BILL ANALYSIS



C.S.H.B. 1227
By: Bosse
3-28-95
Committee Report (Substituted)


BACKGROUND

     A 1985 state law allows mechanics to repossess vehicles from
people who pay repair bills with bad checks.  Although the law was
designed to protect mechanics, the unintended consequence of the
bill has been repossession companies engaging in unscrupulous
business practices. In the typical situation, the bad check is
transferred to the repossession company and the repossession
company pays the repair debt to the mechanic and takes possession
of the vehicle in lieu of repossession costs.  Once they have
repossessed the vehicles, these repossession companies make demands
for outrageous amounts of money from the vehicle owners.  Although
the law requires that any monetary difference between the sale of
the car, the repair debt and repossession and storage costs be
returned to the vehicle's owner, the law, as amended in 1993, only
limits the cost of repossession charged to the consumer to a
"reasonable fair market value" of the cost of repossessing vehicles
- a rather ambiguous provision that can be manipulated to the
advantage of repossession companies.  In addition, the law gives
the repossession company the right to sell vehicles after giving
owners 31 days of notice.  As a result, motorists have lost their
vehicles, often never to be found should a lawsuit arise, for being
tardy on simple repair bills.

PURPOSE

     H.B. 1227 attempts to curtail abuses by unscrupulous
repossession companies who manipulate to their advantage a law
designed to protect mechanics by allowing mechanics to repossess
vehicles from people who paid repair bills with bad checks.  To
accomplish this, the bill would 1) amend the existing bad check
repossession law by prohibiting the transfer of the bad check from
the named party to a third party and 2) require that an auto
repossessor bring the repossessed vehicle only to a licensed
storage lot or to the location where the repairs were performed in
the first place. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency or institution.

SECTION BY SECTION ANALYSIS

SECTION 1.

     Section 70.001, Property Code, Subsection (b).  Substitutes
"check or money order" for "written order for payment" to conform
the language of subsection (b) to the language changes in
subsection (e).

     Section 70.001, Property Code, Subsection (e).  Substitutes
"money order" for "other written order for payment" and changes the
language of the bill to indicate that a worker may not transfer a
check or money order to a third party, and a person who performs
repossession services may not accept such check or money order that
is received as payment for vehicle repair that is returned to the
mechanic.  This change covers those situations in which a worker
transfers the check or money order to a third party who turns
around and transfers the check to the repossessor. In addition, the
modified language prohibiting the repossessor from accepting the
check places some of the onus on the repossessor.

     Section 70.001, Property Code, Subsection (f).  Substitutes
"money order" for "other written order" to conform the language of
subsection (f) to the language changes in subsection (e).

     Section 70.001, Property Code, Subsection (g).  Adds new
section, requiring that the repossessed vehicle remain at the
repair location or a vehicle storage facility licensed under the
Vehicle Storage Facility Act until the vehicle is lawfully returned
to its owner or a lienholder, or is disposed of in accordance with
this subchapter.

SECTION 2.

     Effective date September 1, 1995.

SECTION 3.

     Emergency clause.


COMPARISON OF ORIGINAL TO SUBSTITUTE

     The Committee substitute amends Subsection (b) of Section
70.001, Property Code, by substituting "check or money order" for
"written order for payment" to conform the language of subsection
(b) to the language changes in subsection (e).

     Subsection (e) substitutes "money order" for "other written
order for payment" and changes the language of the bill to indicate
that a worker may not transfer a check or money order to a third
party, and a person who performs repossession services may not
accept such check or money order that is received as payment for
vehicle repair that is returned to the mechanic.  This change
covers those situations in which a worker transfers the check or
money order to a third party who turns around and transfers the
check to the repossessor. In addition, the modified language
prohibiting the repossessor from accepting the check places some of
the onus on the repossessor.

     Subsection (f) of Section 70.001, Property Code substitutes
"money order" for "other written order" to conform the language of
subsection (f) to the language changes in subsection (e).

SUMMARY OF COMMITTEE ACTION

The Business and Industry Committee considered H.B. 1227 in a
public hearing on February 28, 1995.  Testifying in favor of the
bill were Larry Cernosek, representing Texas Towing and Storage
Association; Russell Turbeville, representing Harris County
District Attorney's Office; Tom Smith, representing Public
Citizens.  Testifying on the bill was Pamela Perkins, representing
the Office of the Attorney General.  There were no witnesses to
testify in opposition to H.B. 1227.  H.B. 1227 was referred to a
subcommittee consisting of Eiland-chair, Crabb, Giddings.  The
subcommittee on H.B. 1227 held a formal meeting on March 21, 1995. 
At that meeting, a substitute was offered, adopted and sent to the
full committee for consideration.  H.B. 1227, as substituted, was
reported favorably to the full committee by a record vote of 3
(three) ayes, 0 (zero) nays, 0 (zero) present-not-voting, 0 (zero)
absent.  H.B. 1227, as substituted, was considered on subcommittee
report by the committee in a public hearing on March 28, 1995.  The
committee considered a complete committee substitute for H.B. 1227. 
The substitute was adopted without objection.  H.B. 1227, as
substituted, was reported favorably with the recommendation that it
do pass and be printed, by a record vote of 9 (nine) ayes, 0 (zero)
nays, 0 (zero) present-not-voting, 0 (zero) absent.