an acquisition cost of $25 from the
original time price differential; and
(2) multiplying the amount computed under Subdivision
(1) by the percentage of refund computed under Subsection (d).
SECTION 15. Section 348.213(b), 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 16. Section 348.413(b), Finance Code, is amended to
read as follows:
(b) The holder may charge for the transfer of equity an
amount that does not exceed[:
[(1)] $25 [for a motor vehicle that is not a heavy
commercial vehicle; or
[(2) $50 for a heavy commercial vehicle].
SECTION 17. Subtitle B, Title 4, Finance Code, is amended by
adding Chapter 353 to read as follows:
CHAPTER 353. COMMERCIAL MOTOR VEHICLE INSTALLMENT SALES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 353.001. DEFINITIONS. In this chapter:
(1) "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.
(2) "Debt cancellation agreement" means an 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 of a total loss or theft of the
commercial vehicle;
(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.
(3) "Heavy commercial vehicle" means:
(A) a commercial vehicle that has a gross
vehicular weight of 19,000 pounds or more; or
(B) a trailer or semitrailer designed for use in
combination with a vehicle described by Paragraph (A).
(4) "Holder" means a person who is:
(A) a retail seller; or
(B) the assignee or transferee of a retail
installment contract.
(5) "Motor vehicle" has the meaning assigned by
Section 348.001.
(6) "Precomputed earnings method" means a method of
computing the time price differential in which the time price
differential is computed at the inception of the contract based on
the principal balance for the full contract term, as if the
principal balance under the contract will not decline over the term
of the contract, and in which the retail buyer agrees to pay the
total of payments that includes both the principal balance of the
contract and the time price differential.
(7) "Retail buyer" means a person who purchases or
agrees to purchase a commercial vehicle from a retail seller in a
retail installment transaction.
(8) "Retail installment contract" means one or more
instruments entered into in this state that evidence a retail
installment transaction. The term includes a security agreement and
a document that evidences a bailment or lease described by Section
353.003.
(9) "Retail installment transaction" means a
transaction in which a retail buyer purchases a commercial vehicle
from a retail seller other than principally for the purpose of
resale and agrees with the retail seller to pay part or all of the
cash price in one or more deferred installments.
(10) "Retail seller" means a person in the business of
selling commercial vehicles to retail buyers in retail installment
transactions.
(11) "Scheduled installment earnings method" means a
method of computing the time price differential by applying a daily
rate to the unpaid principal balance as if each scheduled payment
will be paid on the payment's scheduled installment date.
(12) "Time price differential" means the total amount
added to the principal balance to determine the balance of the
retail buyer's indebtedness under a retail installment contract.
(13) "True daily earnings method" means a method of
computing the time price differential by applying a daily rate to
the unpaid principal balance based on the actual payment date as
provided by Section 353.016.
Sec. 353.002. PRESUMPTION REGARDING NONCOMMERCIAL
VEHICLES; EXCEPTION. (a) A motor vehicle that is not described by
Section 353.001(1)(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 may rely on that representation unless the
retail seller or holder, as applicable, has actual knowledge that
the representation is not true.
Sec. 353.003. BAILMENT OR LEASE AS RETAIL INSTALLMENT
TRANSACTION. (a) A bailment or lease of a commercial vehicle is a
retail installment transaction if the bailee or lessee:
(1) contracts to pay as compensation for use of the
vehicle an amount that is substantially equal to or exceeds the
value of the vehicle; and
(2) on full compliance with the bailment or lease is
bound to become the owner or, for no or nominal additional
consideration, has the option to become the owner of the vehicle.
(b) An agreement for the lease of a commercial vehicle does
not create a retail installment transaction by merely providing
that the rental price is permitted or required to be adjusted under
the agreement as determined by the amount realized on the sale or
other disposition of the vehicle, as provided by Section 501.112,
Transportation Code.
Sec. 353.004. CLASSIFICATION AS RETAIL INSTALLMENT
TRANSACTION UNAFFECTED. A transaction is not excluded as a retail
installment transaction because:
(1) the retail seller arranges to transfer the retail
buyer's obligation;
(2) the amount of any charge in the transaction is
determined by reference to a chart or other information furnished
by a financing institution;
(3) a form for all or part of the retail installment
contract is furnished by a financing institution; or
(4) the credit standing of the retail buyer is
evaluated by a financing institution.
Sec. 353.005. CASH PRICE. (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.
(b) The cash price does not include any finance charge.
(c) At the retail seller's option, the cash price may
include:
(1) the price of accessories;
(2) the price of services related to the sale;
(3) the price of service contracts;
(4) taxes; and
(5) fees for license, title, and registration.
Sec. 353.006. 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 commercial vehicle;
(4) charges authorized for insurance, service
contracts, and warranties by Subchapter C; and
(5) advances or payments authorized under Section
353.402(b) or (c) made by the retail seller to or for the benefit of
the retail buyer.
Sec. 353.007. ADDITIONAL CHARGES PERMITTED. (a) In
addition to the amounts allowed under Sections 353.005 and 353.006,
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 a debt cancellation agreement.
(b) If a charge for a debt cancellation agreement is
included in the contract, the contract and debt cancellation
agreement must each conspicuously disclose that the debt
cancellation agreement is optional.
(c) Notwithstanding any other law, a charge for a debt
cancellation agreement is not a charge for insurance, and the sale,
provision, or waiving of a balance owed or other action relating to
a debt cancellation agreement is not considered insurance or
engaging in the business of insurance.
Sec. 353.008. PRINCIPAL BALANCE; INCLUSION OF DOCUMENTARY
FEE. (a) The principal balance under a retail installment contract
is computed by:
(1) adding:
(A) the cash price of the commercial vehicle;
(B) each amount included in the retail
installment contract for an itemized charge; and
(C) subject to Subsection (c), a documentary fee
for services rendered for or on behalf of the retail buyer in
handling and processing documents relating to the sale of the
commercial vehicle; and
(2) subtracting from the results under Subdivision (1)
the amount of the retail buyer's down payment in money, goods, or
both.
(b) The computation of the principal balance may include an
amount authorized under Section 353.402(b).
(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; and
(2) the documentary fee may not exceed an amount
agreed to in writing by the retail seller and retail buyer.
Sec. 353.009. APPLICABILITY OF CHAPTER. (a) Except as
provided by this section, this chapter applies to a retail
installment transaction for a commercial vehicle if the retail
installment contract states that this chapter applies.
(b) If a retail installment contract does not state that
this chapter applies, the transaction is governed by Chapter 348,
and this chapter does not apply.
(c) This chapter does not affect or apply to a loan made or
the business of making loans under other law of this state and does
not affect a rule of law applicable to a retail installment sale
that is not a retail installment transaction.
(d) The provisions of this chapter defining specific rates
and amounts of charges and requiring certain credit disclosures to
be made control over any contrary law of this state respecting those
subjects.
Sec. 353.010. APPLICABILITY OF OTHER STATUTES TO RETAIL
INSTALLMENT TRANSACTION. (a) A loan or interest statute of this
state, other than Chapter 303, does not apply to a retail
installment transaction subject to this chapter.
(b) Except as provided by this chapter, an applicable
statute, including Title 1 and Chapter 322, Business & Commerce
Code, or a principle of common law continues to apply to a retail
installment transaction unless it is displaced by this chapter.
Sec. 353.011. FEDERAL DISCLOSURE REQUIREMENTS. If a
disclosure requirement of this chapter and one of a federal law,
including a regulation or an interpretation of federal law, are
inconsistent or conflict, federal law controls and the inconsistent
or conflicting disclosures required by this chapter need not be
given.
Sec. 353.012. ADDITIONAL INFORMATION ALLOWED IN CONTRACT.
Information not required by this chapter may be included in a retail
installment contract.
Sec. 353.013. ORDER OF ITEMS IN CONTRACT. Items required by
this chapter to be in a retail installment contract are not required
to be stated in the order set forth in this chapter.
Sec. 353.014. APPLICABILITY OF INSURANCE PREMIUM FINANCING
PROVISIONS. Chapter 651, Insurance Code, does not apply to a retail
installment transaction.
Sec. 353.015. CONDITIONAL DELIVERY AGREEMENT. (a) In this
section, "conditional delivery agreement" means a contract between
a retail seller and prospective retail buyer under the terms of
which the retail seller allows the prospective retail buyer the use
and benefit of a commercial vehicle for a specified term.
(b) A retail seller and prospective retail buyer may enter
into a conditional delivery agreement.
(c) A conditional delivery agreement is:
(1) an enforceable contract; and
(2) void on the execution of a retail installment
contract between the parties to the conditional delivery agreement
for the sale of the commercial vehicle that is the subject of the
conditional delivery agreement.
(d) A conditional delivery agreement may only confer rights
consistent with this section and may not confer any legal or
equitable rights of ownership, including ownership of the
commercial vehicle that is the subject of the conditional delivery
agreement.
(e) A conditional delivery agreement may not exceed a term
of 15 days.
(f) If a prospective retail buyer tenders to a retail seller
a trade-in motor vehicle in connection with a conditional delivery
agreement:
(1) the parties must agree on the value of the trade-in
motor vehicle;
(2) the conditional delivery agreement must contain
the agreed value of the trade-in motor vehicle described by
Subdivision (1); and
(3) the retail seller must use reasonable care to
conserve the trade-in motor vehicle while the vehicle is in the
retail seller's possession.
(g) If the parties to a conditional delivery agreement do
not subsequently enter into a retail installment contract for the
sale of the commercial vehicle that is the subject of the
conditional delivery agreement, the retail seller shall, not later
than the seventh day after termination of the conditional delivery
agreement:
(1) deliver to the prospective retail buyer any
trade-in motor vehicle that the prospective retail buyer tendered
in connection with the conditional delivery agreement in the same
or substantially the same condition as it was at the time of
execution of the agreement and shall return any down payment or
other consideration received from the prospective retail buyer in
connection with the agreement; or
(2) if the trade-in motor vehicle cannot be returned
in the same or substantially the same condition as it was at the
time of execution of the conditional delivery agreement, deliver to
the prospective retail buyer a sum of money equal to the agreed
value of the trade-in motor vehicle as described by Subsection (f)
and shall return any down payment or other consideration described
by Subdivision (1).
(h) Any money that a retail seller is obligated to provide a
prospective retail buyer under Subsection (g) must be tendered at
the same time that the trade-in motor vehicle is delivered for
return to the prospective retail buyer or when the trade-in motor
vehicle would have been delivered if the vehicle was damaged or
could not be returned.
(i) If a prospective retail buyer returns a commercial
vehicle under a conditional delivery agreement at the request of
the retail seller, the retail seller, notwithstanding the period
prescribed by Subsection (g), must return the trade-in vehicle at
the same time that the commercial vehicle under the conditional
delivery agreement is returned by the prospective retail buyer.
(j) The prospective retail buyer shall return the
commercial vehicle received under the conditional delivery
agreement in the same or substantially the same condition as it was
at the time of the execution of the conditional delivery agreement.
(k) An amount paid or required to be paid by the retail
seller under Subsection (g) is subject to review by the
commissioner. If the commissioner determines that the retail
seller in fact owes the prospective retail buyer a certain amount
under Subsection (g), the commissioner may order the retail seller
to pay the amount to the prospective retail buyer. If the trade-in
motor vehicle is not returned by the retail seller in accordance
with this section and the retail seller does not pay the prospective
retail buyer an amount equal to the agreed value of the trade-in
motor vehicle within the period prescribed by this section, the
commissioner may assess an administrative penalty against the
retail seller in an amount that is reasonable in relation to the
value of the trade-in motor vehicle. The commissioner shall
provide notice to the retail seller and the prospective retail
buyer of the commissioner's determination under this subsection.
(l) Not later than the 30th day after the date the parties
receive notice of the commissioner's determination under
Subsection (k), the retail seller or prospective retail buyer may
file with the commissioner an appeal of the commissioner's
determination requesting a time and place for a hearing before a
hearings officer designated by the commissioner. A hearing under
this subsection is governed by Chapter 2001, Government Code.
After the hearing, based on the findings of fact, conclusions of
law, and recommendations of the hearings officer, the commissioner
shall enter a final order.
(m) A person who files an appeal under Subsection (l) is
required to pay a deposit to secure the payment of the costs of the
hearing in a reasonable amount as determined by the commissioner,
unless the person cannot afford to pay the deposit and files an
affidavit to that effect with the hearings officer in the form and
content prescribed by finance commission rule. The entire deposit
must be refunded to the person if the person prevails at the
hearing. If the person does not prevail, any portion of the deposit
in excess of the costs of the hearing assessed against the person is
refundable.
(n) Notice of the commissioner's final order under
Subsection (l), given to the person in accordance with Chapter
2001, Government Code, must include a statement of the person's
right to judicial review of the order.
(o) The hearings officer may order the retail seller or the
prospective retail buyer, or both, to pay reasonable expenses
incurred by the commissioner in connection with obtaining a final
order under Subsection (l), including attorney's fees,
investigative costs, and witness fees.
(p) This section does not:
(1) apply to a bailment agreement under Section
353.003; or
(2) create a private right of action.
(q) Except as otherwise provided by this section, the
commissioner has exclusive jurisdiction to enforce this section.
Sec. 353.016. COMPUTATION OF TIME PRICE DIFFERENTIAL USING
TRUE DAILY EARNINGS METHOD. Under the true daily earnings method,
the earned time price differential is computed by multiplying the
daily rate of the time price differential by the number of days the
actual unpaid principal balance is outstanding. Under this method:
(1) a payment is credited at the time received, with a
payment received before the scheduled installment date resulting in
a greater reduction in the unpaid principal balance than otherwise
scheduled, and a payment received after the scheduled installment
date resulting in less of a reduction in the unpaid principal
balance than otherwise scheduled;
(2) a partial payment is applied first to time price
differential with any remainder applied to the unpaid principal
balance; and
(3) accrued but unpaid time price differential is not:
(A) added to the unpaid principal balance; or
(B) compounded.
[Sections 353.017-353.100 reserved for expansion]
SUBCHAPTER B. RETAIL INSTALLMENT CONTRACT
Sec. 353.101. RETAIL INSTALLMENT CONTRACT GENERAL
REQUIREMENTS. (a) A retail installment contract is required for
each retail installment transaction in which the retail buyer is
purchasing a commercial vehicle. A retail installment contract may
be more than one document.
(b) A retail installment contract must be:
(1) in writing;
(2) dated;
(3) signed by the retail buyer and retail seller; and
(4) completed as to all essential provisions before it
is signed by the retail buyer except as provided by Subsection (d).
(c) The printed part of a retail installment contract, other
than instructions for completion, must be in at least eight-point
type unless a different size of type is required under this
subchapter.
(d) If the commercial vehicle is not delivered when the
retail installment contract is executed, the following information
may be inserted after the contract is executed:
(1) the identifying numbers or marks of the vehicle or
similar information; and
(2) the due date of the first installment.
Sec. 353.102. CONTRACT CONDITIONED ON SUBSEQUENT
ASSIGNMENT PROHIBITED. (a) A retail installment contract may not
be conditioned on the subsequent assignment of the contract to a
holder.
(b) A provision in violation of this section is void. This
subsection does not affect the validity of other provisions of the
contract that may be given effect without the voided provision, and
to that extent those provisions are severable.
(c) This section does not create a private right of action.
(d) The commissioner has exclusive jurisdiction to enforce
this section.
Sec. 353.103. TIME PRICE DIFFERENTIAL FOR RETAIL
INSTALLMENT CONTRACT. (a) A retail installment contract may
provide for:
(1) any amount of time price differential permitted
under Section 353.104, 353.105, or 353.106; or
(2) any rate of time price differential not exceeding
a yield permitted under Section 353.104, 353.105, or 353.106.
(b) The time price differential may be computed using the:
(1) precomputed earnings method;
(2) scheduled installment earnings method; or
(3) true daily earnings method.
Sec. 353.104. TIME PRICE DIFFERENTIAL FOR CONTRACT WITH
EQUAL MONTHLY SUCCESSIVE PAYMENTS. (a) A retail installment
contract that is payable in substantially equal successive monthly
installments beginning one month after the date of the contract may
provide for a time price differential that does not exceed the
add-on charge provided by this section.
(b) The add-on charge is $7.50 per $100 per year on the
principal balance for a new commercial 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.
(c) The add-on charge is $10 per $100 per year on the
principal balance for:
(1) a new commercial vehicle not covered by Subsection
(b);
(2) a used 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; or
(3) 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.
(d) The add-on charge is $12.50 per $100 per year on the
principal balance for a used commercial vehicle not covered by
Subsection (c) that is a commercial 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.
(e) For a used commercial vehicle not covered by Subsection
(c) or (d), the add-on charge is:
(1) $15 per $100 per year on the principal balance; or
(2) $18 per $100 per year on the principal balance if
the principal balance under the retail installment contract does
not exceed $300.
(f) The time price differential is computed on the original
principal balance under the retail installment contract from the
date of the contract until the maturity of the final installment,
notwithstanding that the balance is payable in installments.
(g) If the retail installment contract is payable for a
period that is shorter or longer than a year or is for an amount that
is less or greater than $100, the amount of the maximum time price
differential computed under this section is decreased or increased
proportionately.
(h) For the purpose of a computation under this section, 16
or more days of a month may be considered a full month.
Sec. 353.105. USE OF OPTIONAL CEILING. As an alternative to
the maximum rate or amount authorized for a time price differential
under Section 353.104 or 353.106, a retail installment contract may
provide for a rate or amount of time price differential that does
not exceed the rate or amount authorized by Chapter 303.
Sec. 353.106. TIME PRICE DIFFERENTIAL FOR OTHER CONTRACTS.
A retail installment contract that is payable other than in
substantially equal successive monthly installments or the first
installment of which is not payable one month from the date of the
contract may provide for a time price differential that does not
exceed an amount that, having due regard for the schedule of
payments, provides the same effective return as if the contract
were payable in substantially equal successive monthly
installments beginning one month from the date of the contract.
Sec. 353.107. CHARGE FOR DEFAULT IN PAYMENT OF INSTALLMENT.
(a) A retail installment contract may provide that if an
installment remains unpaid after the 10th day after the maturity of
the installment for a heavy commercial vehicle or after the 15th day
after the maturity of the installment for any other commercial
vehicle the holder may collect:
(1) a delinquency charge that does not exceed five
percent of the amount of the installment; or
(2) interest on the amount of the installment accruing
after the maturity of the installment and until the installment is
paid in full at a rate that does not exceed the maximum rate
authorized for the contract.
(b) A retail installment contract that provides for the true
daily earnings method or the scheduled installment earnings method
may provide for the delinquency charge authorized by Subsection
(a)(1), the interest authorized by Subsection (a)(2), or both.
(c) Only one delinquency charge under Subsection (a)(1) may
be collected on an installment under this section regardless of the
duration of the default.
Sec. 353.108. CHARGES FOR COLLECTING DEBT. A retail
installment contract may provide for the payment of:
(1) reasonable attorney's fees if the contract is
referred for collection to an attorney who is not a salaried
employee of the holder;
(2) court costs and disbursements; and
(3) reasonable out-of-pocket expenses incurred in
connection with the repossession or sequestration of the commercial
vehicle securing the payment of the contract or foreclosure of a
security interest in the vehicle, including the costs of storing,
reconditioning, and reselling the vehicle, subject to the standards
of good faith and commercial reasonableness set by Title 1,
Business & Commerce Code.
Sec. 353.109. 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;
(2) the holder believes in good faith that the
prospect of the buyer's payment or performance is impaired; or
(3) 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.
Sec. 353.110. DELIVERY OF COPY OF CONTRACT. A retail seller
shall:
(1) deliver to the retail buyer a copy of the retail
installment contract as accepted by the retail seller; or
(2) mail to the retail buyer at the address shown on
the retail installment contract a copy of the retail installment
contract as accepted by the retail seller.
Sec. 353.111. BUYER'S RIGHT TO RESCIND CONTRACT. Until the
retail seller complies with Section 353.110, a retail buyer who has
not received delivery of the commercial vehicle is entitled to:
(1) rescind the contract;
(2) receive a refund of all payments made under or in
contemplation of the contract; and
(3) receive the return of all goods traded in to the
retail seller under or in contemplation of the contract or, if those
goods cannot be returned, to receive the value of those goods.
Sec. 353.112. BUYER'S ACKNOWLEDGMENT OF DELIVERY OF
CONTRACT COPY. (a) Any retail buyer's acknowledgment of delivery
of a copy of the retail installment contract must:
(1) be in at least 10-point type that is boldfaced,
capitalized, or underlined or otherwise conspicuously set out from
the surrounding written material; and
(2) appear directly above the buyer's signature.
(b) Any retail buyer's acknowledgment conforming to this
section of delivery of a copy of the retail installment contract is,
in an action or proceeding by or against a holder of the contract
who was without knowledge to the contrary when the holder purchased
it, conclusive proof:
(1) that the copy was delivered to the buyer;
(2) that the contract did not contain a blank space
that was required to have been completed under this chapter when the
contract was signed by the buyer; and
(3) of compliance with Sections 353.011, 353.101,
353.205, 353.403, 353.404, and 353.405.
Sec. 353.113. AMENDMENT OF RETAIL INSTALLMENT CONTRACT. On
request by a retail buyer, the holder may agree to one or more
amendments to the retail installment contract to:
(1) extend or defer the scheduled due date of all or a
part of one or more installments; or
(2) renew, restate, or reschedule the unpaid balance
under the contract.
Sec. 353.114. CHARGES FOR DEFERRING INSTALLMENT. (a) If a
retail installment contract is amended to defer all or a part of one
or more installments for not longer than three months, the holder
may collect from the retail buyer:
(1) an amount computed on the amount deferred for the
period of deferment at a rate that does not exceed the effective
return for time price differential permitted for a monthly payment
retail installment contract; and
(2) the amount of the additional cost to the holder
for:
(A) premiums for continuing in force any
insurance coverages provided for by the contract; and
(B) any additional necessary official fees.
(b) The minimum charge under Subsection (a)(1) is $1.
Sec. 353.115. CHARGE FOR OTHER AMENDMENT. (a) If the
unpaid balance of a retail installment contract is extended,
renewed, restated, or rescheduled under this subchapter and Section
353.114 does not apply, the holder may collect an amount computed on
the principal balance of the amended contract for the term of the
amended contract at the time price differential for a retail
installment contract that is applicable after reclassifying the
commercial vehicle by its model year at the time of the amendment.
(b) The principal balance of the amended contract is
computed by:
(1) adding:
(A) the unpaid balance as of the date of
amendment;
(B) the cost of any insurance incidental to the
amendment;
(C) the amount of each additional necessary
official fee; and
(D) the amount of each accrued delinquency or
collection charge; and
(2) if the time price differential was computed using
the precomputed earnings method or the scheduled installment
earnings method, subtracting from the total computed under
Subdivision (1) an amount equal to the prepayment refund credit
required by Section 353.120 or 353.121, as applicable.
(c) Subsection (b)(2) does not apply to a retail installment
contract in which the time price differential is computed using the
true daily earnings method.
(d) The provisions of this chapter relating to acquisition
costs under the refund schedule under Section 353.120 do not apply
in computing the principal balance of the amended contract.
Sec. 353.116. CONFIRMATION OF AMENDMENT. An amendment to a
retail installment contract must be confirmed in a writing signed
by the retail buyer. The holder shall:
(1) deliver a copy of the confirmation to the buyer; or
(2) mail a copy of the confirmation to the buyer at the
buyer's most recent address shown on the records of the holder.
Sec. 353.117. CONTRACT AFTER AMENDMENT. After amendment
the retail installment contract is the original contract and each
amendment to the original contract.
Sec. 353.118. PREPAYMENT OF CONTRACT. A retail buyer may
prepay a retail installment contract in full at any time before
maturity. This section prevails over a conflicting provision of the
contract.
Sec. 353.119. REFUND CREDIT ON PREPAYMENT. (a) This
section does not apply to a retail installment contract in which the
time price differential is computed using the true daily earnings
method.
(b) If a retail buyer prepays a retail installment contract
in full or if the holder of the contract demands payment of the
unpaid balance of the contract in full before the contract's final
installment is due and the time price differential is computed
using the precomputed earnings method or the scheduled installment
earnings method, the buyer is entitled to receive a refund credit as
provided by Section 353.120 or 353.121, as applicable.
Sec. 353.120. AMOUNT OF REFUND CREDIT FOR MONTHLY
INSTALLMENT CONTRACT. (a) This section:
(1) applies only to a refund credit on the prepayment
of a retail installment contract that is payable in substantially
equal successive monthly installments beginning one month after the
date of the contract; and
(2) does not apply to a retail installment contract in
which the time price differential is computed using the true daily
earnings method or the scheduled installment earnings method.
(b) On a contract for a commercial vehicle other than a
heavy commercial vehicle the minimum amount of the refund credit is
computed by:
(1) subtracting an acquisition cost of $25 from the
original time price differential; and
(2) multiplying the amount computed under Subdivision
(1) by the percentage of refund computed under Subsection (d).
(c) On a contract for a heavy commercial vehicle the minimum
amount of the refund credit is computed by:
(1) multiplying the amount of the original time price
differential by the percentage of refund computed under Subsection
(d); and
(2) subtracting an acquisition cost of $150 from the
amount computed under Subdivision (1).
(d) The percentage of refund is computed by:
(1) computing the sum of all of the monthly balances
under the contract's schedule of payments; and
(2) dividing the amount computed under Subdivision (1)
into the sum of the unpaid monthly balances under the contract's
schedule of payments beginning:
(A) on the first day, after the date of the
prepayment or demand for payment in full, that is the date of a
month that corresponds to the date of the month that the first
installment is due under the contract; or
(B) if the prepayment or demand for payment in
full is made before the first installment date under the contract,
one month after the next monthly anniversary date of the contract
occurring after the prepayment or demand.
(e) A refund credit is not required if the amount of the
refund credit is less than $1.
Sec. 353.121. REFUND ON CONTRACTS USING SCHEDULED
INSTALLMENT EARNINGS METHOD. (a) This section:
(1) applies to a retail installment contract:
(A) that includes precomputed time price
differential; and
(B) to which Section 353.120 does not apply; and
(2) does not apply to a retail installment contract in
which the time price differential is computed using the true daily
earnings method.
(b) If a retail installment contract is prepaid in full or
if the holder demands payment in full of the unpaid balance before
final maturity of the contract, the holder earns time price
differential for the period beginning on the date of the contract
and ending on the date of the earlier of the prepayment or demand,
in an amount that does not exceed the amount allowed by this
section.
(c) If prepayment in full or demand for payment in full
occurs during an installment period, the holder may retain, in
addition to time price differential that accrued during any elapsed
installment periods, an amount computed by:
(1) multiplying the simple annual rate under the
contract by the unpaid principal balance of the contract determined
according to the schedule of payments to be outstanding on the
preceding installment due date;
(2) dividing 365 into the product computed under
Subdivision (1); and
(3) multiplying the number of days in the period,
beginning on the day after the installment due date and ending on
the date of the earlier of the prepayment or demand, by the result
obtained under Subdivision (2).
(d) In addition to the earned time price differential
computed under this section, the holder may also earn a $150
acquisition fee for a heavy commercial vehicle, or a $25
acquisition fee for other commercial vehicles, if the sum of the
earned time price differential and the acquisition fee does not
exceed the time price differential disclosed in the contract.
(e) The holder shall refund or credit, as applicable, to the
retail buyer the amount computed by subtracting the total amount
earned or retained under Subsections (b), (c), and (d) from the
total amount of time price differential contracted for and
precomputed in the contract.
Sec. 353.122. REINSTATEMENT OF CONTRACT AFTER DEMAND FOR
PAYMENT. After a demand for payment in full under a retail
installment contract, the retail buyer and holder of the contract
may:
(1) agree to reinstate the contract; and
(2) amend the contract as provided by Section 353.113.
[Sections 353.123-353.200 reserved for expansion]
SUBCHAPTER C. INSURANCE
Sec. 353.201. PROPERTY INSURANCE. (a) A holder may require
a retail buyer to insure the commercial vehicle purchased under a
retail installment transaction and accessories and related goods
subject to the holder's security interest.
(b) The holder may offer to provide insurance on a
commercial vehicle purchased under a retail installment
transaction and accessories and related goods subject to the
holder's security interest, regardless of whether the holder
requires a retail buyer to insure the commercial vehicle.
(c) The insurance required by the holder, and the premiums
or charges for any insurance that is provided by the holder, must
bear a reasonable relationship to:
(1) the amount, term, and conditions of the retail
installment contract; and
(2) the existing hazards or risk of loss, damage, or
destruction.
(d) Any insurance under this section may not:
(1) cover unusual or exceptional risks; or
(2) provide coverage not ordinarily included in
policies issued to the public or for commercial purposes.
(e) The holder may include the cost of the insurance as a
separate charge in the contract.
Sec. 353.202. CREDIT LIFE AND CREDIT HEALTH AND ACCIDENT
INSURANCE. (a) A holder may require a retail buyer to provide
credit life insurance and credit health and accident insurance.
(b) The holder may offer to provide credit life insurance
and credit health and accident insurance, regardless of whether the
holder requires a retail buyer to provide the insurance under
Subsection (a).
(c) A retail seller may offer involuntary unemployment
insurance to the buyer at the time the contract is negotiated or
executed.
(d) A holder may include the cost of insurance provided
under this section, and a policy or agent fee charged in connection
with insurance provided under Subsection (b) or (c), as a separate
charge in the contract.
Sec. 353.203. MAXIMUM AMOUNT OF CREDIT LIFE AND CREDIT
HEALTH AND ACCIDENT COVERAGE. (a) At any time the total amount of
the policies of credit life insurance in force on one retail buyer
on one retail installment contract may not exceed:
(1) the total amount repayable under the contract; and
(2) the greater of the scheduled or actual amount of
unpaid indebtedness if the indebtedness is repayable in
substantially equal installments.
(b) At any time the total amount of the policies of credit
health and accident insurance in force on one retail buyer on one
retail installment contract may not exceed the total amount payable
under the contract, and the amount of each periodic indemnity
payment may not exceed the scheduled periodic payment on the
indebtedness.
Sec. 353.204. INSURANCE STATEMENT. (a) If insurance is
required in connection with a retail installment contract, the
holder shall give to the retail buyer a written statement that
clearly and conspicuously states that:
(1) insurance is required in connection with the
contract; and
(2) the buyer as an option may furnish the required
insurance through:
(A) an existing policy of insurance owned or
controlled by the buyer; or
(B) an insurance policy obtained through an
insurance company authorized to do business in this state.
(b) A statement under Subsection (a) may be provided with or
as part of the retail installment contract or separately.
Sec. 353.205. STATEMENT IF LIABILITY INSURANCE NOT INCLUDED
IN CONTRACT. If liability insurance coverage for bodily injury and
property damage caused to others is not included in a retail
installment contract, the retail installment contract or a separate
writing must contain, in at least 10-point type that is boldfaced,
capitalized, underlined, or otherwise conspicuously set out from
the surrounding written material, a specific statement that
liability insurance coverage for bodily injury and property damage
caused to others is not included.
Sec. 353.206. BUYER'S FAILURE TO PROVIDE EVIDENCE OF
INSURANCE. (a) If a retail buyer fails to present to the holder
reasonable evidence that the buyer has obtained or maintained a
coverage required by the retail installment contract, the holder
may:
(1) obtain substitute insurance coverage that is
substantially equal to or more limited than the coverage required;
and
(2) add the amount of the premium advanced for the
substitute insurance to the unpaid balance of the contract.
(b) Substitute insurance coverage under Subsection (a)(1):
(1) may at the holder's option be limited to coverage
only of the interest of the holder or the interest of the holder and
the buyer; and
(2) must be written at lawful rates in accordance with
the Insurance Code by a company authorized to do business in this
state.
(c) If substitute insurance is obtained by the holder under
Subsection (a), the amendment adding the premium or rescheduling
the contract is not required to be signed by the retail buyer. The
holder shall deliver to the buyer or send to the buyer's most recent
address shown on the records of the holder specific written notice
that the holder has obtained substitute insurance.
Sec. 353.207. CHARGES FOR OTHER INSURANCE AND FORMS OF
PROTECTION INCLUDED IN RETAIL INSTALLMENT CONTRACT. (a) A retail
installment contract may include as a separate charge an amount for
insurance coverage that is:
(1) for a risk of loss or liability reasonably related
to:
(A) the commercial vehicle;
(B) the use of the commercial vehicle; or
(C) goods or services that:
(i) are related to the commercial vehicle;
and
(ii) may ordinarily be insured with a
commercial vehicle;
(2) written on policies or endorsement forms
prescribed or approved by the commissioner of insurance; and
(3) ordinarily available in policies or endorsements
offered to the public or for commercial purposes.
(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 pay all or part of the amount computed
by subtracting the proceeds of the retail buyer's basic collision
policy on the commercial vehicle from the amount owed on the vehicle
in the event of a total loss or theft of the vehicle;
(5) a warranty or service contract relating to the
commercial vehicle;
(6) an identity recovery service contract defined by
Section 1306.003, Occupations Code; or
(7) a debt cancellation agreement.
(c) Notwithstanding any other law, service contracts and
debt cancellation agreements sold by a retail seller of a
commercial vehicle to a retail buyer are not subject to Chapter 101
or 226, Insurance Code.
(d) In addition to the charges for insurance coverage
permitted under Subsection (a) or (b), a retail installment
contract 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 must set forth the amount
of each charge for insurance coverage under Subsection (d) and the
type of the coverage provided for that charge.
Sec. 353.208. HOLDER'S DUTY IF INSURANCE IS ADJUSTED OR
TERMINATED. (a) If insurance for which a charge is included in or
added to a retail installment contract is canceled, adjusted, or
terminated, the holder shall, at the holder's option:
(1) apply the amount of the refund for unearned
insurance premiums received by the holder to replace required
insurance coverage; or
(2) credit the refund to the final maturing
installments of the retail installment contract.
(b) If the amount to be applied or credited under Subsection
(a) is more than the amount unpaid on the retail installment
contract, the holder shall refund to the retail buyer the
difference between those amounts.
(c) A cash refund is not required under this section if the
amount of the refund is less than $1.
Sec. 353.209. GAIN OR ADVANTAGE FROM INSURANCE NOT
ADDITIONAL CHARGE. Any gain or advantage to the holder or the
holder's employee, officer, director, agent, general agent,
affiliate, or associate from insurance or the provision or sale of
insurance under this subchapter is not an additional charge or
additional time price differential in connection with a retail
installment contract except as specifically provided by this
chapter.
Sec. 353.210. ADDING TO RETAIL INSTALLMENT CONTRACT
PREMIUMS FOR INSURANCE ACQUIRED AFTER TRANSACTION. (a) A retail
buyer and holder may agree to add to the unpaid balance of a retail
installment contract premiums for insurance policies obtained
after the date of the retail installment transaction for coverages
of the types allowed under Sections 353.201, 353.202, and 353.207,
including premiums for the renewal of a policy included in the
contract.
(b) A policy of insurance described by Subsection (a) must
comply with the requirements of Sections 353.201, 353.202, 353.203,
and 353.207, as applicable.
Sec. 353.211. EFFECT OF ADDING PREMIUM TO CONTRACT. If a
premium is added to the unpaid balance of a retail installment
contract under Section 353.206 or 353.210, the rate applicable to
the time price differential agreed to in the retail installment
contract remains in effect and shall be applied to the new unpaid
balance, or the contract may be rescheduled in accordance with
Sections 353.114 and 353.115, without reclassifying the commercial
vehicle by its year model at the time of the amendment.
Sec. 353.212. FINANCING ENTITY MAY NOT REQUIRE INSURANCE
FROM PARTICULAR SOURCE. If a retail installment contract presented
to a financing entity for acceptance includes any insurance
coverage, the financing entity may not directly or indirectly
require, as a condition of its agreement to finance the commercial
vehicle, that the retail buyer purchase the insurance coverage from
a particular source.
[Sections 353.213-353.300 reserved for expansion]
SUBCHAPTER D. ACQUISITION OF CONTRACT OR BALANCE
Sec. 353.301. AUTHORITY TO ACQUIRE. A person may acquire a
retail installment contract or an outstanding balance under a
contract from another person on the terms, including the price, to
which they agree. Notwithstanding any other law of this state, a
person acquiring or assigning a retail installment contract, or any
balance under a contract, does not have a duty to disclose to any
other person the terms on which a contract or balance under a
contract is acquired or assigned, including the consideration for
the acquisition or assignment and any discount or difference
between the rates, charges, or balance under the contract and the
consideration rates, charges, or balance acquired or assigned, as
applicable.
Sec. 353.302. LACK OF NOTICE DOES NOT AFFECT VALIDITY AS TO
CERTAIN CREDITORS. Notice to a retail buyer of an assignment or
negotiation of a retail installment contract or an outstanding
balance under the contract or a requirement that the retail seller
be deprived of dominion over payments on a retail installment
contract or over the commercial vehicle if returned to or
repossessed by the retail seller is not necessary for a written
assignment or negotiation of the contract or balance to be valid as
against a creditor, subsequent purchaser, pledgee, mortgagee, or
lien claimant of the retail seller.
Sec. 353.303. PAYMENT BY BUYER. Unless a retail buyer has
notice of the assignment or negotiation of the buyer's retail
installment contract or an outstanding balance under the contract,
a payment by the buyer to the most recent holder known to the buyer
is binding on all subsequent holders.
[Sections 353.304-353.400 reserved for expansion]
SUBCHAPTER E. HOLDER'S RIGHTS, DUTIES, AND LIMITATIONS
Sec. 353.401. SELLER'S PROMISE TO PAY OR TENDER OF CASH TO
BUYER AS PART OF TRANSACTION. A retail seller may not promise to
pay, pay, or otherwise tender cash to a retail buyer as a part of a
transaction under this chapter unless specifically authorized by
this chapter.
Sec. 353.402. SELLER'S ACTION FOR INCENTIVE PROGRAM OR TO
PAY FOR BUYER'S MOTOR VEHICLE. (a) A retail seller may pay,
promise to pay, or tender cash or another thing of value to the
manufacturer, distributor, or retail buyer of the product if the
payment, promise, or tender is made in order to participate in a
financial incentive program offered by the manufacturer or
distributor of the vehicle to the buyer.
(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.
(c) A retail seller may pay in cash to the retail buyer any
portion of the net cash value of a motor vehicle owned by the buyer
and used as a trade-in in a transaction involving the sale of a
commercial vehicle. In this subsection, "net cash value" means the
cash value of a motor vehicle after payment of all amounts secured
by the motor vehicle.
Sec. 353.403. STATEMENT OF PAYMENTS AND AMOUNT DUE UNDER
CONTRACT. (a) On written request of a retail buyer, the holder of a
retail installment contract shall give or send to the buyer a
written statement of the dates and amounts of payments and the total
amount unpaid under the contract.
(b) A retail buyer is entitled to one statement during a
six-month period without charge. The charge for each additional
requested statement may not exceed $1.
Sec. 353.404. RECEIPT FOR CASH PAYMENT. A holder of a
retail installment contract shall give the retail buyer a written
receipt for each cash payment.
Sec. 353.405. OUTSTANDING BALANCE INFORMATION; PAYMENT IN
FULL. (a) The holder of a retail installment contract who gives
the retail buyer or the buyer's designee outstanding balance
information relating to the contract is bound by that information
and shall honor that information for a reasonable time.
(b) If the retail buyer or the buyer's designee tenders to
the holder as payment in full an amount derived from that
outstanding balance information, the holder shall:
(1) accept the amount as payment in full; and
(2) release the holder's lien against the commercial
vehicle within a reasonable time not later than the 10th day after
the date on which the amount is tendered.
(c) A retail seller must pay in full the outstanding balance
of a vehicle traded in to the retail seller as part of the retail
installment transaction 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
commercial 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.
Sec. 353.406. LIABILITY RELATING TO OUTSTANDING BALANCE
INFORMATION. A holder who violates Section 353.405 is liable to the
retail buyer or the buyer's designee in an amount computed by
adding:
(1) three times the difference between the amount
tendered and the amount sought by the holder at the time of tender;
(2) interest;
(3) reasonable attorney's fees; and
(4) costs.
Sec. 353.407. PROHIBITION ON POWER OF ATTORNEY TO CONFESS
JUDGMENT OR ASSIGNMENT OF WAGES. A retail installment contract may
not contain:
(1) a power of attorney to confess judgment in this
state; or
(2) an assignment of wages.
Sec. 353.408. PROHIBITION ON CERTAIN ACTS OF REPOSSESSION.
A retail installment contract may not:
(1) authorize the holder or a person acting on the
holder's behalf to:
(A) enter the retail buyer's premises in
violation of Chapter 9, Business & Commerce Code; or
(B) commit a breach of the peace in the
repossession of the commercial vehicle; or
(2) contain, or provide for the execution of, a power
of attorney by the retail buyer appointing, as the buyer's agent in
the repossession of the vehicle, the holder or a person acting on
the holder's behalf.
Sec. 353.409. BUYER'S WAIVER. (a) A retail installment
contract may not:
(1) provide for a waiver of the retail buyer's rights
of action against the holder or a person acting on the holder's
behalf for an illegal act committed in:
(A) the collection of payments under the
contract; or
(B) the repossession of the commercial vehicle;
or
(2) provide that the retail buyer agrees not to assert
against the holder a claim or defense arising out of the sale.
(b) An act or agreement of the retail buyer before or at the
time of the making of a retail installment contract or a purchase
under the contract does not waive any provision of this chapter.
Sec. 353.410. TRANSFER OF EQUITY. (a) With the written
consent of the holder, a retail buyer may transfer at any time the
buyer's equity in the commercial vehicle subject to the retail
installment contract to another person.
(b) The holder may charge for the transfer of equity an
amount that does not exceed:
(1) $25 for a commercial vehicle that is not a heavy
commercial vehicle; or
(2) $50 for a heavy commercial vehicle.
[Sections 353.411-353.500 reserved for expansion]
SUBCHAPTER F. LICENSING; ADMINISTRATION OF CHAPTER
Sec. 353.501. LICENSE REQUIRED. (a) A person may not act
as a holder under this chapter unless the person:
(1) is an authorized lender or a credit union; or
(2) holds a license issued under Chapter 348 or this
chapter.
(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.
Sec. 353.502. APPLICATION REQUIREMENTS. (a) The
application for a license under this chapter must:
(1) be under oath;
(2) identify the applicant's principal parties in
interest; and
(3) contain other relevant information that the
commissioner requires.
(b) On the filing of a license application, the applicant
shall pay to the commissioner:
(1) an investigation fee not to exceed $200; and
(2) for the license's year of issuance, a license fee
in an amount determined as provided by Section 14.107.
Sec. 353.503. INVESTIGATION OF APPLICATION. On the filing
of an application and payment of the required fees, the
commissioner shall conduct an investigation to determine whether to
issue the license.
Sec. 353.504. APPROVAL OR DENIAL OF APPLICATION. (a) The
commissioner shall approve the application and issue to the
applicant a license under this chapter if the commissioner finds
that the financial responsibility, experience, character, and
general fitness of the applicant are sufficient to:
(1) command the confidence of the public; and
(2) warrant the belief that the business will be
operated lawfully and fairly, within the purposes of this chapter.
(b) If the commissioner does not find the eligibility
requirements of Subsection (a), the commissioner shall notify the
applicant.
(c) If an applicant requests a hearing on the application
not later than the 30th day after the date of notification under
Subsection (b), the applicant is entitled to a hearing not later
than the 60th day after the date of the request.
(d) The commissioner shall approve or deny the application
not later than the 60th day after the date of the filing of a
completed application with payment of the required fees, or if a
hearing is held, after the date of the completion of the hearing on
the application. The commissioner and the applicant may agree to a
later date in writing.
Sec. 353.505. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
If the commissioner denies the application, the commissioner shall
retain the investigation fee and shall return to the applicant the
license fee submitted with the application.
Sec. 353.506. ANNUAL LICENSE FEE. Not later than December
1, a license holder shall pay to the commissioner for each license
held an annual fee for the year beginning the next January 1, in an
amount determined as provided by Section 14.107.
Sec. 353.507. EXPIRATION OF LICENSE ON FAILURE TO PAY
ANNUAL FEE. If the annual fee for a license is not paid before the
16th day after the date on which the written notice of delinquency
of payment has been given to the license holder, the license expires
on the later of:
(1) that day; or
(2) December 31 of the last year for which an annual
fee was paid.
Sec. 353.508. LICENSE SUSPENSION OR REVOCATION. After
notice and a hearing the commissioner may suspend or revoke a
license if the commissioner finds that:
(1) the license holder failed to pay the annual
license fee, an investigation fee, or another charge imposed by the
commissioner;
(2) the license holder, knowingly or without the
exercise of due care, violated this chapter or a rule adopted or
order issued under this chapter; or
(3) a fact or condition exists that, if it had existed
or had been known to exist at the time of the original application
for the license, clearly would have justified the commissioner's
denial of the application.
Sec. 353.509. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE
OF NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
suspended license or issue a new license on application to a person
whose license has been revoked if at the time of the reinstatement
or issuance no fact or condition exists that clearly would have
justified the commissioner's denial of an original application for
the license.
Sec. 353.510. SURRENDER OF LICENSE. A license holder may
surrender a license issued under this chapter by delivering to the
commissioner:
(1) the license; and
(2) a written notice of the license's surrender.
Sec. 353.511. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
SURRENDER. (a) The suspension, revocation, or surrender of a
license issued under this chapter does not affect the obligation of
a contract between the license holder and a retail buyer entered
into before the suspension, revocation, or surrender.
(b) Surrender of a license does not affect the license
holder's civil or criminal liability for an act committed before
surrender.
Sec. 353.512. TRANSFER OR ASSIGNMENT OF LICENSE. A license
may be transferred or assigned only with the approval of the
commissioner.
Sec. 353.513. ADOPTION OF RULES. (a) The finance
commission may adopt rules to enforce this chapter.
(b) The commissioner shall recommend proposed rules to the
finance commission.
Sec. 353.514. GENERAL INVESTIGATION. To discover a
violation of this chapter or to obtain information required under
this chapter, the commissioner or the commissioner's
representative may investigate the records, including books,
accounts, papers, and correspondence, of a person, including a
license holder, who the commissioner has reasonable cause to
believe is violating this chapter, regardless of whether the person
claims to not be subject to this chapter.
Sec. 353.515. SHARING OF INFORMATION. To ensure consistent
enforcement of law and minimization of regulatory burdens, the
commissioner and the Texas Department of Motor Vehicles may share
information, including criminal history information, relating to a
person licensed under this chapter. Information otherwise
confidential remains confidential after it is shared under this
section.
SECTION 18. Section 411.095, Government Code, is amended to
read as follows:
Sec. 411.095. ACCESS TO CRIMINAL HISTORY RECORD
INFORMATION: CONSUMER CREDIT COMMISSIONER. The consumer credit
commissioner is entitled to obtain from the department criminal
history record information that relates to a person who is an
applicant for or holder of a license under Chapter 342, 347, 348,
351, 353, or 371, Finance Code.
SECTION 19. Section 1304.003(b), Occupations Code, is
amended to read as follows:
(b) A service contract may also provide for:
(1) incidental payment or indemnity under limited
circumstances, including towing, rental, and emergency road
service;
(2) the repair or replacement of a product for damage
resulting from a power surge or for accidental damage incurred in
handling the product; or
(3) identity recovery, as defined by Section 1306.002,
if the service contract is financed under Chapter 348 or 353,
Finance Code.
SECTION 20. Section 1306.003, Occupations Code, is amended
to read as follows:
Sec. 1306.003. IDENTITY RECOVERY SERVICE CONTRACT. In this
chapter, "identity recovery service contract" means an agreement:
(1) to provide identity recovery;
(2) that is entered into for a separately stated
consideration and for a specified term; and
(3) that is financed through a retail installment
contract under Chapter 348 or 353, Finance Code.
SECTION 21. Section 2305.007(b), Occupations Code, is
amended to read as follows:
(b) For the purposes of tracing or locating a stolen motor
vehicle on the premises of a person engaging in a business or
activity regulated under this chapter who is also licensed under
Chapter 348 or 353, Finance Code, only an officer of the Department
of Public Safety may at a reasonable time:
(1) enter the premises of the person's business; and
(2) inspect or copy any document, record, vehicle,
part, or other item regulated under:
(A) this chapter; or
(B) Chapter 348 or 353, Finance Code.
SECTION 22. Section 2306.003(c), Occupations Code, is
amended to read as follows:
(c) A vehicle protection product may also include identity
recovery, as defined by Section 1306.002, if the vehicle protection
product is financed under Chapter 348 or 353, Finance Code.
SECTION 23. Section 152.002(b), Tax Code, is amended to
read as follows:
(b) "Total consideration" does not include:
(1) a cash discount;
(2) a full cash or credit refund to a customer of the
sales price of a motor vehicle returned to the seller;
(3) the amount charged for labor or service rendered
in installing, applying, remodeling, or repairing the motor vehicle
sold;
(4) a financing, carrying, or service charge or
interest on credit extended on a motor vehicle sold under a
conditional sale or other deferred payment contract;
(5) the value of a motor vehicle taken by a seller as
all or a part of the consideration for sale of another motor
vehicle, including any cash payment to the buyer under Section
348.404 or 353.402, Finance Code;
(6) a charge for transportation of the motor vehicle
after a sale;
(7) motor vehicle inventory tax; or
(8) an amount made available to the customer under
Subchapter G, Chapter 382, Health and Safety Code.
SECTION 24. Section 501.115(a), Transportation Code, is
amended to read as follows:
(a) When a debt or claim secured by a lien has been
satisfied, the lienholder shall, within a reasonable time not to
exceed the maximum time allowed by Section 348.408 or 353.405(b),
Finance Code, as applicable, execute and deliver to the owner, or
the owner's designee, a discharge of the lien on a form prescribed
by the department.
SECTION 25. Section 26.342(7), Water Code, is amended to
read as follows:
(7) "Lender" means:
(A) a state or national bank;
(B) a state or federal savings and loan
association or savings bank;
(C) a credit union;
(D) a state or federal agency that customarily
provides financing; or
(E) an entity that is registered with the Office
of Consumer Credit Commissioner pursuant to Chapter 348 or 353,
Finance Code, if the entity is regularly engaged in the business of
extending credit and if extending credit represents the majority of
the entity's total business activity.
SECTION 26. The following provisions of the Finance Code
are repealed:
(1) Section 348.007(a-2), as added by Chapter 238
(S.B. 1965), Acts of the 81st Legislature, Regular Session, 2009;
(2) Section 348.007(a-2), as added by Chapter 676
(H.B. 2438), Acts of the 81st Legislature, Regular Session, 2009;
and
(3) Sections 348.0051, 348.006(j), 348.120(c), and
348.208(d), (e), and (f).
SECTION 27. This Act takes effect September 1, 2011.
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