H.B. No. 813
1-1 AN ACT
1-2 relating to the regulation of certain consumer credit transactions;
1-3 providing civil penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subsection (f), Article 7.01, Title 79, Revised
1-6 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
1-7 amended to read as follows:
1-8 (f) "Cash Price" means the price at which a creditor, in the
1-9 ordinary course of business, offers to sell for cash the property
1-10 or service that is the subject of the transaction. At the
1-11 creditor's option, the term may include the price of accessories,
1-12 services related to the sale, service contracts and taxes and fees
1-13 for license, title, and registration. The term does not include
1-14 any finance charge <stated in a retail installment contract for
1-15 which the seller would have sold to the buyer and the buyer would
1-16 have bought from the seller, the motor vehicle and other goods and
1-17 services which are the subject matter of such contract if such sale
1-18 had been a sale for cash. The cash price may include any taxes and
1-19 charges for delivering, servicing, repairing, altering or improving
1-20 the motor vehicle, or for installation of the motor vehicle or of
1-21 goods to the motor vehicle, and charges for accessories and goods
1-22 related to or used with the motor vehicle, if such charges are made
1-23 to both cash and credit buyers alike and may include any of the
2-1 charges described in Subsections (ii) and (iii) of Section (g) of
2-2 this Article if they are not separately itemized on the contract>.
2-3 SECTION 2. Subsection (h-1), Article 7.01, Title 79, Revised
2-4 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
2-5 amended to read as follows:
2-6 (h-1) In addition to the provisions of Section (h) of this
2-7 article, "principal balance" includes a motor vehicle inspection
2-8 fee and a documentary fee for services actually rendered to, for or
2-9 on behalf of the retail buyer in preparing, handling, and
2-10 processing documents relating to the motor vehicle and the closing
2-11 of the transaction evidenced by the retail installment contract.
2-12 If a documentary fee is charged:
2-13 (i) it must be charged to both cash and credit buyers;
2-14 (ii) it may not exceed $50 <25>;
2-15 (iii) it shall be disclosed on the retail installment
2-16 contract as a separate itemized charge; and
2-17 (iv) the buyer's order and the retail installment
2-18 contract shall include in reasonable proximity to the point in the
2-19 buyer's order and retail installment contract where the documentary
2-20 fee is disclosed the amount of the documentary fee to be charged
2-21 and the following notice in type that is boldfaced, capitalized,
2-22 underlined, or otherwise set out from surrounding written material
2-23 so as to be conspicuous:
2-24 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
2-25 DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE
3-1 CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING
3-2 SERVICES RELATING TO THE CLOSING OF A SALE. BUYERS MAY
3-3 AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING THE
3-4 DOCUMENTS AND PERFORMING THE SERVICES RELATING TO THE
3-5 CLOSING OF THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED
3-6 $50 <25>. THIS NOTICE IS REQUIRED BY LAW."
3-7 (v) If the language primarily used in the oral sales
3-8 presentation is not the same as that in which the retail
3-9 installment contract is written, the seller shall furnish to the
3-10 buyer a written statement containing the notice set out in
3-11 Subsection (iv) in the language primarily used in the oral sales
3-12 presentation.
3-13 SECTION 3. Section (9), Article 7.06, Title 79, Revised
3-14 Statutes (Article 5069-7.06, Vernon's Texas Civil Statutes), is
3-15 amended to read as follows:
3-16 (9) A buyer and seller may agree to include motor vehicle
3-17 property damage or bodily injury liability insurance, mechanical
3-18 breakdown insurance, motor vehicle theft protection plans,
3-19 insurance to reimburse the buyer the difference, if any, between
3-20 the proceeds of the buyer's basic collision policy on the vehicle
3-21 and the amount owed on the vehicle, in the event that the vehicle
3-22 has been rendered a total loss, or a warranty or service contract
3-23 relating to the motor vehicle as a separate charge in a contract
3-24 for the sale of a motor vehicle. If a charge is added to a
3-25 contract as provided by this section, the contract shall clearly
4-1 and conspicuously disclose that fact.
4-2 SECTION 4. Article 7.09, Title 79, Revised Statutes (Article
4-3 5069-7.09, Vernon's Texas Civil Statutes), is amended to read as
4-4 follows:
4-5 Art. 7.09. Application. None of the provisions of this
4-6 Chapter shall affect or apply to any loans or to the business of
4-7 making loans under or in accordance with the laws of this State,
4-8 nor shall any of the provisions of the loan or interest statutes of
4-9 this State affect or apply to any retail installment transaction.
4-10 Nor shall any seller pay, promise to pay, or otherwise tender cash
4-11 to any buyer as a part of any transaction made pursuant to this
4-12 Chapter unless otherwise specifically authorized by this Chapter.
4-13 A seller may pay, promise to pay, or tender cash or other thing of
4-14 value to the manufacturer, distributor or buyer of the product if
4-15 the payment, promise, or tender is made in order to participate in
4-16 a financial incentive program offered by the manufacturer or
4-17 distributor of the product to the retail purchaser. A seller may
4-18 advance funds to retire an amount owed against a vehicle used as a
4-19 trade-in vehicle and may finance repayment of those funds in a
4-20 retail installment contract. Nothing in this Chapter shall be
4-21 construed to impair or in any way affect any rule of law applicable
4-22 to, or governing retail installment sales not otherwise subject
4-23 hereto. This Chapter shall apply exclusively to all retail
4-24 installment transactions as defined in Article 7.01.
4-25 The provisions of this Chapter defining specific rates and
5-1 amounts of charges requiring certain credit disclosures to be made
5-2 shall be deemed to control over any contrary Texas law respecting
5-3 those subjects. Except as displaced by the particular provisions
5-4 of this Chapter, the Uniform Commercial Code as adopted in Texas,
5-5 other applicable statutes, and the principles of the common law
5-6 shall remain applicable to transactions hereunder to the extent
5-7 they are applicable.
5-8 SECTION 5. Article 7.11, Title 79, Revised Statutes (Article
5-9 5069-7.11, Vernon's Texas Civil Statutes), is amended to read as
5-10 follows:
5-11 Art. 7.11. Registration. (1) Each holder governed by this
5-12 chapter who is not a credit union or an authorized lender under
5-13 Chapter 3 of this title shall register with the Office of Consumer
5-14 Credit Commissioner. Each holder shall pay an annual fee of $25
5-15 <$10> for each location at which credit transactions subject to
5-16 this chapter are originated, serviced, or collected. The
5-17 commissioner by rule may establish procedures to facilitate the
5-18 registration and collection of fees, including rules staggering the
5-19 due dates of the fees throughout the year. If a holder or seller
5-20 fails to renew the holder's or seller's registration, the
5-21 commissioner shall, not later than 30 days after the expiration of
5-22 the registration, notify the holder or seller of the expiration,
5-23 and of the procedures applicable to renewal. A registration
5-24 renewal is timely if filed with the commissioner, together with the
5-25 annual registration fee, not later than 30 days after receipt of
6-1 notice of expiration. A holder or seller who fails to renew timely
6-2 as required by this section is subject to the penalties set forth
6-3 in Section (2) of this Article.
6-4 (2) The commissioner may impose a penalty not to exceed $50
6-5 for failure to register as required by this Article. The
6-6 commissioner may impose a penalty not to exceed $250 for failure of
6-7 the holder to renew the holder's existing registration and submit
6-8 the appropriate fee as required by this Article. The penalties
6-9 provided by this section are the sole and exclusive penalties for a
6-10 violation of this Article. The fact that a holder or seller was
6-11 not registered as required by this Article at the time of execution
6-12 of a contract does not render invalid or unenforceable a contract
6-13 otherwise valid and enforceable and does not subject an
6-14 unregistered holder to liability to the state or to any person
6-15 under Article 8.01 of this Subtitle or any other provision of this
6-16 Subtitle or other law or at common law, other than that liability
6-17 established by this subsection.
6-18 SECTION 6. Section (b), Article 8.01, Title 79, Revised
6-19 Statutes (Article 5069-8.01, Vernon's Texas Civil Statutes), is
6-20 amended to read as follows:
6-21 (b) Except as otherwise provided by a provision of this
6-22 Subtitle, a <Any> person who violates this Subtitle <or Chapter 14
6-23 of this Title> by (i) failing to perform any duty or requirement
6-24 specifically imposed on him by any provision of this Subtitle <or
6-25 Chapter 14 of this Title>, or by (ii) committing any act or
7-1 practice prohibited by this Subtitle <or Chapter 14 of this Title>,
7-2 shall be liable to the obligor for a penalty calculated under one
7-3 of the following procedures but not both:
7-4 (1) <in> an amount not to exceed three times the
7-5 actual economic loss suffered by the obligor as a result of the
7-6 violation, together with reasonable attorneys' fees fixed by the
7-7 court; or
7-8 (2) an amount up to <equal to> twice the time price
7-9 differential or interest contracted for, charged, or received but
7-10 not to exceed $2,000 in a transaction in which the amount financed
7-11 is $5,000 or less, and not to exceed $4,000 in a transaction in
7-12 which the amount financed is in excess of $5,000 and reasonable
7-13 attorneys' fees fixed by the court, if the court determines that
7-14 the violation was material and the finder of fact determines that
7-15 the violation induced the obligor to enter into a transaction into
7-16 which the obligor would not have entered into had the violation not
7-17 occurred.
7-18 SECTION 7. Subsection (3), Section (c), Article 8.01, Title
7-19 79, Revised Statutes (Article 5069-8.01, Vernon's Texas Civil
7-20 Statutes), is amended to read as follows:
7-21 (3) If, subsequent to the times specified in Article
7-22 8.01(c)(1) and (2) of this Act but prior to the obligor having
7-23 given written notice of or having filed an action alleging a
7-24 violation for which a penalty is provided in Article 8.01(b) of
7-25 this Act, such violation is corrected as to such obligor by
8-1 performing the required duty or act and written notice of such
8-2 violation is given to such obligor, then the liability of any
8-3 person to such obligor shall be limited in each transaction to a
8-4 penalty calculated under one of the following procedures but not
8-5 both:
8-6 (A) <in> an amount not to exceed the actual economic
8-7 loss suffered by the obligor as a result of the violation, together
8-8 with reasonable attorneys' fees fixed by the court; or
8-9 (B) an amount up to the <equal to the> time price
8-10 differential or interest contracted for, charged, or received but
8-11 not to exceed $2,000 and reasonable attorneys' fees fixed by the
8-12 court, if the court determines that the violation was material and
8-13 the finder of fact determines that the violation induced the
8-14 obligor to enter into a transaction into which the obligor would
8-15 not have entered had the violation not occurred.
8-16 SECTION 8. The amendments to Articles 7.11 and 8.01, Title
8-17 79, Revised Statutes (Article 5069-7.11 and Article 5069-8.01,
8-18 Vernon's Texas Civil Statutes), made by this Act apply only to
8-19 claims made after the effective date of this Act. An action
8-20 alleging a violation of Article 7.09, Title 79, Revised Statutes,
8-21 based on an advance of funds by a seller to a purchaser to retire
8-22 an outstanding indebtedness on a vehicle used by the purchaser as a
8-23 trade-in vehicle may not be brought after the effective date of
8-24 this Act. The fee increase provided by Section 5 of this bill is
8-25 effective September 1, 1993. The remainder of the bill is
9-1 effective as provided by Section 9 of the bill.
9-2 SECTION 9. The importance of this legislation and the
9-3 crowded condition of the calendars in both houses create an
9-4 emergency and an imperative public necessity that the
9-5 constitutional rule requiring bills to be read on three several
9-6 days in each house be suspended, and this rule is hereby suspended,
9-7 and that this Act take effect and be in force from and after its
9-8 passage, and it is so enacted.