By: Parker S.B. No. 1221
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of certain installment sales.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subsection (f), Article 7.01, Title 79, Revised
1-4 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes) is
1-5 amended to read as follows:
1-6 (f) "Cash Price" means the price at which a creditor, in the
1-7 ordinary course of business, offers to sell for cash the property
1-8 or service that is the subject of the transaction. At the
1-9 creditor's option, the term may include the price of accessories,
1-10 services related to the sale, service contracts and taxes and fees
1-11 for license, title, and registration. The term does not include
1-12 any finance charge <stated in a retail installment contract for
1-13 which the seller would have sold to the buyer and the buyer would
1-14 have bought from the seller, the motor vehicle and other goods and
1-15 services which are the subject matter of such contract if such sale
1-16 had been a sale for cash. The cash price may include any taxes and
1-17 charges for delivering, servicing, repairing, altering or improving
1-18 the motor vehicle, or for installation of the motor vehicle or of
1-19 goods to the motor vehicle, and charges for accessories and goods
1-20 related to or used with the motor vehicle, if such charges are made
1-21 to both cash and credit buyers alike and may include any of the
1-22 charges described in Subsections (ii) and (iii) of Section (g) of
1-23 this Article if they are not separately itemized on the contract>.
2-1 SECTION 2. Subsection (h-1), Article 7.01, Title 79, Revised
2-2 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes) is
2-3 amended to read as follows:
2-4 (h-1) In addition to the provisions of Section (h) of this
2-5 article, "principal balance" includes a motor vehicle inspection
2-6 fee and a documentary fee for services actually rendered to, for or
2-7 on behalf of the retail buyer in preparing, handling, and
2-8 processing documents relating to the motor vehicle and the closing
2-9 of the transaction evidenced by the retail installment contract.
2-10 If a documentary fee is charged:
2-11 (i) it must be charged to both cash and credit buyers;
2-12 (ii) it may not exceed $50 <25>;
2-13 (iii) it shall be disclosed on the retail installment
2-14 contract as a separate itemized charge; and
2-15 (iv) the buyer's order and the retail installment contract
2-16 shall include in reasonable proximity to the point in the buyer's
2-17 order and retail installment contract where the documentary fee is
2-18 disclosed the amount of the documentary fee to be charged and the
2-19 following notice in type that is boldfaced, capitalized,
2-20 underlined, or otherwise set out from surrounding written material
2-21 so as to be conspicuous:
2-22 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
2-23 DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE
2-24 CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING
2-25 SERVICES RELATING TO THE CLOSING OF A SALE. BUYERS MAY
3-1 AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING THE
3-2 DOCUMENTS AND PERFORMING THE SERVICES RELATING TO THE
3-3 CLOSING OF THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED
3-4 $50 <25>. THIS NOTICE IS REQUIRED BY LAW."
3-5 (v) If the language primarily used in the oral sales
3-6 presentation is not the same as that in which the retail
3-7 installment contract is written, the seller shall furnish to the
3-8 buyer a written statement containing the notice set out in
3-9 Subsection (iv) in the language primarily used in the oral sales
3-10 presentation.
3-11 SECTION 3. Section 9, Article 7.06, Title 79, Revised
3-12 Statutes (Article 5069-7.06, Vernon's Texas Civil Statutes), is
3-13 amended to read as follows:
3-14 (9) A buyer and seller may agree to include motor vehicle
3-15 property damage or bodily injury liability insurance, mechanical
3-16 breakdown insurance, or any other type of insurance coverage
3-17 relating to the seller's or holder's security interest, or a
3-18 warranty or service contract relating to the motor vehicle as a
3-19 separate charge in a contract for the sale of a motor vehicle. If
3-20 a charge is added to a contract as provided by this section, the
3-21 contract shall clearly and conspicuously disclose that fact.
3-22 SECTION 4. Article 7.09, Title 79, Revised Statutes (Article
3-23 5069-7.09, Vernon's Texas Civil Statutes), is amended to read as
3-24 follows:
3-25 Article 7.09. Application. None of the provisions of this
4-1 Chapter shall affect or apply to any loans or to the business of
4-2 making loans under or in accordance with the laws of this State,
4-3 nor shall any of the provisions of the loan or interest statutes of
4-4 this State affect or apply to any retail installment transaction.
4-5 Nor shall any seller pay, promise to pay, or otherwise tender cash
4-6 to any buyer as a part of any transaction made pursuant to this
4-7 Chapter unless otherwise specifically authorized by this Chapter.
4-8 A seller may pay, promise to pay, or tender cash or other thing of
4-9 value to the manufacturer, distributor or buyer of the product if
4-10 the payment, promise, or tender is made in order to participate in
4-11 a financial incentive program offered by the manufacturer or
4-12 distributor of the product to the retail purchaser. Nothing in
4-13 this Chapter shall be construed to impair or in any way affect any
4-14 rule of law applicable to, or governing retail installment sales
4-15 not otherwise subject hereto. This Chapter shall apply exclusively
4-16 to all retail installment transactions as defined in Article 7.01.
4-17 The provisions of this Chapter defining specific rates and
4-18 amounts of charges requiring certain credit disclosures to be made
4-19 shall be deemed to control over any contrary Texas law respecting
4-20 those subjects. Except as displaced by the particular provisions
4-21 of this Chapter, the Uniform Commercial Code as adopted in Texas,
4-22 other applicable statutes, and the principles of the common law
4-23 shall remain applicable to transactions hereunder to the extent
4-24 they are applicable.
4-25 SECTION 5. Article 7.11, Title 79, Revised Statutes (Article
5-1 5069-7.11, Vernon's Texas Civil Statutes), is amended to read as
5-2 follows"
5-3 Article 7.11. Registration. (1) Each holder governed by
5-4 this chapter who is not a credit union or an authorized lender
5-5 under Chapter 3 of this title shall register with the Office of
5-6 Consumer Credit Commissioner. Each holder shall pay an annual fee
5-7 of $10 for each location at which credit transactions subject to
5-8 this chapter are originated, serviced, or collected. The
5-9 commissioner by rule may establish procedures to facilitate the
5-10 registration and collection of fees, including rules staggering the
5-11 due dates of the fees throughout the year.
5-12 (2) The commissioner may impose a penalty not to exceed $50
5-13 for failure to register as required by this Article. That is the
5-14 sole and exclusive penalty for a violation of this Article. The
5-15 fact that a holder or seller was not registered as required by this
5-16 Article at the time of execution of a contract does not render
5-17 invalid or unenforceable a contract otherwise valid and enforceable
5-18 and does not subject an unregistered holder to liability to the
5-19 state or to any person under Article 8.01 of this Subtitle or any
5-20 other provision of this Subtitle or other law or at common law,
5-21 other than that liability established by this subsection.
5-22 SECTION 6. Section (b), Article 8.01, Title 79, Revised
5-23 Statutes (Article 5069-8.01, Vernon's Texas Civil Statutes), is
5-24 amended to read as follows:
5-25 (b) Except as otherwise provided by a provision of this
6-1 Subtitle, a <Any> person who violates this Subtitle <or Chapter 14
6-2 of this Title> by (i) failing to perform any duty or requirement
6-3 specifically imposed on him by any provision of this Subtitle <or
6-4 Chapter 14 of this Title>, or by (ii) committing any act or
6-5 practice prohibited by this Subtitle <or Chapter 14 of this Title>,
6-6 shall be liable to the obligor for a penalty in an amount equal to
6-7 twice the actual economic loss suffered by the obligor as a result
6-8 of the violation, and, on a showing that the violation was
6-9 committed knowingly and wilfully, a penalty of not less than $100
6-10 and not more than $1000, together with <the time price differential
6-11 or interest contracted for, charged, or received but not to exceed
6-12 $2000 in a transaction in which the amount financed is $5000 or
6-13 less, and not to exceed $4000 in a transaction in which the amount
6-14 financed is in excess of $5000 and> reasonable attorneys' fees
6-15 fixed by the court.
6-16 SECTION 7. Subsection (3), Section (c), Article 8.01, Title
6-17 79, Revised Statutes (Article 5069-8.01, Vernon's Texas Civil
6-18 Statutes), is amended to read as follows:
6-19 (3) If, subsequent to the times specified in Article
6-20 8.01(c)(1) and (2) of this Act but prior to the obligor having
6-21 given written notice of or having filed an action alleging a
6-22 violation for which a penalty is provided in Article 8.01(b) of
6-23 this Act, such violation is corrected as to such obligor by
6-24 performing the required duty or act and written notice of such
6-25 violation is given to such obligor, then the liability of any
7-1 person to such obligor shall be limited in each transaction to a
7-2 penalty in an amount equal to the actual economic loss suffered by
7-3 the obligor as a result of the violation <time price differential
7-4 or interest contracted for, charged, or received but not to exceed
7-5 $2000> and reasonable attorneys' fees fixed by the court.
7-6 SECTION 8. The amendments to Articles 7.11 and 8.01, Title
7-7 79, Revised Statutes (Article 5069-7.11 and Article 5069-8.01,
7-8 Vernon's Texas Civil Statutes), made by this Act apply only to
7-9 claims made after the effective date of this Act.
7-10 SECTION 9. The importance of this legislation and the
7-11 crowded condition of the calendars in both houses create an
7-12 emergency and an imperative public necessity that the
7-13 constitutional rule requiring bills to be read on three several
7-14 days in each house be suspended, and this rule is hereby suspended,
7-15 and that this Act take effect and be in force from and after its
7-16 passage, and it is so enacted.