By Bosse H.B. No. 1571
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of certain persons engaged in the
1-3 business of motor vehicle leasing.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-6 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-7 read as follows:
1-8 Sec. 1.03. Definitions. In this Act:
1-9 (1) "Motor vehicle" means:
1-10 (A) every fully self-propelled vehicle which has
1-11 as its primary purpose the transport of a person or persons, or
1-12 property, on a public highway, and having two or more wheels;
1-13 (B) every two or more wheeled fully
1-14 self-propelled, titled vehicle which has as its primary purpose the
1-15 transport of a person or persons or property and is not
1-16 manufactured for use on public streets, roads, or highways; or
1-17 (C) an engine, transmission, or rear axle
1-18 manufactured for installation in a vehicle having as its primary
1-19 purpose the transport of a person or persons or property on a
1-20 public highway and having a gross vehicle weight rating of more
1-21 than 16,000 pounds, whether or not attached to a vehicle chassis.
1-22 (2) "New motor vehicle" means a motor vehicle which
1-23 has not been the subject of a "retail sale" without regard to the
2-1 mileage of the vehicle.
2-2 (3) "Person" means a natural person, partnership,
2-3 corporation, association, trust, estate, or any other legal entity.
2-4 (4) "Dealer" means any person engaged in the business
2-5 of buying, selling or exchanging new motor vehicles at an
2-6 established and permanent place of business pursuant to a franchise
2-7 in effect with a manufacturer or distributor.
2-8 (5) "Manufacturer" means any person who manufactures
2-9 or assembles new motor vehicles either within or without this
2-10 State.
2-11 (6) "Distributor" means any person who distributes
2-12 and/or sells new motor vehicles to dealers and who is not a
2-13 manufacturer.
2-14 (7) "Representative" means any person who is or acts
2-15 as an agent, employee or representative of a manufacturer,
2-16 distributor, or converter who performs any duties in this State
2-17 relating to promoting the distribution and/or sale of new motor
2-18 vehicles or contacts dealers in this State on behalf of a
2-19 manufacturer, distributor, or converter.
2-20 (8) "Franchise" means one or more contracts between a
2-21 dealer as franchisee, and either a manufacturer or a distributor as
2-22 franchisor under which (A) the franchisee is granted the right to
2-23 sell new motor vehicles manufactured or distributed by the
2-24 franchisor; (B) the franchisee as an independent business is a
2-25 component of franchisor's distribution system; (C) the franchisee
3-1 is substantially associated with franchisor's trademark, tradename
3-2 and commercial symbol; (D) the franchisee's business is
3-3 substantially reliant on franchisor for a continued supply of motor
3-4 vehicles, parts, and accessories for the conduct of its business;
3-5 or (E) any right, duty, or obligation granted or imposed by this
3-6 Act is affected. The term includes a written communication from a
3-7 franchisor to a franchisee by which a duty is imposed on the
3-8 franchisee.
3-9 (9)
3-10 (10) "Broker" means a person who, for a fee,
3-11 commission, or other valuable consideration, arranges or offers to
3-12 arrange a transaction involving the sale, for purposes other than
3-13 resale, of a new motor vehicle, and who is not:
3-14 (A) a dealer or bona fide employee of a dealer
3-15 when acting on behalf of a dealer;
3-16 (B) a representative or bona fide employee of a
3-17 representative when acting on behalf of a representative;
3-18 (C) a distributor or bona fide employee of a
3-19 distributor when acting on behalf of a distributor; or
3-20 (D) at any point in the transaction the bona
3-21 fide owner of the vehicle involved in the transaction.
3-22 (11) "Motor home" means a motor vehicle which is
3-23 designed to provide temporary living quarters and which:
3-24 (A) is built onto as an integral part of, or is
3-25 permanently attached to, a motor vehicle chassis; and
4-1 (B) contains at least four of the following
4-2 independent life support systems if each is permanently installed
4-3 and designed to be removed only for purposes of repair or
4-4 replacement and meets the standards of the American National
4-5 Standards Institute, Standards for Recreational Vehicles:
4-6 (i) a cooking facility with an on-board
4-7 fuel source;
4-8 (ii) a gas or electric refrigerator;
4-9 (iii) a toilet with exterior evacuation;
4-10 (iv) a heating or air conditioning system
4-11 with an on-board power or fuel source separate from the vehicle
4-12 engine;
4-13 (v) a potable water supply system that
4-14 includes at least a sink, a faucet, and a water tank with an
4-15 exterior service supply connection;
4-16 (vi) a 110-125 volt electric power supply.
4-17 (12) "Conversion" means a motor vehicle, other than a
4-18 motor home, which has been substantially modified by a person other
4-19 than the manufacturer or distributor of the chassis of the motor
4-20 vehicle and which has not been the subject of a retail sale.
4-21 (13) "Motor home manufacturer" means a person other
4-22 than the manufacturer of the chassis of a motor vehicle who, prior
4-23 to the retail sale of the motor vehicle, performs modifications on
4-24 the chassis that result in the finished product being classified as
4-25 a motor home.
5-1 (14) "Chassis manufacturer" means a person who
5-2 manufactures and produces the frame upon which is mounted the body
5-3 of a motor vehicle.
5-4 (15) "Converter" means a person who prior to the
5-5 retail sale of a motor vehicle, assembles, installs, or affixes a
5-6 body, cab, or special equipment to a chassis, or who substantially
5-7 adds, subtracts from, or modifies a previously assembled or
5-8 manufactured motor vehicle.
5-9 (16) "Rule" means a statement by the Commission of
5-10 general and future applicability that implements, interprets, or
5-11 prescribes law or policy or describes the organization or
5-12 procedural practice requirements of the Commission. The term
5-13 includes the amendment or repeal of a prior rule, but does not
5-14 include statements concerning only the internal management of the
5-15 Commission which do not affect the rights of a person not connected
5-16 with the Commission.
5-17 (17) "Party" means each person or agency named or
5-18 admitted as a party and whose legal rights, duties, or privileges
5-19 are to be determined by the Commission after an opportunity for
5-20 adjudicative hearing.
5-21 (18) "Relocation" means the transfer of an existing
5-22 dealership operation to facilities at a different location,
5-23 including a transfer which results in a consolidation or dualing of
5-24 an existing dealer's operation.
5-25 (19) "Retail sale" means the sale of a motor vehicle
6-1 except:
6-2 (A) a sale in which the purchaser acquires a
6-3 vehicle for the purpose of resale; or
6-4 (B) a sale of a vehicle that is operated under
6-5 and in accordance with Article 6686, Revised Statutes.
6-6 (20) "Warranty work" means parts, labor, and any other
6-7 expenses incurred by a dealer in complying with the terms of a
6-8 manufacturer's or distributor's warranty.
6-9 (21) "Department" means the Texas Department of
6-10 Transportation.
6-11 (22) "Transportation Commission" means the Texas
6-12 Transportation Commission of the Texas Department of
6-13 Transportation.
6-14 (23) "Lease" means a transfer of the right to
6-15 possession and use of a motor vehicle for a term in excess of 180
6-16 days in return for consideration.
6-17 (24) "Lessor" means a person who acquires title to a
6-18 new motor vehicle for the purpose of leasing the vehicle to another
6-19 person.
6-20 (25) "Lease Facilitator" means a person, other than a
6-21 dealer or a bona fide employee of a dealer, or a vehicle lessor or
6-22 a bona fide employee of a vehicle lessor, who:
6-23 (1) holds himself out to any person as a "motor
6-24 vehicle leasing company" or "motor vehicle leasing agent" or uses a
6-25 similar title, for the purpose of soliciting or procuring a person
7-1 to enter into a contract or agreement to become the lessee of a
7-2 vehicle that is not, and will not be, titled in the name of and
7-3 registered to the lease facilitator; or
7-4 (2) otherwise solicits a person to enter into a
7-5 contract or agreement to become a lessee of a vehicle that is not,
7-6 and will not be, titled in the name of and registered to the lease
7-7 facilitator, or who is otherwise engaged in the business of
7-8 securing lessees or prospective lessees of motor vehicles that are
7-9 not, and will not be, titled in the name of and registered to the
7-10 facilitator.
7-11 (26) "Manufacturer's Statement of Origin" means a
7-12 certificate on a form prescribed by the Department showing the
7-13 original transfer of a new motor vehicle from the manufacturer to
7-14 the original purchaser.
7-15 SECTION 2. Section 3.01(a), Texas Motor Vehicle Commission
7-16 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
7-17 to read as follows:
7-18 (a) The Commission has <is hereby delegated and vested
7-19 with, in the exercise of the State's police power,> the general and
7-20 original power and jurisdiction to regulate all aspects of the
7-21 distribution, <and> sale, and leasing of new motor vehicles and to
7-22 do all things, whether specifically designated in this Act or
7-23 implied herein, or necessary or convenient to the exercise of this
7-24 power and jurisdiction, including the original jurisdiction to
7-25 determine questions of its own jurisdiction.
8-1 SECTION 3. Section 3.02(a), Texas Motor Vehicle Commission
8-2 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
8-3 to read as follows:
8-4 (a) The Commission shall, in accordance with this Act,
8-5 administer the provisions of this Act, establish the qualifications
8-6 of licensees <manufacturers, distributors, converters, and
8-7 dealers>, ensure that the distribution, <and> sale and leasing of
8-8 motor vehicles is conducted as provided herein and under the
8-9 Commission's rules, provide for compliance with warranties, and
8-10 otherwise prevent fraud, unfair practices, discriminations,
8-11 impositions, and other abuses in connection with the distribution
8-12 and sale of new motor vehicles.
8-13 SECTION 4. Section 4.01, Texas Motor Vehicle Commission Code
8-14 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
8-15 read as follows:
8-16 Sec. 4.01. License Required. No person shall engage in
8-17 business as, serve in the capacity of, or act as a dealer,
8-18 manufacturer, distributor, converter, <or> representative, lessor,
8-19 or lease facilitator in this State without obtaining a license
8-20 therefor as provided in this Act and the rules of the Commission.
8-21 All new license applications shall be reviewed and, in the
8-22 discretion of the Commission, investigated to determine compliance
8-23 with the provisions of this Act. License renewals may be
8-24 administratively granted unless protested. Licenses issued by the
8-25 Commission shall expire one year from date of issuance.
9-1 Notwithstanding the effective date of any franchise agreement, all
9-2 licenses and renewals thereof are issued subject to all provisions
9-3 of this Act and rules of the Commission in effect upon the date of
9-4 issuance as well as all future provisions of this Act and rules
9-5 which may become effective during the term of the license.
9-6 SECTION 5. The Texas Motor Vehicle Commission Code (Article
9-7 4413(36), Vernon's Texas Civil Statutes), is amended by adding
9-8 Sections 4.03A and 4.03B to read as follows:
9-9 Sec. 4.03A. LESSOR APPLICATION. An application for a
9-10 lessor license shall be on a form prescribed by the Commission and
9-11 shall contain evidence of compliance with Article 6686, Revised
9-12 Statutes, if applicable, and other information prescribed by the
9-13 Commission. This Act does not require a separate license for each
9-14 individual employee of a lessor.
9-15 Sec. 4.03B. LEASE FACILITATOR APPLICATION. An application
9-16 of a lease facilitator license shall be on a form prescribed by the
9-17 Commission and shall contain the information prescribed by the
9-18 Commission. This Act does not require a separate license for each
9-19 individual employee of a lease facilitator.
9-20 SECTION 6. Section 4.05(a), Texas Motor Vehicle Commission
9-21 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended
9-22 to read as follows:
9-23 (a) The annual license fees for licenses issued hereunder
9-24 shall be as follows:
9-25 (1) For each manufacturer and distributor, $825.
10-1 (2) For each dealer who sold 200 or fewer new motor
10-2 vehicles during the preceding calendar year, $165.
10-3 (3) For each dealer who sold more than 200, but not
10-4 more than 500, new motor vehicles during the preceding calendar
10-5 year, $275.
10-6 (4) For each dealer who sold more than 500, but not
10-7 more than 1,000, new motor vehicles during the preceding calendar
10-8 year, $385.
10-9 (5) For each dealer who sold more than 1,000 new motor
10-10 vehicles during the preceding calendar year, $495.
10-11 (6) For each representative, $85.
10-12 (7) For each converter, $275.
10-13 (8) For each amendment to a dealer's license, $25.
10-14 (9) For each lessor, $750.
10-15 (10) For each lease facilitator, $375.
10-16 SECTION 7. Section 5.01, Texas Motor Vehicle Commission Code
10-17 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
10-18 read as follows:
10-19 Sec. 5.01. Dealers. It shall be unlawful for any dealer
10-20 to:
10-21 (1) Require a retail purchaser of a new motor vehicle
10-22 as a condition of sale and delivery thereof to purchase special
10-23 features, equipment, parts, or accessories not ordered or desired
10-24 by the purchaser, provided such features, equipment, parts, or
10-25 accessories are not already installed on the new motor vehicle at
11-1 the time of sale.
11-2 (2) Use false, deceptive, or misleading advertising.
11-3 (3) Fail to perform the obligations placed on the
11-4 selling dealer in connection with the delivery and preparation of a
11-5 new motor vehicle for retail sale as provided in the manufacturer's
11-6 preparation and delivery agreements on file with the Commission and
11-7 applicable to such vehicle.
11-8 (4) Fail to perform the obligations placed on the
11-9 dealer in connection with the manufacturer's warranty agreements on
11-10 file with the Commission.
11-11 (5) Operate as a dealer without a currently valid
11-12 license from the Commission or otherwise violate this Act or rules
11-13 promulgated by the Commission hereunder.
11-14 (6) Operate without appropriate signs readily and
11-15 easily visible to the public, identifying the dealer's place of
11-16 business and the products the dealer offers for sale. In the event
11-17 of a conflict with another law or ordinance, this Subdivision
11-18 prevails, and in the event of a dispute, the Board has exclusive
11-19 jurisdiction to determine whether a sign or signs are in compliance
11-20 with the terms of this Subdivision. In the event of a dispute, the
11-21 Board shall uphold local ordinances of a home-rule city and protect
11-22 dealers from retribution by manufacturers for having complied with
11-23 local ordinances.
11-24 (7) Directly or indirectly pay a fee to a lessor or
11-25 lease facilitator.
12-1 SECTION 8. The Texas Motor Vehicle Commission Code (Article
12-2 4413(36), Vernon's Texas Civil Statutes), is amended by adding
12-3 Sections 5.03A and 5.03B to read as follows:
12-4 Sec. 5.03A. LESSORS. (a) A lessor may not directly or
12-5 indirectly accept a fee from a dealer.
12-6 (b) A lessor may not pay a fee to any person in return for
12-7 the solicitation, procurement or production by that person of
12-8 prospective lessees of motor vehicles unless the person receiving
12-9 the fee is a lease facilitator who holds a valid license as
12-10 provided by this code and a valid appointment from the lessor as
12-11 provided by this section.
12-12 (c) A lessor may appoint one or more lease facilitators
12-13 licensed pursuant to the terms of this code to represent the lessor
12-14 in obtaining prospective lease customers. An appointment complies
12-15 with the requirements of this subsection if it is in writing,
12-16 discloses its term, and otherwise complies with rules of the
12-17 Commission.
12-18 (d) In a lease contract between a lessor and a lessee
12-19 solicited, procured or produced by a lease facilitator, the lessor
12-20 shall disclose to the lessee that a fee was paid, or will be paid
12-21 to the lease facilitator for the solicitation, procurement or
12-22 production of the lessee or the lease. The lessor shall include
12-23 the disclosure required by this subsection in a prominent position
12-24 either:
12-25 (1) on the face of the written memorandum of the lease
13-1 agreement; or
13-2 (2) on a separate instrument signed by the lessee at
13-3 the same time as the signing of the lease.
13-4 Sec. 5.03B. LEASE FACILITATORS. (a) No person may hold
13-5 himself out to any person as a "leasing company", "leasing agent",
13-6 "lease facilitator" or similar title, directly or indirectly engage
13-7 in the business of lease facilitator or otherwise engage in the
13-8 solicitation or procurement of prospective lessees for motor
13-9 vehicles not titled in the name of and registered to the person,
13-10 unless the person holds a valid lease facilitator license and is in
13-11 compliance with the terms of this code.
13-12 (b) A lease facilitator may not:
13-13 (1) sell or offer to sell a new motor vehicle;
13-14 (2) accept a fee from a dealer;
13-15 (3) sign a motor vehicle manufacturer's statement of
13-16 origin to a vehicle, accept an assignment of a manufacturer's
13-17 statement of origin to a vehicle, or otherwise assume any element
13-18 of title to a new motor vehicle;
13-19 (4) procure or solicit prospective lessees for or on
13-20 behalf of any person other than a lessor; or
13-21 (5) act in the capacity of, or engage in the business
13-22 of lease facilitator without a valid license issued as provided by
13-23 this code and a valid appointment from a lessor to act on behalf of
13-24 the lessor in soliciting prospective lease clients or customers as
13-25 provided by this code.
14-1 (c) Except as provided by Subsection (b)(2) of this section,
14-2 a lease facilitator may accept a fee for procuring a vehicle lessee
14-3 or prospective vehicle lessee for or on behalf of a lessor.
14-4 (d) This section does not limit the ability of a lease
14-5 facilitator to accept an appointment from more than one lessors.
14-6 SECTION 9. The importance of this legislation and the
14-7 crowded condition of the calendars in both houses create an
14-8 emergency and an imperative public necessity that the
14-9 constitutional rule requiring bills to be read on three several
14-10 days in each house be suspended, and this rule is hereby suspended,
14-11 and that this Act take effect and be in force from and after its
14-12 passage, and it is so enacted.