1-1 By: Seidlits, et al. (Senate Sponsor - Parker) H.B. No. 563
1-2 (In the Senate - Received from the House April 1, 1993;
1-3 April 5, 1993, read first time and referred to Committee on
1-4 Economic Development; May 11, 1993, reported adversely, with
1-5 favorable Committee Substitute by the following vote: Yeas 6, Nays
1-6 2; May 11, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Parker x
1-10 Lucio x
1-11 Ellis x
1-12 Haley x
1-13 Harris of Dallas x
1-14 Harris of Tarrant x
1-15 Leedom x
1-16 Madla x
1-17 Rosson x
1-18 Shapiro x
1-19 Wentworth x
1-20 COMMITTEE SUBSTITUTE FOR H.B. No. 563 By: Parker
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to the regulation and taxation of manufactured housing and
1-24 to manufactured housing credit transactions.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Section 6, Texas Manufactured Housing Standards
1-27 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
1-28 amending Subsections (h) and (j) to read as follows:
1-29 (h) It is unlawful for a person to sell, convey, or
1-30 otherwise transfer to a consumer in this state a salvaged
1-31 manufactured home as such term is defined in Section 8 of this
1-32 article. A salvaged manufactured home may only be sold to a
1-33 registered retailer or registered retailer or registered rebuilder.
1-34 (j) It is unlawful for a retailer or broker to fail to
1-35 comply with the requirements and provisions of the Texas Credit
1-36 Code or the federal Truth-in-Lending Act or to advertise any
1-37 interest rate or finance charge which is not expressed as an annual
1-38 percentage rate. A violation of this subsection does not create a
1-39 cause of action nor claim for damages by any consumer. The
1-40 consumer shall not recover more than the penalties set forth in the
1-41 Texas Credit Code and federal Truth-in-Lending Act.
1-42 SECTION 2. Section 7, Texas Manufactured Housing Standards
1-43 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
1-44 amending Subsection (o) to read as follows:
1-45 (o) A person may not alter, repair, or otherwise rebuild a
1-46 salvaged manufactured home, as such term is defined in Section 8 of
1-47 this article, unless the person is duly registered with the
1-48 commissioner as a manufactured home rebuilder or retailer and
1-49 unless the person complies with the rules and regulations of the
1-50 commissioner relating to the rebuilding of salvaged manufactured
1-51 homes.
1-52 SECTION 3. Section 13, Texas Manufactured Housing Standards
1-53 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
1-54 amending Subsections (a), (f) and (i), and by adding Subsection (k)
1-55 to read as follows:
1-56 (a) The commissioner may not issue a certificate of
1-57 registration, unless the applicant first files a surety bond or
1-58 posts other security in such form as the commissioner may prescribe
1-59 and a written irrevocable designation of the commissioner as agent
1-60 for service of legal process, which service is made pursuant to
1-61 Subsection (k) of this section.
1-62 (f) The bond or other security shall not be liable for any
1-63 judgment, or part thereof, resulting from pain and suffering,
1-64 mental anguish, emotional distress, or any other tort claims<,>
1-65 except as are recoverable in a deceptive trade practice action
1-66 pursuant to Chapter 17, Subchapter E, Business & Commerce Code, nor
1-67 for any punitive, exemplary, or treble damages. A consumer, the
1-68 state, or any political subdivision thereof may recover against the
2-1 principal, the surety, or the principal and surety jointly and
2-2 severally for such damages, restitution, or expenses; provided,
2-3 however, that in no event shall a surety or the other security
2-4 posted under this section be liable for an amount in excess of
2-5 actual damages, restitution, or expenses, including reasonable
2-6 attorney's fees. Any judgment obtained against a principal is
2-7 conclusive against the surety or other security if notice of the
2-8 filing of suit is given as required by this section. The bond or
2-9 other security shall be open to successive claims up to the amount
2-10 of face value of the bond or other required security. The surety
2-11 shall not be liable for successive claims in excess of the bond
2-12 amount, regardless of the number of years the bond remains in
2-13 force.
2-14 (i) A manufacturer shall be bonded or post other security in
2-15 the amount of $100,000. A retailer shall be bonded or post other
2-16 security in the amount of $30,000. A broker shall be bonded or
2-17 post other security in the amount of $20,000. An installer shall
2-18 be bonded or post other security in the amount of $10,000. A
2-19 rebuilder shall be bonded or post other security in the amount of
2-20 $30,000. In order to assure the availability of prompt and
2-21 satisfactory warranty service, a manufacturer, which does not have
2-22 a registered manufacturing plant or other facility in this state
2-23 from which warranty service and repairs can be provided and made,
2-24 shall be bonded or post other security in an additional amount of
2-25 $100,000. A retailer holding a valid certificate of registration
2-26 shall not be required to be bonded or file any security to secure a
2-27 certificate of registration as a broker or an installer. A new
2-28 bond shall not be required for any change of ownership of a
2-29 corporation <person> registered with the commissioner nor for any
2-30 change of a location; however, a proper endorsement of the original
2-31 bond may be required by the commissioner.
2-32 (k)(1) The commissioner may not be served as a registrant's
2-33 agent for service of legal process unless the service is
2-34 accompanied by the affidavit of a person legally authorized to
2-35 serve civil process that service on the registrant has been
2-36 attempted but has not been possible. The affidavit shall set forth
2-37 the facts relating to the attempted, but unsuccessful, service.
2-38 (2) When served with process as the agent of a
2-39 registrant, the commissioner shall mail a copy of the affidavit,
2-40 citation, and petition by certified mail, return receipt requested,
2-41 to the physical location and the mailing addresses of the
2-42 registrant and, if applicable, to the registrant's corporate
2-43 mailing address.
2-44 SECTION 4. Section 13A, Texas Manufactured Housing Standards
2-45 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
2-46 amending Subsections (g), (h) and (i) to read as follows:
2-47 (g) Within 20 days following receipt of service of the
2-48 application and verified claim, the commission may enter an
2-49 appearance on its behalf, file a response, appear at the hearing,
2-50 cross-examine witnesses, or take whatever other action it deems
2-51 appropriate that could have been taken in the original action on
2-52 behalf of, and in the name of, the registrant or surety; in taking
2-53 such action the commission shall act only to protect the fund from
2-54 spurious or unjust claims and to assure compliance with the
2-55 requirements for recovery under this section. If the unsatisfied
2-56 final judgment on which the consumer's claim is based is a default
2-57 judgment, the commission is entitled to a trial de novo for a
2-58 determination of the actual damages, attorney's fees, costs, and
2-59 expenses for which the fund is liable.
2-60 (h) The court shall set a hearing on the application at the
2-61 earliest possible time following 30 days from the date on which the
2-62 commission was served. Not less than 10 days' notice shall be
2-63 given the applicant and the commission. The court shall determine
2-64 from the verified complaint or oral testimony at the hearing the
2-65 amount of actual damage which is recoverable by the consumer
2-66 pursuant to the provisions and limitations of Section 13 of this
2-67 article, and the amount of reasonable attorney's fees, costs, and
2-68 expenses which the consumer incurred in the litigation which
2-69 resulted in the judgment or incurred in preparing and prosecuting
2-70 the litigation which was stayed or discharged by the bankruptcy
3-1 court and for legal services, costs, and expenses in recovering
3-2 from the fund. The court shall enter its order specifically
3-3 setting forth the actual damages and attorney's fees, costs, and
3-4 expenses which the commission shall pay to the consumer. Under no
3-5 circumstances shall the order include any punitive, exemplary, or
3-6 double or treble damages nor damages for pain and suffering, mental
3-7 anguish, emotional distress, or any other tort claims which are not
3-8 recoverable against a surety as set forth in Section 13 of this
3-9 article.
3-10 (i) Within 30 days following receipt of the order of the
3-11 court, the commission shall pay to the consumer a sum equal to the
3-12 amount of actual damages and attorney's fees, costs, and expenses
3-13 awarded by the court in its order; however, under no circumstances
3-14 shall any consumer be paid more than $30,000 in actual damages or
3-15 <in> an amount in excess of $15,000 for attorney's fees, costs, and
3-16 expenses <$25,000> per home. Prior to payment, the consumer shall
3-17 execute an assignment to the commission of all of the consumer's
3-18 right, title, and interest in and to the unsatisfied judgment and
3-19 the judgment lien or the claim against the registrant and surety.
3-20 SECTION 5. Section 18, Texas Manufactured Housing Standards
3-21 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
3-22 amending Subsection (b) to read as follows:
3-23 (b) <A violation of any of the provisions of this article is
3-24 a deceptive trade practice in addition to those set forth in
3-25 Section 17.50, Business & Commerce Code.> The provisions of all
3-26 laws, parts of laws, ordinances, rules or regulations which are in
3-27 conflict with any of the provisions of this article are superceded
3-28 and preempted to the extent of such conflict. The proper giving of
3-29 the warranties and notices by the seller as required by the
3-30 provisions of Section 8 and Section 14 of this article is a valid
3-31 disclaimer of any implied warranties of fitness for a particular
3-32 purpose or of merchantability as described in Chapter 2, Business &
3-33 Commerce Code. The failure to give the warranties and notices
3-34 required by the provisions of Section 8 and Section 14 of this
3-35 article is a deceptive trade practice in addition to those set
3-36 forth in Section 17.50, Business & Commerce Code.
3-37 SECTION 6. Section 19, Texas Manufactured Housing Standards
3-38 Act (Article 5221f, Vernon's Texas Civil Statutes), is amended by
3-39 amending Subdivision (c)(2) and Subsections (h) and (m) to read as
3-40 follows:
3-41 (2) The commissioner may not refuse to issue a
3-42 document of title, and may not suspend or revoke a document of
3-43 title, unless:
3-44 (A) the application contains any false or
3-45 fraudulent statement, or the applicant has failed to furnish
3-46 information required by the commissioner, or the applicant is not
3-47 lawfully entitled to the issuance of a document of title;
3-48 (B) the commissioner has reasonable basis to
3-49 believe that the manufactured home has been stolen or unlawfully
3-50 converted, or the issuance of a document of title would constitute
3-51 a fraud against the rightful owner or a lienholder;
3-52 (C) the commissioner has reasonable basis to
3-53 believe that the manufactured home is "salvaged" as defined in
3-54 Section 8 of this article and a salvage title has not been applied
3-55 for;
3-56 (D) the required fee has not been paid;
3-57 (E) the state sales and use tax has not been
3-58 paid in accordance with the provisions of Chapter 158, Tax Code,
3-59 and its subsequent amendments, and <a state tax lien has been
3-60 recorded as filed by the comptroller pursuant to> Subsection (h) of
3-61 this section; or
3-62 (F) a local tax lien has been filed and recorded
3-63 pursuant to Section 32.015, Property Tax Code.
3-64 (h) The commissioner shall not issue titles to new <record
3-65 all state tax liens as filed by the comptroller on> manufactured
3-66 homes installed for use and occupancy in this state unless the
3-67 state sales and use tax has been paid. Proof of payment may be
3-68 shown in any manner as may be prescribed at the discretion of the
3-69 department <The commissioner may not issue or transfer the title to
3-70 a manufactured home on which a state tax lien has been filed until
4-1 the tax, penalties, and interest are paid. On receipt of a notice
4-2 that the comptroller has filed a lien, the commissioner shall
4-3 notify the owner and all lienholders>.
4-4 (m) The commissioner shall furnish each county tax
4-5 assessor-collector in this state a quarterly report that lists the
4-6 name of the owner of each manufactured home installed in the county
4-7 during the preceding calendar quarter, the name of the
4-8 manufacturer, the model designation, the identification number of
4-9 each section or module, and the address or location where the
4-10 manufactured home is installed. The report shall include the same
4-11 information for all manufactured homes previously installed in the
4-12 county for which a transfer of ownership was recorded by the
4-13 issuance of a document of title during the quarter. The
4-14 commissioner shall furnish a copy of the report to the chief
4-15 appraiser of the appraisal district established for the county in
4-16 which the manufactured home is installed.
4-17 SECTION 7. Section (5) and Subsection (7)(c), Article 6A.05,
4-18 Title 79, Revised Statutes (Article 5069-6A.05, Vernon's Texas
4-19 Civil Statutes), are amended to read as follows:
4-20 (5) The creditor may collect, on each installment in
4-21 default for a period of more than 15 days, a delinquency charge
4-22 that may not exceed an amount equal to five percent of each
4-23 installment or $20, whichever is less. Only one delinquency charge
4-24 may be collected on any installment, regardless of the period for
4-25 which it remains in default. The creditor shall disclose in the
4-26 credit document the amount or method of computing the amount of any
4-27 default, delinquency, or similar charges payable in the event of
4-28 late payments. The charge or collection of a delinquency charge
4-29 does not affect the right of a creditor to accelerate the debt
4-30 under Section 10 of this chapter. Notwithstanding any provision of
4-31 Chapter 8 of this title to the contrary, any creditor that
4-32 contracts for, charges, or receives any charge which is other than
4-33 interest or time price differential, including but not limited to
4-34 any late fee, default charge, or delinquency charge in relation to
4-35 a credit transaction under this chapter and which is greater than
4-36 that authorized by this chapter shall be liable to the consumer for
4-37 those penalty provisions of Article 8.01(b) of this title <with a
4-38 penalty not to exceed $2,000 in a transaction in which the amount
4-39 financed is $5,000 or less and not to exceed $4,000 in a
4-40 transaction in which the amount financed is in excess of $5,000 and
4-41 reasonable attorney fees fixed by the court>.
4-42 (c) If the creditor fails to order or fails to hold the
4-43 manufactured home in inventory in accordance with the deposit
4-44 agreement, or retains a deposit in excess of that authorized by
4-45 this section, the creditor shall be liable for those penalty
4-46 provisions of Article 8.01(b) of this title <forfeits the deposit
4-47 and in addition shall pay three times the amount of the deposit>.
4-48 SECTION 8. Article 6A.06, Title 79, Revised Statutes
4-49 (Article 5069-6A.06, Vernon's Texas Civil Statutes), is amended as
4-50 follows:
4-51 Art. 6A.06. Prepayment. Notwithstanding the provisions of
4-52 any credit transaction to the contrary, a consumer may prepay the
4-53 debt in full at any time before maturity. On prepayment, after the
4-54 deduction of an acquisition charge not exceeding $50, the consumer
4-55 is entitled to a refund credit of the time price differential, or
4-56 interest in the case of loans, calculated on an actuarial basis in
4-57 accordance with Federal Home Loan Bank Board regulations
4-58 promulgated pursuant to the Depository Institutions Deregulation
4-59 and Monetary Control Act of 1980, Public Law 96-221, for the
4-60 prepayment of mortgage loans that are secured by first liens on
4-61 residential manufactured homes. In making the calculation, the
4-62 creditor may assume that the payments have been made as originally
4-63 scheduled and ignore any differences created by late or early
4-64 payments. Notwithstanding any provision of Chapter 8 of this title
4-65 to the contrary, any creditor that responds to a consumer's request
4-66 for a pay-off quotation under this chapter by delivering to the
4-67 consumer a written statement indicating that the consumer owes a
4-68 total amount on the credit transaction greater than that allowed by
4-69 this chapter shall be liable to the consumer for those penalty
4-70 provisions of Article 8.01(b) of this title <with a penalty not to
5-1 exceed $2,000 in a transaction in which the amount financed is
5-2 $5,000 or less and not to exceed $4,000 in a transaction in which
5-3 the amount financed is in excess of $5,000 and reasonable attorney
5-4 fees fixed by the court>. The creditor shall not be liable for any
5-5 oral statement of any amounts owed in regard to a transaction or
5-6 for any written statement not solicited by a debtor of amounts
5-7 owing in regard to a transaction unless such statements are made in
5-8 conjunction with an affirmative demand by a creditor that the
5-9 consumer pay amounts in excess of that authorized by this subtitle
5-10 or are contained in a solicitation to renew or refinance existing
5-11 debt.
5-12 SECTION 9. Section (3), Article 6A.08, Title 79, Revised
5-13 Statutes (Article 5069-6A.08, Vernon's Texas Civil Statutes), is
5-14 amended to read as follows:
5-15 (3) If the consumer fails to obtain the required insurance
5-16 at any time, the creditor may treat the failure as an event of
5-17 default or may purchase the required insurance and add the premium
5-18 of the insurance, together with interest, at the contract rate of
5-19 interest or time price differential or last adjusted rate to the
5-20 credit transaction; this forced placed insurance may be in an
5-21 amount up to, but not in excess of, the prepayment amount due the
5-22 consumer calculated pursuant to Article 6A.06 of this chapter as of
5-23 the time the insurance is purchased. In addition, the consumer may
5-24 agree to purchase any insurance allowed by this chapter after the
5-25 date of the credit document and include the amount of the premium
5-26 for the insurance in the unpaid balance. The additional insurance
5-27 premium bears interest at a rate not in excess of the contract rate
5-28 of interest or time price differential or last adjusted rate. The
5-29 additional premium and interest may be paid in any period and any
5-30 number of installments agreed to by the parties. In the case of
5-31 forced placed <place> insurance, the creditor shall notify the
5-32 consumer that the insurance has been forced placed and that the
5-33 premium for the insurance and interest on the premium have been
5-34 added to the debt. The creditor may require the consumer to pay
5-35 the premium and interest in any period and in the number of
5-36 installment as the creditor elects, including but not limited to a
5-37 lump-sum payment on the date of the last installment, equal
5-38 increments added to each of the remaining installments, or a lesser
5-39 number of installments or unequal increments. In addition, the
5-40 consumer and creditor may agree that the purchase of any additional
5-41 insurance will be handled in accordance with an insurance premium
5-42 financing agreement made under the Insurance Code and will be
5-43 treated separately from the transaction.
5-44 SECTION 10. Article 6A.16, Title 79, Revised Statutes
5-45 (Article 5069-6A.16, Vernon's Texas Civil Statutes), is amended to
5-46 read as follows:
5-47 Art. 6A.16. CONSUMER CREDIT COMMISSIONER AND REGISTRATION.
5-48 (a) The Consumer Credit Commissioner of Texas has the same
5-49 powers and authority to enforce this chapter as those provided by
5-50 Chapter 2 of this title. However, the commissioner may not require
5-51 by rule or regulation the inclusion of any specific language or
5-52 disclosures on any manufactured home credit document which are not
5-53 expressly required by the provisions of this chapter or the
5-54 regulations of the Federal Home Loan Bank Board.
5-55 (b)(1) Each creditor governed by this chapter who is not a
5-56 credit union or an authorized lender under Chapter 3 of this title
5-57 shall register with the Office of Consumer Credit Commissioner.
5-58 Each creditor shall pay an annual fee of $15 for each location at
5-59 which credit transactions subject to this chapter are originated,
5-60 serviced, or collected. The commissioner by rule may establish
5-61 procedures to facilitate the registration and collection of fees,
5-62 including rules staggering the due dates of the fees throughout the
5-63 year. If a creditor fails to renew the creditor's registration,
5-64 the commissioner shall, not later than 30 days after the expiration
5-65 of the registration, notify the creditor of the expiration, and of
5-66 the procedures applicable to renewal. A registration renewal is
5-67 timely if filed with the commissioner, together with the annual
5-68 registration fee, not later than 30 days after receipt of notice of
5-69 expiration. A creditor who fails to renew timely as required by
5-70 this section is subject to the penalties set forth in Section (2)
6-1 of this Article.
6-2 (2) The commissioner may impose a penalty not to
6-3 exceed $50 for failure to register as required by this Article.
6-4 The commissioner may impose a penalty not to exceed $250 for
6-5 failure of the creditor to renew the creditor's existing
6-6 registration and submit the appropriate fee as required by this
6-7 Article. The penalties provided by this section are the sole and
6-8 exclusive penalties for a violation of this Article. The fact that
6-9 a creditor was not registered as required by this Article at the
6-10 time of execution of a contract does not render invalid or
6-11 unenforceable a contract otherwise valid and enforceable and does
6-12 not subject an unregistered creditor to liability to the state or
6-13 to any person under Article 8.01 of this Subtitle or any other
6-14 provision of this Subtitle or other law or at common law, other
6-15 than that liability established by this subsection.
6-16 SECTION 11. Article 6A.18, Title 79, Revised Statutes
6-17 (Article 5069-6A.18, Vernon's Texas Civil Statutes), as enacted by
6-18 Acts 1987, 70th Legislature, Chapter 838, Section 11, is repealed.
6-19 SECTION 12. Section 11.432, Tax Code, is amended by amending
6-20 Subsection (a) to read as follows:
6-21 (a) For a manufactured home to qualify for an exemption
6-22 under Section 11.13 of this code, the application for the exemption
6-23 must be accompanied by a copy of a document of title to the
6-24 manufactured home issued by the Texas Department of Licensing and
6-25 Regulation under Section 19, Texas Manufactured Housing Standards
6-26 Act (Article 5221f, Vernon's Texas Civil Statutes), showing that
6-27 the individual applying for the exemption is the owner of the
6-28 manufactured home or be accompanied by a verified copy of the
6-29 purchase contract showing that the applicant is the purchaser of
6-30 the manufactured home.
6-31 SECTION 13. Section 25.03, Tax Code, is amended by amending
6-32 Subsection (a) and by adding Subsection (c) to read as follows:
6-33 (a) Property shall be described in the appraisal records
6-34 with sufficient certainty to identify it. The description of a
6-35 manufactured home shall include the correct identification or
6-36 serial number of the home or the Department of Housing and Urban
6-37 Development label number or the state seal number in addition to
6-38 the information required in Subsection (c) of this Section. A
6-39 manufactured home shall not be included in the appraisal records
6-40 unless this identification and descriptive information is included.
6-41 (c) Each description of a manufactured home shall include
6-42 the approximate square footage, the approximate age, the general
6-43 physical condition, and any characteristics which distinguish the
6-44 particular manufactured home.
6-45 SECTION 14. The importance of this legislation and the
6-46 crowded condition of the calendars in both houses create an
6-47 emergency and an imperative public necessity that the
6-48 constitutional rule requiring bills to be read on three several
6-49 days in each house be suspended, and this rule is hereby suspended,
6-50 and that this Act take effect and be in force from and after its
6-51 passage, and it is so enacted.
6-52 * * * * *
6-53 Austin,
6-54 Texas
6-55 May 11, 1993
6-56 Hon. Bob Bullock
6-57 President of the Senate
6-58 Sir:
6-59 We, your Committee on Economic Development to which was referred
6-60 H.B. No. 563, have had the same under consideration, and I am
6-61 instructed to report it back to the Senate with the recommendation
6-62 that it do not pass, but that the Committee Substitute adopted in
6-63 lieu thereof do pass and be printed.
6-64 Parker,
6-65 Chairman
6-66 * * * * *
6-67 WITNESSES
6-68 FOR AGAINST ON
6-69 ___________________________________________________________________
6-70 Name: Carol Taylor x
7-1 Representing: Tex. Trial Lawyers Assn.
7-2 City: Austin
7-3 -------------------------------------------------------------------
7-4 FOR AGAINST ON
7-5 ___________________________________________________________________
7-6 Name: Will Ehrle x
7-7 Representing: Tx Manufactured Housing Assn.
7-8 City: Austin
7-9 -------------------------------------------------------------------