By Carona H.B. No. 1616
74R5554 LJR-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of retail installment contracts of
1-3 certain goods and services.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subsections (a) and (b), Article 6.01, Title 79,
1-6 Revised Statutes (Article 5069-6.01, Vernon's Texas Civil
1-7 Statutes), are amended to read as follows:
1-8 (a) "Goods" means all tangible personal property when
1-9 purchased primarily for personal, family or household use and not
1-10 for commercial or business use, including such property which is
1-11 furnished or used at the time of sale or subsequently, in the
1-12 modernization, rehabilitation, repair, alteration, improvement or
1-13 construction of real property so as to become a part thereof
1-14 whether or not severable therefrom. The term also includes, but is
1-15 not limited to, a structure, except a mobile home, to be used as a
1-16 residence, any boat, boat-trailer, motor scooter, motor-assisted
1-17 bicycle, motorcycle, trailer designed or intended to be pulled by,
1-18 or to transport, a motor scooter, motor-assisted bicycle,
1-19 motorcycle or all-terrain vehicle, recreational vehicles commonly
1-20 known as travel trailers designed for temporary living
1-21 accommodations, camper-type trailer, horse trailer, any vehicle
1-22 propelled or drawn exclusively by muscular power, and merchandise
1-23 certificates or coupons, issued by a retail seller, not redeemable
1-24 in cash and to be used in their face amount in lieu of cash, in
2-1 exchange for goods or services sold by such seller.
2-2 The term does not include (i) money, things in action or
2-3 intangible personal property, other than merchandise certificates
2-4 or coupons as herein described; or (ii) any automobile, mobile
2-5 home, truck, trailer, other than a trailer expressly included in
2-6 the term, semi-trailer, truck tractor or bus designed and used
2-7 primarily to transport persons or property on a public highway; or
2-8 (iii) any vehicle designed to run only on rails or tracks or in the
2-9 air, as defined in Chapter 7 of this Subtitle; or (iv) any goods
2-10 which are authorized to be and are included in a contract subject
2-11 to Chapter 7 of this Subtitle.
2-12 (b) "Services" means work, labor, or services of any kind
2-13 when purchased primarily for personal, family or household use and
2-14 not for commercial or business use, and includes a maintenance or
2-15 service contract or agreement or warranty, but does not include (i)
2-16 the services, other than prepaid funeral benefits regulated by
2-17 Article 548b, Vernon's Texas Civil Statutes, of a professional
2-18 person licensed by the State except when those services are
2-19 rendered in connection with the purchase of goods; or (ii) services
2-20 for which the cost is by law fixed or approved by, or filed with or
2-21 subject to approval or disapproval by the United States or the
2-22 State of Texas, or any agency, instrumentality or subdivision
2-23 thereof; or (iii) educational services provided by an accredited
2-24 college or university or a primary or secondary school providing
2-25 education required by the State of Texas or services of a
2-26 kindergarten or nursery school; or (iv) any services which are
2-27 authorized to be and are included in a contract subject to Chapter
3-1 7 of this Subtitle; or (v) any <medical or> legal services.
3-2 SECTION 2. Subsections (2) and (3), Article 6.02, Title 79,
3-3 Revised Statutes (Article 5069-6.02, Vernon's Texas Civil
3-4 Statutes), are amended to read as follows:
3-5 (2) The printed or typed portion of the contract, other than
3-6 instructions for completion, shall be in a size equal to at least
3-7 eight-point type. The contract shall be designated "Retail
3-8 Installment Contract" and shall contain substantially the following
3-9 notice printed or typed in a size equal to at least ten-point
3-10 <bold> type that is boldfaced, capitalized, underlined, or
3-11 otherwise set out from surrounding written material so as to be
3-12 conspicuous:
3-13 "NOTICE TO THE BUYER. DO NOT SIGN THIS CONTRACT BEFORE
3-14 YOU READ IT OR IF IT CONTAINS BLANK SPACES. YOU ARE
3-15 ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. UNDER THE
3-16 LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE FULL
3-17 AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN A
3-18 PARTIAL REFUND OF THE FINANCE CHARGE. KEEP THIS
3-19 CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
3-20 (3) The retail seller shall deliver to the retail buyer, or
3-21 mail to him at his address shown on the retail installment
3-22 contract, a copy of the contract as accepted by the seller. Until
3-23 the seller does so, a buyer, who has not received delivery of the
3-24 goods or been furnished or rendered the services, shall have the
3-25 right to rescind the contract and to receive a refund of all
3-26 payments made and return of all goods traded in to the seller on
3-27 account of or in contemplation of the contract, or if such goods
4-1 cannot be returned, the trade-in allowance thereof. Any
4-2 acknowledgement by the buyer of delivery of a copy of the contract
4-3 shall be in a size equal to at least ten-point <bold> type that is
4-4 boldfaced, capitalized, underlined, or otherwise set out from
4-5 surrounding written material so as to be conspicuous and, if
4-6 contained in the contract, shall appear directly above the buyer's
4-7 signature.
4-8 SECTION 3. Subsection (1), Article 6.03, Title 79, Revised
4-9 Statutes (Article 5069-6.03, Vernon's Texas Civil Statutes), is
4-10 amended to read as follows:
4-11 (1) A retail charge agreement may be established by a seller
4-12 or credit card issuer upon the request of a buyer or prospective
4-13 buyer. The retail charge agreement shall be in writing and signed
4-14 by the buyer. A copy of such agreement executed on or after the
4-15 effective date of this Chapter shall be delivered or mailed to the
4-16 buyer prior to the date on which the first payment is due
4-17 thereunder. Any acknowledgment by the buyer of delivery of a copy
4-18 of the agreement contained in the body thereof shall be in a size
4-19 equal to at least ten-point <bold> type that is boldfaced,
4-20 capitalized, underlined, or otherwise set out from surrounding
4-21 written material so as to be conspicuous and shall appear directly
4-22 above the buyer's signature. No agreement executed on or after the
4-23 effective date of this Chapter shall be signed by the buyer when it
4-24 contains blank spaces to be filled in after it has been signed.
4-25 The buyer's acknowledgment, conforming to the requirements of this
4-26 section, of delivery of a copy of an agreement, shall be
4-27 presumptive proof, in any action or proceeding, of such delivery
5-1 and that the agreement, when signed, did not contain any blank
5-2 spaces as herein provided. If no copy of the agreement is retained
5-3 by the seller, a notation in his permanent record showing that such
5-4 agreement was mailed and the date of mailing shall serve as
5-5 presumptive proof of such mailing. Any such agreement shall
5-6 contain substantially the following notice printed or typed in a
5-7 size equal to at least ten-point <bold> type that is boldfaced,
5-8 capitalized, underlined, or otherwise set out from surrounding
5-9 written material so as to be conspicuous:
5-10 "NOTICE TO THE BUYER--DO NOT SIGN THIS AGREEMENT BEFORE
5-11 YOU READ IT OR IF IT CONTAINS BLANK SPACES. YOU ARE
5-12 ENTITLED TO A COPY OF THE AGREEMENT YOU SIGN. KEEP
5-13 THIS AGREEMENT TO PROTECT YOUR LEGAL RIGHTS."
5-14 SECTION 4. Chapter 6, Title 79, Revised Statutes (Article
5-15 5069-6.01 et seq., Vernon's Texas Civil Statutes), is amended by
5-16 adding Article 6.13 to read as follows:
5-17 Art. 6.13. RATES FOR MEDICAL AND DENTAL SERVICES. Medical
5-18 or dental services may be financed only at rates authorized by
5-19 Article 1.04 of this title.
5-20 SECTION 5. Subsection (1), Article 6.06, Title 79, Revised
5-21 Statutes (Article 5069-6.06, Vernon's Texas Civil Statutes), is
5-22 amended to read as follows:
5-23 (1) A seller who has entered into a retail installment
5-24 transaction to perform services or install goods for the
5-25 modernization, rehabilitation, repair, alteration, improvement or
5-26 construction of improvements on real property shall obtain a
5-27 certificate of completion or certificate of satisfaction
6-1 (hereinafter designated "certificate") signed by the buyer, when
6-2 all such goods and/or services purchased under a retail installment
6-3 contract have been performed or installed as required by such
6-4 contract; and may obtain such a certificate whether or not any
6-5 guarantee or warranty of the goods or services remains in force.
6-6 Such certificate shall be a separate writing and shall have the
6-7 following notation at the top thereof in at least ten-point <bold>
6-8 type that is boldfaced, capitalized, underlined, or otherwise set
6-9 out from surrounding written material so as to be conspicuous:
6-10 WARNING TO BUYER--DO NOT SIGN THIS CERTIFICATE UNTIL
6-11 ALL SERVICES HAVE BEEN SATISFACTORILY PERFORMED AND
6-12 MATERIALS SUPPLIED OR GOODS RECEIVED AND FOUND
6-13 SATISFACTORY.
6-14 SECTION 6. Article 6.07, Title 79, Revised Statutes (Article
6-15 5069-6.07, Vernon's Texas Civil Statutes), is amended to read as
6-16 follows:
6-17 Art. 6.07. ASSIGNMENT AND NEGOTIATION. Notwithstanding the
6-18 provisions of any other law, a person may purchase or acquire or
6-19 agree to purchase or acquire any retail installment contract or
6-20 retail charge agreement or any outstanding balance under either
6-21 from another person on such terms and conditions and for such price
6-22 as may be mutually agreed upon. Notice to the buyer of the
6-23 assignment or negotiation and any requirement that the seller be
6-24 deprived of dominion over payments upon a retail installment
6-25 contract or retail charge agreement, or over the goods if returned
6-26 to or repossessed by the seller, is not necessary to the validity
6-27 of a written assignment or negotiation of the retail installment
7-1 contract or retail charge agreement or any outstanding balance
7-2 under either, as against creditors, subsequent purchasers, pledges,
7-3 mortgagees and lien claimants of the seller. Unless the buyer has
7-4 notice of the assignment or negotiation of his retail installment
7-5 contract, retail charge agreement or any outstanding balance under
7-6 either, payment therefor made by the buyer to the holder last known
7-7 to him shall be binding upon all subsequent holders. No right of
7-8 action or defense of a buyer arising out of a retail installment
7-9 transaction which would be cut off by negotiation, shall be cut off
7-10 by negotiation of the retail installment contract or retail charge
7-11 agreement to any third party unless such holder acquires the
7-12 contract relying in good faith upon a certificate of completion or
7-13 certificate of satisfaction, if required by the provisions of
7-14 Article 6.06; and such holder gives notice of the negotiation to
7-15 the buyer as provided in this Article, and within thirty days of
7-16 the mailing of such notice receives no written notice from the
7-17 buyer of any facts giving rise to any claim or defense of the
7-18 buyer. Such notice of negotiation shall be in writing addressed to
7-19 the buyer at the address shown on the contract and shall: identify
7-20 the contract; state the names and addresses of the seller and
7-21 buyer; describe the goods or services; state the time balance and a
7-22 description of the payment schedule. The notice of negotiation
7-23 shall contain the following warning to the buyer in at least
7-24 ten-point <bold face> type that is boldfaced, capitalized,
7-25 underlined, or otherwise set out from surrounding written material
7-26 so as to be conspicuous:
7-27 ARE THE TERMS OF THE CONTRACT DESCRIBED ABOVE CORRECT
8-1 AND ARE YOU SATISFIED WITH THE GOODS OR SERVICES
8-2 FURNISHED? IF NOT, YOU SHOULD NOTIFY US GIVING DETAILS
8-3 WITHIN 30 DAYS FROM THE DATE THE ABOVE NOTICE WAS
8-4 MAILED.
8-5 SECTION 7. Subsection (b), Article 6.10, Title 79, Revised
8-6 Statutes (Article 5069-6.10, Vernon's Texas Civil Statutes), is
8-7 amended to read as follows:
8-8 (b) Preliminary worksheets that are shown to the buyer in
8-9 which a sale price is computed, an order from the buyer, and the
8-10 retail installment contract must include, in reasonable proximity
8-11 to the place in the worksheet, order, or contract where the
8-12 documentary fee is disclosed, the amount of the fee and the
8-13 following notice in <bold-faced> type that is boldfaced,
8-14 capitalized, underlined, or otherwise set out from surrounding
8-15 written material so as to be conspicuous:
8-16 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
8-17 DOCUMENTARY FEE <AND> IS NOT REQUIRED BY LAW, BUT MAY
8-18 BE CHARGED TO BUYERS <A BUYER> FOR <THE> HANDLING <OF>
8-19 DOCUMENTS AND <THE> PERFORMING <OF> SERVICES RELATING
8-20 <RELATED> TO THE CLOSING OF A SALE. BUYERS <A BUYER>
8-21 MAY AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING
8-22 THE <THESE> DOCUMENTS AND PERFORMING THE <THESE>
8-23 SERVICES RELATING TO THE CLOSING OF THE SALE. A
8-24 DOCUMENTARY FEE MAY NOT EXCEED $50. THIS NOTICE IS
8-25 REQUIRED BY LAW."
8-26 SECTION 8. Subsection (d), Article 7.01, Title 79, Revised
8-27 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
9-1 amended to read as follows:
9-2 (d) "Retail Installment Transaction" or "Transaction" means
9-3 any transaction as a result of which a retail buyer acquires a
9-4 motor vehicle from a retail seller <under a retail installment
9-5 contract for a sum consisting of the cash sale price and other
9-6 charges as limited by this Chapter> and agrees with a retail seller
9-7 to pay part or all of the cash price <such sum> in one or more
9-8 deferred installments. All such transactions shall be under a
9-9 retail installment contract and be subject to the provisions of
9-10 this chapter. The term shall include every transaction wherein the
9-11 promise or agreement to pay the deferred balance of the cash price
9-12 <such sum> is made by the retail buyer to the retail seller
9-13 notwithstanding the existence or occurrence of any one or more of
9-14 the following events: (i) that the retail seller has arranged or
9-15 arranges to sell, transfer or assign the retail buyer's obligation;
9-16 (ii) that the amount of any <the> charges is determined by
9-17 reference to charts or information furnished by a financing
9-18 institution; (iii) that the forms of instruments used to evidence
9-19 the retail installment transaction are furnished by a financing
9-20 institution; and (iv) that the credit standing of the retail buyer
9-21 is or has been evaluated by a financing institution.
9-22 SECTION 9. Subsections (2)-(4), Article 7.02, Title 79,
9-23 Revised Statutes (Article 5069-7.02, Vernon's Texas Civil
9-24 Statutes), are amended to read as follows:
9-25 (2) The printed portion of the retail installment contract,
9-26 other than instructions for completion, shall be in a size equal to
9-27 at least eight-point type. Such contract shall contain
10-1 substantially the following notice in a size equal to at least
10-2 ten-point <bold> type that is boldfaced, capitalized, underlined,
10-3 or otherwise set out from surrounding written material so as to be
10-4 conspicuous:
10-5 "NOTICE TO THE BUYER--DO NOT SIGN THIS CONTRACT BEFORE
10-6 YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES. YOU
10-7 ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN. UNDER
10-8 THE LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE
10-9 FULL AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN
10-10 A PARTIAL REFUND OF THE FINANCE CHARGE. KEEP THIS
10-11 CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
10-12 (3) A retail installment contract or separate written
10-13 statement shall also contain, in a size equal to at least ten-point
10-14 <bold> type that is boldfaced, capitalized, underlined, or
10-15 otherwise set out from surrounding written material so as to be
10-16 conspicuous, a specific statement that liability insurance coverage
10-17 for bodily injury and property damage caused to others is not
10-18 included, if that is the case.
10-19 (4) The seller shall deliver to the buyer, or mail to him at
10-20 his address shown on the retail installment contract, a copy of
10-21 such contract as accepted by the seller. Until the seller does so,
10-22 a buyer who has not received delivery of the motor vehicle shall
10-23 have the right to rescind his contract and to receive a refund of
10-24 all payments made and a return of all goods traded in to the seller
10-25 on account of or in contemplation of such contract, or if the goods
10-26 traded in cannot be returned, the value thereof. Any
10-27 acknowledgment by the buyer of delivery of a copy of the retail
11-1 installment contract shall be in a size equal to at least ten-point
11-2 <bold> type that is boldfaced, capitalized, underlined, or
11-3 otherwise set out from surrounding written material so as to be
11-4 conspicuous and shall appear directly above the buyer's signature.
11-5 SECTION 10. This Act applies only to acts done and
11-6 transactions entered into on or after the effective date of this
11-7 Act. Acts done and transactions entered into before the effective
11-8 date of this Act are governed by the law in effect immediately
11-9 before this Act takes effect, and that law continues in effect for
11-10 that purpose.
11-11 SECTION 11. This Act takes effect September 1, 1995.
11-12 SECTION 12. The importance of this legislation and the
11-13 crowded condition of the calendars in both houses create an
11-14 emergency and an imperative public necessity that the
11-15 constitutional rule requiring bills to be read on three several
11-16 days in each house be suspended, and this rule is hereby suspended.
11-17 COMMITTEE AMENDMENT NO. 1
11-18 Amend H.B. No. 1616 on page 2 by striking line 16 and
11-19 substituting "the services, other than medical or dental services
11-20 or prepaid funeral benefits regulated by".
11-21 74R7045 LJR-D Marchant