1-1 By: Marchant (Senate Sponsor - Parker) H.B. No. 813
1-2 (In the Senate - Received from the House March 25, 1993;
1-3 March 30, 1993, read first time and referred to Committee on
1-4 Economic Development; April 6, 1993, reported favorably, as
1-5 amended, by the following vote: Yeas 8, Nays 2; April 6, 1993,
1-6 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 AMENDMENT NO. 1 By: Parker
1-21 H.B. No. 813, House Engrossment, is amended as follows:
1-22 (1) On page 3, line 17, insert the following after the
1-23 period following the word "purchaser": "A seller may advance funds
1-24 to retire an amount owed against a vehicle used as a trade-in
1-25 vehicle and may finance repayment of those funds in a retail
1-26 installment contract."
1-27 (2) On page 4, line 32, insert the following after the
1-28 period following the word "Act" and before the word "The": "An
1-29 action alleging a violation of Article 7.09, Title 79, Revised
1-30 Statutes, based on an advance of funds by a seller to a purchaser
1-31 to retire an outstanding indebtedness on a vehicle used by the
1-32 purchaser as a trade-in vehicle may not be brought after the
1-33 effective date of this Act."
1-34 (3) Beginning on page 3, line 65, delete Section 6 of the
1-35 bill, and insert the following new Section 6 of the bill:
1-36 SECTION 6. Section (b), Article 8.01, Title 79, Revised
1-37 Statutes (Article 5069-8.01, Vernon's Texas Civil Statutes), is
1-38 amended to read as follows:
1-39 (b) Except as otherwise provided by a provision of this
1-40 Subtitle, a <Any> person who violates this Subtitle <or Chapter 14
1-41 of this Title> by (i) failing to perform any duty or requirement
1-42 specifically imposed on him by any provision of this Subtitle <or
1-43 Chapter 14 of this Title>, or by (ii) committing any act or
1-44 practice prohibited by this Subtitle <or Chapter 14 of this Title>,
1-45 shall be liable to the obligor for a penalty calculated under one
1-46 of the following procedures but not both:
1-47 (1) <in> an amount not to exceed three times the
1-48 actual economic loss suffered by the obligor as a result of the
1-49 violation, together with reasonable attorneys' fees fixed by the
1-50 court; or
1-51 (2) <equal to> an amount up to twice the time price
1-52 differential or interest contracted for, charged, or received but
1-53 not to exceed $2,000 in a transaction in which the amount financed
1-54 is $5,000 or less, and not to exceed $4,000 in a transaction in
1-55 which the amount financed is in excess of $5,000 and reasonable
1-56 attorneys' fees fixed by the court, if the court determines that
1-57 the violation was material and the finder of fact determines that
1-58 the violation induced the obligor to enter into a transaction into
1-59 which the obligor would not have entered into had the violation not
1-60 occurred.
1-61 A BILL TO BE ENTITLED
1-62 AN ACT
1-63 relating to the regulation of certain consumer credit transactions;
1-64 providing civil penalties.
1-65 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-66 SECTION 1. Subsection (f), Article 7.01, Title 79, Revised
1-67 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
1-68 amended to read as follows:
2-1 (f) "Cash Price" means the price at which a creditor, in the
2-2 ordinary course of business, offers to sell for cash the property
2-3 or service that is the subject of the transaction. At the
2-4 creditor's option, the term may include the price of accessories,
2-5 services related to the sale, service contracts and taxes and fees
2-6 for license, title, and registration. The term does not include
2-7 any finance charge <stated in a retail installment contract for
2-8 which the seller would have sold to the buyer and the buyer would
2-9 have bought from the seller, the motor vehicle and other goods and
2-10 services which are the subject matter of such contract if such sale
2-11 had been a sale for cash. The cash price may include any taxes and
2-12 charges for delivering, servicing, repairing, altering or improving
2-13 the motor vehicle, or for installation of the motor vehicle or of
2-14 goods to the motor vehicle, and charges for accessories and goods
2-15 related to or used with the motor vehicle, if such charges are made
2-16 to both cash and credit buyers alike and may include any of the
2-17 charges described in Subsections (ii) and (iii) of Section (g) of
2-18 this Article if they are not separately itemized on the contract>.
2-19 SECTION 2. Subsection (h-1), Article 7.01, Title 79, Revised
2-20 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
2-21 amended to read as follows:
2-22 (h-1) In addition to the provisions of Section (h) of this
2-23 article, "principal balance" includes a motor vehicle inspection
2-24 fee and a documentary fee for services actually rendered to, for or
2-25 on behalf of the retail buyer in preparing, handling, and
2-26 processing documents relating to the motor vehicle and the closing
2-27 of the transaction evidenced by the retail installment contract.
2-28 If a documentary fee is charged:
2-29 (i) it must be charged to both cash and credit buyers;
2-30 (ii) it may not exceed $50 <25>;
2-31 (iii) it shall be disclosed on the retail installment
2-32 contract as a separate itemized charge; and
2-33 (iv) the buyer's order and the retail installment
2-34 contract shall include in reasonable proximity to the point in the
2-35 buyer's order and retail installment contract where the documentary
2-36 fee is disclosed the amount of the documentary fee to be charged
2-37 and the following notice in type that is boldfaced, capitalized,
2-38 underlined, or otherwise set out from surrounding written material
2-39 so as to be conspicuous:
2-40 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
2-41 DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE
2-42 CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING
2-43 SERVICES RELATING TO THE CLOSING OF A SALE. BUYERS MAY
2-44 AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING THE
2-45 DOCUMENTS AND PERFORMING THE SERVICES RELATING TO THE
2-46 CLOSING OF THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED
2-47 $50 <25>. THIS NOTICE IS REQUIRED BY LAW."
2-48 (v) If the language primarily used in the oral sales
2-49 presentation is not the same as that in which the retail
2-50 installment contract is written, the seller shall furnish to the
2-51 buyer a written statement containing the notice set out in
2-52 Subsection (iv) in the language primarily used in the oral sales
2-53 presentation.
2-54 SECTION 3. Section (9), Article 7.06, Title 79, Revised
2-55 Statutes (Article 5069-7.06, Vernon's Texas Civil Statutes), is
2-56 amended to read as follows:
2-57 (9) A buyer and seller may agree to include motor vehicle
2-58 property damage or bodily injury liability insurance, mechanical
2-59 breakdown insurance, motor vehicle theft protection plans,
2-60 insurance to reimburse the buyer the difference, if any, between
2-61 the proceeds of the buyer's basic collision policy on the vehicle
2-62 and the amount owed on the vehicle, in the event that the vehicle
2-63 has been rendered a total loss, or a warranty or service contract
2-64 relating to the motor vehicle as a separate charge in a contract
2-65 for the sale of a motor vehicle. If a charge is added to a
2-66 contract as provided by this section, the contract shall clearly
2-67 and conspicuously disclose that fact.
2-68 SECTION 4. Article 7.09, Title 79, Revised Statutes (Article
2-69 5069-7.09, Vernon's Texas Civil Statutes), is amended to read as
2-70 follows:
3-1 Art. 7.09. Application. None of the provisions of this
3-2 Chapter shall affect or apply to any loans or to the business of
3-3 making loans under or in accordance with the laws of this State,
3-4 nor shall any of the provisions of the loan or interest statutes of
3-5 this State affect or apply to any retail installment transaction.
3-6 Nor shall any seller pay, promise to pay, or otherwise tender cash
3-7 to any buyer as a part of any transaction made pursuant to this
3-8 Chapter unless otherwise specifically authorized by this Chapter.
3-9 A seller may pay, promise to pay, or tender cash or other thing of
3-10 value to the manufacturer, distributor or buyer of the product if
3-11 the payment, promise, or tender is made in order to participate in
3-12 a financial incentive program offered by the manufacturer or
3-13 distributor of the product to the retail purchaser. Nothing in
3-14 this Chapter shall be construed to impair or in any way affect any
3-15 rule of law applicable to, or governing retail installment sales
3-16 not otherwise subject hereto. This Chapter shall apply exclusively
3-17 to all retail installment transactions as defined in Article 7.01.
3-18 The provisions of this Chapter defining specific rates and
3-19 amounts of charges requiring certain credit disclosures to be made
3-20 shall be deemed to control over any contrary Texas law respecting
3-21 those subjects. Except as displaced by the particular provisions
3-22 of this Chapter, the Uniform Commercial Code as adopted in Texas,
3-23 other applicable statutes, and the principles of the common law
3-24 shall remain applicable to transactions hereunder to the extent
3-25 they are applicable.
3-26 SECTION 5. Article 7.11, Title 79, Revised Statutes (Article
3-27 5069-7.11, Vernon's Texas Civil Statutes), is amended to read as
3-28 follows:
3-29 Art. 7.11. Registration. (1) Each holder governed by this
3-30 chapter who is not a credit union or an authorized lender under
3-31 Chapter 3 of this title shall register with the Office of Consumer
3-32 Credit Commissioner. Each holder shall pay an annual fee of $25
3-33 <$10> for each location at which credit transactions subject to
3-34 this chapter are originated, serviced, or collected. The
3-35 commissioner by rule may establish procedures to facilitate the
3-36 registration and collection of fees, including rules staggering the
3-37 due dates of the fees throughout the year. If a holder or seller
3-38 fails to renew the holder's or seller's registration, the
3-39 commissioner shall, not later than 30 days after the expiration of
3-40 the registration, notify the holder or seller of the expiration,
3-41 and of the procedures applicable to renewal. A registration
3-42 renewal is timely if filed with the commissioner, together with the
3-43 annual registration fee, not later than 30 days after receipt of
3-44 notice of expiration. A holder or seller who fails to renew timely
3-45 as required by this section is subject to the penalties set forth
3-46 in Section (2) of this Article.
3-47 (2) The commissioner may impose a penalty not to exceed $50
3-48 for failure to register as required by this Article. The
3-49 commissioner may impose a penalty not to exceed $250 for failure of
3-50 the holder to renew the holder's existing registration and submit
3-51 the appropriate fee as required by this Article. The penalties
3-52 provided by this section are the sole and exclusive penalties for a
3-53 violation of this Article. The fact that a holder or seller was
3-54 not registered as required by this Article at the time of execution
3-55 of a contract does not render invalid or unenforceable a contract
3-56 otherwise valid and enforceable and does not subject an
3-57 unregistered holder to liability to the state or to any person
3-58 under Article 8.01 of this Subtitle or any other provision of this
3-59 Subtitle or other law or at common law, other than that liability
3-60 established by this subsection.
3-61 SECTION 6. Section (b), Article 8.01, Title 79, Revised
3-62 Statutes (Article 5069-8.01, Vernon's Texas Civil Statutes), is
3-63 amended to read as follows:
3-64 (b) Except as otherwise provided by a provision of this
3-65 Subtitle, a <Any> person who violates this Subtitle <or Chapter 14
3-66 of this Title> by (i) failing to perform any duty or requirement
3-67 specifically imposed on him by any provision of this Subtitle <or
3-68 Chapter 14 of this Title>, or by (ii) committing any act or
3-69 practice prohibited by this Subtitle <or Chapter 14 of this Title>,
3-70 shall be liable to the obligor for a penalty in an amount not to
4-1 exceed three times the actual economic loss suffered by the obligor
4-2 as a result of the violation, and, on a showing that the violation
4-3 was committed knowingly and wilfully, a penalty of not more than
4-4 $1,000, together with <equal to twice the time price differential
4-5 or interest contracted for, charged, or received but not to exceed
4-6 $2,000 in a transaction in which the amount financed is $5,000 or
4-7 less, and not to exceed $4,000 in a transaction in which the amount
4-8 financed is in excess of $5,000 and> reasonable attorneys' fees
4-9 fixed by the court.
4-10 SECTION 7. Subsection (3), Section (c), Article 8.01, Title
4-11 79, Revised Statutes (Article 5069-8.01, Vernon's Texas Civil
4-12 Statutes), is amended to read as follows:
4-13 (3) If, subsequent to the times specified in Article
4-14 8.01(c)(1) and (2) of this Act but prior to the obligor having
4-15 given written notice of or having filed an action alleging a
4-16 violation for which a penalty is provided in Article 8.01(b) of
4-17 this Act, such violation is corrected as to such obligor by
4-18 performing the required duty or act and written notice of such
4-19 violation is given to such obligor, then the liability of any
4-20 person to such obligor shall be limited in each transaction to a
4-21 penalty in an amount equal to the actual economic loss suffered by
4-22 the obligor as a result of the violation <time price differential
4-23 or interest contracted for, charged, or received but not to exceed
4-24 $2,000> and reasonable attorneys' fees fixed by the court.
4-25 SECTION 8. The amendments to Articles 7.11 and 8.01, Title
4-26 79, Revised Statutes (Article 5069-7.11 and Article 5069-8.01,
4-27 Vernon's Texas Civil Statutes), made by this Act apply only to
4-28 claims made after the effective date of this Act. The fee increase
4-29 provided by Section 5 of this bill is effective September 1, 1993.
4-30 The remainder of the bill is effective as provided by Section 9 of
4-31 the bill.
4-32 SECTION 9. The importance of this legislation and the
4-33 crowded condition of the calendars in both houses create an
4-34 emergency and an imperative public necessity that the
4-35 constitutional rule requiring bills to be read on three several
4-36 days in each house be suspended, and this rule is hereby suspended,
4-37 and that this Act take effect and be in force from and after its
4-38 passage, and it is so enacted.
4-39 * * * * *
4-40 Austin,
4-41 Texas
4-42 April 6, 1993
4-43 Hon. Bob Bullock
4-44 President of the Senate
4-45 Sir:
4-46 We, your Committee on Economic Development to which was referred
4-47 H.B. No. 813, have had the same under consideration, and I am
4-48 instructed to report it back to the Senate with the recommendation
4-49 that it do pass, as amended, and be printed.
4-50 Parker,
4-51 Chairman
4-52 * * * * *
4-53 WITNESSES
4-54 FOR AGAINST ON
4-55 ___________________________________________________________________
4-56 Name: Gene Fondren x
4-57 Representing: Tex. Automobile Dealers Assn.
4-58 City: Austin
4-59 -------------------------------------------------------------------
4-60 Name: Pamela Brown x
4-61 Representing: Consumers Union
4-62 City: Austin
4-63 -------------------------------------------------------------------
4-64 FOR AGAINST ON
4-65 ___________________________________________________________________
4-66 Name: Sam Kelley x
4-67 Representing: Tex. Automobile Dealers Assn.
4-68 City: Austin
4-69 -------------------------------------------------------------------
4-70 Name: Deidre Smith x
5-1 Representing: Tex. Legal Services Center
5-2 City: Austin
5-3 -------------------------------------------------------------------