By: Goldman H.B. No. 2279
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of a residential service contract.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1303.004, Occupations Code, is amended
to read as follows:
Sec. 1303.004. NONAPPLICABILITY TO CERTAIN PERSONS. (a)
This chapter does not apply to a person who:
(1) manufactures or sells a product or part of a
product; and
(2) sells, offers to sell, or issues a service or
maintenance agreement that provides for the maintenance, repair,
replacement, or performance of the product or part of the product.
(b) A person described by Subsection (a) or an employee or
agent of a person described by Subsection (a) is not required to be
licensed or regulated under this chapter.
(c) This chapter does not apply to a person who engages in
the business of structural pest control in compliance with Chapter
1951.
(d) This chapter does not apply to a person who sells a
service contract as defined by Section 1304.003, Occupations Code,
but only to the extent the service contract does not provide
benefits with respect to a structural component, or an electrical
or plumbing system of a residential property. However, a
residential service contract providing benefits only with respect
to an appliance or a heating, cooling, or air-conditioning system
of a residential property may be offered pursuant to this Chapter
without having to also comply with Chapter 1304, Occupations Code.
SECTION 2. Section 1303.103, Occupations Code, is amended
to add subsection (d) as follows:
(d) Any financial information submitted to the commission
in connection with an application shall be considered confidential
and for the exclusive use of the commission.
SECTION 3. Section 1303.153, Occupations Code, is amended
to read as follows:
Sec. 1303.153. SECURITY REQUIRED. (a) As a guarantee that
a residential service company will meet its obligations to its
contract holders, the company shall maintain with the commission a
bond or other security accepted by the commission.
(b) A bond posted as security must:
(1) be issued by a carrier admitted in this state;
(2) be continuous;
(3) be cancellable by the surety only after not less
than 90 days' notice to the commission; and
(4) recognize that the obligation continues for the
terms of the residential service contracts written by the
residential service company while the bond is in force.
(c) Any security provided under this section in a form other
than a bond must be convertible to cash by the commission for the
benefit of contract holders in this state, without resort to the
courts, if the commission determines that the residential service
company is in default of its financial obligations to the contract
holders. Any amount remaining after all contract holders' claims
are paid must be returned to the residential service company not
later than the 120th day after the date the last outstanding
residential service contract expires.
(d) This section shall not be applicable to a residential
service company that reinsures one hundred percent of its
outstanding risk under residential service contracts issued and
outstanding in this state in accordance with subsection (c) of
Section 1303.152.
SECTION 4. The change in law made by this Act applies only
to a contract entered into or renewed on or after the effective date
of this Act. A contract entered into or renewed before that date is
governed by the law in effect immediately before the effective date
of this Act, and that law is continued in effect for that purpose.
SECTION 5. This Act takes effect September 1, 2017.