86R30521 GRM-F
By: Goldman H.B. No. 2403
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of residential service companies and
residential service contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1303.101(b), Occupations Code, is
amended to read as follows:
(b) Except for the license requirement in Subsection (a), a
person who administers, issues, makes, provides, sells, markets, or
offers to sell a residential service contract is exempt from any
other licensing requirements of this state with respect to the
administration, issuance, making, provision, sale, marketing, or
offering for sale of [A person may not sell, offer to sell, arrange
or solicit the sale of, or receive an application for] a residential
service contract [unless:
[(1) the person is:
[(A) employed by a residential service company
licensed under this chapter; or
[(B) licensed as a real estate salesperson, real
estate broker, mobile home dealer, or insurance agent in this
state; and
[(2) the contract is issued by a residential service
company licensed under this chapter].
SECTION 2. Section 1303.152(a), Occupations Code, is
amended to read as follows:
(a) The amount of the reserve required by Section 1303.151
is based on the amount of liability remaining under outstanding
residential service contracts written in this state by the
residential service company, as determined by multiplying the total
number of days [months] remaining on all of those contracts by the
pro rata daily [monthly] contract charge.
SECTION 3. Section 1303.202(b), Occupations Code, is
amended to read as follows:
(b) The report must:
(1) be on a form prescribed by the commission;
(2) be verified by at least two of the residential
service company's principal officers; and
(3) include:
(A) financial statements of the residential
service company, including its balance sheet and receipts and
disbursements for the preceding year, certified as accurate by:
(i) an independent public accountant; or
(ii) at least two of the residential
service company's principal officers[, if the residential service
company uses a reimbursement insurance policy to insure its
outstanding residential service contracts written in this state in
accordance with Section 1303.151(b)];
(B) any material change to the information
submitted under Section 1303.103, except an amendment to a
residential service contract filed with the commission under
Section 1303.251;
(C) if the residential service company maintains
a reserve required by Section 1303.151(a), the number of
residential service contracts entered into during the year, the
number of contract holders as of the end of the year, and the number
of contracts terminating during the year; and
(D) any other information that:
(i) relates to the performance and solvency
of the residential service company; and
(ii) is necessary for the commission to
perform its duties under this chapter.
SECTION 4. Section 1303.253, Occupations Code, is amended
by amending Subsections (c), (e), and (f) and adding Subsection (k)
to read as follows:
(c) A filing made under Subsection (a) by a residential
service company that maintains a reserve required by Section
1303.151(a) may [not] be implemented beginning on the later of the
date:
(1) the filing is made; or
(2) the commission receives any associated filing fee
[until approved by the commission].
(e) If the commission determines that a filing made under
Subsection (a) is not reasonably related to the amount, term, and
conditions of the contract to which the filing applies [as
described by Subsection (d)], the commission may disapprove the
filing. If the commission disapproves the filing, the commission
shall notify the company of the disapproval and shall specify in
detail the reason for the disapproval.
(f) For a filing made under Subsection (a) by a residential
service company described by Subsection (c) after the residential
service company is licensed, the commission shall have 30 days to
disapprove [consider] the filing from the date of the filing or the
date that the commission receives any associated filing fee,
whichever is later. On the 31st day after that date[,] the filing
is considered approved [unless the commission disapproves the
filing or notifies the residential service company in writing that
the filing is not reasonably related to the amount, term, and
conditions of the contract to which the filing applies].
(k) If a filing is disapproved under Subsection (f), the
commission may order the residential service company to pay a
refund as provided by Section 1101.659.
SECTION 5. Section 1303.302(b), Occupations Code, is
amended to read as follows:
(b) A sales contract must state [A seller of a residential
property or the buyer's or seller's agent shall provide to the buyer
a statement that clearly and conspicuously states] that:
(1) the purchase of a residential service contract is
optional; and
(2) the buyer and seller of a residential property may
negotiate the amount paid toward, the coverage provided by, and the
provider of a [purchase similar coverage through another]
residential service contract [company or insurance company
authorized to engage in business in this state].
SECTION 6. Section 1303.352(a), Occupations Code, is
amended to read as follows:
(a) The commission may discipline a residential service
company under Section 1303.351 if the continued operation of the
company would be hazardous to its contract holders or if the
company:
(1) operates in conflict with its basic organizational
document or in a manner that is contrary to that described in and
reasonably inferred from information submitted under Section
1303.103, unless an amendment to the information has been filed
with and approved by the commission;
(2) issues a residential service contract that does
not comply with Sections 1303.251 and 1303.252;
(3) uses a schedule of charges that does not comply
with Section 1303.253;
(4) is not financially responsible and may be
reasonably expected to be unable to meet the company's obligations
to contract holders;
(5) did not comply with Subchapter D;
(6) advertised or marketed the company's services in a
false, misrepresentative, misleading, deceptive, or unfair manner;
[or]
(7) fails to pay the fee for filing the report under
Section 1303.202;
(8) provides false or misleading information to the
commission on a report required by Subchapter E or on a filing
required by Subchapter F;
(9) fails to provide, within a reasonable time,
information requested by the commission that relates to a formal or
informal complaint to the commission; or
(10) otherwise did not substantially comply with this
chapter or a rule adopted under this chapter.
SECTION 7. Sections 1303.101(c) and 1303.253(d),
Occupations Code, are repealed.
SECTION 8. The changes in law made by this Act apply only to
a residential service contract entered into or renewed on or after
the effective date of this Act. A residential service contract
entered into or renewed before that date is governed by the law as
it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 9. This Act takes effect September 1, 2019.