BILL ANALYSIS C.S.H.B. 2151 By: Bosse (Cain) State Affairs 5-12-95 Senate Committee Report (Substituted) BACKGROUND Over 125,000 motor vehicles were stolen in Texas in 1993, with a value of $600 million. These vehicles are then sold with switched identification plates or dismantled by "chop shops" and sold to both legitimate and illegitimate repair facilities. Many of these parts end up on vehicles that are totaled and cannot be safely rebuilt, but are ultimately resold to the unsuspecting public. Current law does not adequately provide for tracking the transfer of vehicle or vehicle titles. PURPOSE As proposed, C.S.H.B. 2151 sets forth regulations regarding the issuance, recording, and surrender of certificates of title for a late model salvage motor vehicle or a nonrepairable vehicle so that law enforcement officials may track the transfer of salvage and nonrepairable vehicle titles, including requiring an insurance company to surrender the title to a vehicle upon payment of a insurance claim as well as provide for specific certificates of title for salvage vehicles or nonrepairable parts vehicles; provides a criminal penalty. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Article 6687-1, V.T.C.S. (Certificate of Title Act), by adding Section 37A, to define "actual cash value," "automobile recycler," "casual sale," "insurance company," "late model motor vehicle," "late model salvage motor vehicle," "major component part," "nonrepairable motor vehicle," "nonrepairable motor vehicle certificate of title," "older model motor vehicle," "other negotiable evidence of ownership," "out-of-state buyer," "person," "rebuilder," "salvage motor vehicle certificate of title," and "salvage vehicle dealer." (b)(1) Requires a licensed insurance company (insurer) that acquires ownership of a late model salvage motor vehicle through payment of a claim to surrender a properly assigned certificate of title (title) to the department, on a form prescribed by the department. (2) Requires the insurer to apply for a salvage title for a vehicle described by Subsection (a)(6). Requires the insurer to apply for a nonrepairable title for a vehicle described by Subsection (a)(8). (3) Prohibits an insurer from selling a late model salvage motor vehicle unless the department has issued a salvage or nonrepairable title for the vehicle or a comparable ownership document has been issued by another state or jurisdiction for the vehicle (comparable document). (4) Authorizes an insurer to sell a late model salvage motor vehicle, or assign a salvage or nonrepairable title, only to a salvage vehicle dealer (dealer), an out-of-state buyer, a buyer in a casual sale at auction, or a person described by Article 6687-2b(g), V.T.C.S. (certain parties). Provides that if the vehicle is not a late model salvage or nonrepairable vehicle, the insurer is not required to surrender the regular title for the vehicle or to be issued a salvage or nonrepairable title. (5) Requires the insurer on delivery of the vehicle to a buyer to deliver a properly assigned title for the vehicle if an insurer acquires ownership of a vehicle other than a late model salvage or a nonrepairable vehicle. (6) Provides that this section does not apply to a vehicle that has been stolen and recovered unless the damage causes the vehicle to be a salvage or nonrepairable vehicle. (c)(1) Requires the insurer to submit to the department a report stating certain information if after a payment of a total loss claim on a late model salvage or nonrepairable vehicle an insurer does not acquire ownership of the vehicle. (2) Prohibits the owner of a late model salvage vehicle to which this section applies from transferring ownership of the vehicle by sale or otherwise unless the department has issued a salvage or nonrepairable title for the vehicle or a comparable ownership document. (d)(1) Prohibits a person that owns a late model salvage vehicle from selling, transferring, or releasing the vehicle to a person other than certain parties, and requires the person to deliver to that person a properly assigned title. Requires the purchaser, if the assigned title is not a salvage title, a nonrepairable title, or a comparable document, to surrender the title to the department and apply for a salvage or a nonrepairable title within 10 days after receiving the title. (2) Requires a dealer that acquires ownership of a late model salvage vehicle for the purpose of dismantling, scrapping, or destroying the vehicle to submit to the department a report stating that the dealer will perform such actions accompanied by a properly assigned regular certificate, salvage or nonrepairable title, or a comparable document. (3) Requires the department to issue the dealer a receipt for the title, salvage and nonrepairable title, or a comparable document. (e) Requires a dealer that acquires an older model vehicle for the purpose of dismantling, scrapping, or destroying the vehicle and that receives a properly assigned title to perform submit certain information to the department and keep a record of the vehicle for a certain within 31 days after the dealer acquires the vehicle. (f) Requires a person, other than a dealer or insurer, that acquires ownership of a late model salvage or a nonrepairable vehicle which has not been issued a salvage or nonrepairable title, or a comparable document to, before selling the vehicle, surrender the properly assigned title and apply to the department for a salvage or nonrepairable title, as appropriate. (g) Authorizes the owner of a late model salvage vehicle that has been issued a salvage or a nonrepairable title to sell the vehicle only to certain parties. (h) Sets forth requirements for an application for a salvage or nonrepairable title. (i)(1) Requires the department within six days of receiving a complete application and the prescribed fee to issue the applicant a salvage or nonrepairable title, as appropriate. (2) Requires a nonrepairable title to state that the vehicle may not be issued a regular title or registered in this state and may only be used for parts or scrap metal, except as provided by Subsections (n) and (p). (j) Entitles a person who holds a salvage title to possess, record a lien on, transport, and transfer ownership of the vehicle. Prohibits a vehicle for which a salvage title is the most current title from being operated on a public highway. (k)(1) Authorizes a vehicle for which a salvage title has been issued a regular title only after application and only if the application meets certain requirements. (2) Authorizes the Department of Public Safety (DPS) to prescribe a fee for conducting an inspection and providing the statement required by this subsection. (l)(1) Requires the department to issue the applicant a title on receipt of a complete application accompanied by the peace officer's statement and the appropriate fee for the title. (2) Sets forth requirements for the title issued under this subsection. (m)(1) Requires the department to issue the applicant a title or other appropriate document for the vehicle on proper application by the owner of a vehicle brought into this state from another state or jurisdiction that has on any title issued a "rebuilt," "salvage," "nonrepairable," or analogous notation. (2) Sets forth requirements for a title or other appropriate document issued under this subsection. (n) Entitles a person who holds a nonrepairable title to possess, dismantle, scrap, destroy, transport, or rebuild the vehicle; prohibits the person from operating the vehicle on a public highway; and authorizes the person to transfer ownership of the vehicle under certain circumstances. (o) Provides that a person commits an offense if the person applies to the department for a title and knows that the vehicle is a nonrepairable vehicle that has been rebuilt, except as provided by Subsection (p). (p)(1) Authorizes a person who rebuilds a nonrepairable vehicle to apply to the department for a title if the application meets certain requirements. (2) Authorizes the DPS to prescribe a fee for conducting the inspection and providing the statement required by this subsection. (3) Requires the department to issue the applicant a title for the vehicle that conforms to Subsection (1)(2) on receipt of an application and fee for the title. (q) Sets forth requirements for determining the estimated costs for repairs and labor. (r) Requires the department to print salvage and nonrepairable titles in a colors that show that each is the ownership document for a late model salvage or nonrepairable vehicle. (s) Requires a rebuilder to possess a title, a salvage title, a nonrepairable title, or a comparable document that is in the rebuilder's inventory and being offered for resale. (t) Authorizes a person that rebuilds a late model salvage vehicle for which the department has issued a salvage title or who assembles a salvage vehicle from component parts. Requires a title under this subsection to bear the words "REBUILT SALVAGE." (u) Provides that the department, or an agent, officer, or employee of the department, is not liable to a person damaged or injured by an act or omission relating to the issuance of a title, salvage title, or nonrepairable title. (v)(1) Provides that this section does not apply to or preclude or prohibit any sales to, purchases by, or other transactions by or with, a person described by Subsection (g), Article 6687-2b, V.T.C.S., with exceptions. (2) Requires a person described by Subsection (g), Article 6687-2b, V.T.C.S., to submit to the department the title or equivalent document that the person receives in conjunction with the purchase of a vehicle within 60 days after the date of receipt of the title or equivalent document. (3) Applies this section to a transaction with a person described by Subsection 9(g), Article 6687-2b, V.T.C.S., in which a vehicle is sold or delivered to the person for the purpose of reuse or resale as a vehicle or as vehicle parts. (w) Prohibits an owner to whom Section 152.065, Tax Code, applies from retaining for use or using a motor vehicle that has been issued a certificate of title under Subsection (l) for a usual commercial purpose of that owner. (x) Provides that this section does not prohibit the owner of a late model salvage vehicle or a nonrepairable vehicle from selling the vehicle to any person, if the vehicle is so classified solely because of water damage caused by flood conditions; or limit the ability or authority of an insurance company to adjust or settle a claim for loss on a motor vehicle. SECTION 2. Amends Section 62, Article 6687-1, V.T.C.S. (Certificate of Title Act), as follows: Sec. 62. (a) Created from existing text. Makes a conforming change. (b) Provides that a person who violates Section 37A or a rule adopted under Section 37A commits a Class A misdemeanor. SECTION 3. Repealer: Section 37, Article 6687-1, V.T.C.S. (Junking Motor Vehicle; Rebuilding or Assembling Motor Vehicle). SECTION 4. Provides that this Act takes effect September 1, 1995, but only if H.B. 2599 is enacted and becomes law. Provides that if H.B. 2599 does not become law, this Act has no effect. SECTION 5. Emergency clause.