By:  Madla                                             S.B. No. 872
                                 A BILL TO BE ENTITLED
                                        AN ACT
    1-1  relating to the regulation of retail installment contracts of
    1-2  certain goods and services.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Sections (a) and (b), Article 6.01, Title 79,
    1-5  Revised Statutes (Article 5069-6.01, Vernon's Texas Civil
    1-6  Statutes), are amended to read as follows:
    1-7        (a)  "Goods" means all tangible personal property when
    1-8  purchased primarily for personal, family or household use and not
    1-9  for commercial or business use, including such property which is
   1-10  furnished or used at the time of sale or subsequently, in the
   1-11  modernization, rehabilitation, repair, alteration, improvement or
   1-12  construction of real property so as to become a part thereof
   1-13  whether or not severable therefrom.  The term also includes, but is
   1-14  not limited to, a structure, except a mobile home, to be used as a
   1-15  residence, any boat, boat-trailer, motor scooter, motor-assisted
   1-16  bicycle, motorcycle, trailer designed or intended to be pulled by
   1-17  or to transport a motor scooter, motor-assisted bicycle, motorcycle
   1-18  or all-terrain vehicle, recreational vehicle commonly known as a
   1-19  travel trailer designed for temporary living accommodations,
   1-20  camper-type trailer, horse trailer, any vehicle propelled or drawn
   1-21  exclusively by muscular power, and merchandise certificates or
   1-22  coupons, issued by a retail seller, not redeemable in cash and to
   1-23  be used in their face amount in lieu of cash, in exchange for goods
   1-24  or services sold by such seller.
    2-1        The term does not include (i) money, things in action or
    2-2  intangible personal property, other than merchandise certificates
    2-3  or coupons as herein described; or (ii) any automobile, mobile
    2-4  home, truck, trailer, other than a trailer expressly included in
    2-5  the term, semi-trailer, truck tractor or bus designed and used
    2-6  primarily to transport persons or property on a public highway; or
    2-7  (iii) any vehicle designed to run only on rails or tracks or in the
    2-8  air, as defined in Chapter 7 of this Subtitle; or (iv) any goods
    2-9  which are authorized to be and are included in a contract subject
   2-10  to Chapter 7 of this Subtitle.
   2-11        (b)  "Services" means work, labor, or services of any kind
   2-12  when purchased primarily for personal, family or household use and
   2-13  not for commercial or business use, and includes a maintenance or
   2-14  service contract or agreement or warranty, but does not include
   2-15  (i) the services, other than medical or dental services, or prepaid
   2-16  funeral benefits regulated by Article 548b, Vernon's Texas Civil
   2-17  Statutes, of a professional person licensed by the State except
   2-18  when those services are rendered in connection with the purchase of
   2-19  goods; or (ii) services for which the cost is by law fixed or
   2-20  approved by, or filed with or subject to approval or disapproval by
   2-21  the United States or the State of Texas, or any agency,
   2-22  instrumentality or subdivision thereof; or (iii) educational
   2-23  services provided by an accredited college or university or a
   2-24  primary or secondary school providing education required by the
   2-25  State of Texas or services of a kindergarten or nursery school; or
   2-26  (iv) any services which are authorized to be and are included in a
   2-27  contract subject to Chapter 7 of this Subtitle; or (v) any <medical
    3-1  or> legal services.
    3-2        SECTION 2.  Sections (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 boldface, capitalized, underlined, or otherwise
   3-11  set out from surrounding written material so as to be conspicuous:
   3-12        "NOTICE TO THE BUYER.  DO NOT SIGN THIS CONTRACT BEFORE
   3-13        YOU READ IT OR IF IT CONTAINS BLANK SPACES.  YOU ARE
   3-14        ENTITLED TO A COPY OF THE CONTRACT YOU SIGN.  UNDER THE
   3-15        LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE FULL
   3-16        AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN A
   3-17        PARTIAL REFUND OF THE FINANCE CHARGE.  KEEP THIS
   3-18        CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
   3-19        (3)  The retail seller shall deliver to the retail buyer, or
   3-20  mail to him at his address shown on the retail installment
   3-21  contract, a copy of the contract as accepted by the seller.  Until
   3-22  the seller does so, a buyer, who has not received delivery of the
   3-23  goods or been furnished or rendered the services, shall have the
   3-24  right to rescind the contract and to receive a refund of all
   3-25  payments made and return of all goods traded in to the seller on
   3-26  account of or in contemplation of the contract, or if such goods
   3-27  cannot be returned, the trade-in allowance thereof.  Any
    4-1  acknowledgement by the buyer of delivery of a copy of the contract
    4-2  shall be in a size equal to at least ten-point <bold> type that is
    4-3  boldface, capitalized, underlined, or otherwise set out from
    4-4  surrounding written material so as to be conspicuous and, if
    4-5  contained in the contract, shall appear directly above the buyer's
    4-6  signature.
    4-7        SECTION 3.  Section (1), Article 6.03, Title 79, Revised
    4-8  Statutes (Article 5069-6.03, Vernon's Texas Civil Statutes), is
    4-9  amended to read as follows:
   4-10        (1)  A retail charge agreement may be established by a seller
   4-11  or credit card issuer upon the request of a buyer or prospective
   4-12  buyer.  The retail charge agreement shall be in writing and signed
   4-13  by the buyer.  A copy of such agreement executed on or after the
   4-14  effective date of this Chapter shall be delivered or mailed to the
   4-15  buyer prior to the date on which the first payment is due
   4-16  thereunder.  Any acknowledgment by the buyer of delivery of a copy
   4-17  of the agreement contained in the body thereof shall be in a size
   4-18  equal to at least ten-point <bold> type that is boldface,
   4-19  capitalized, underlined, or otherwise set out from surrounding
   4-20  written material so as to be conspicuous and shall appear directly
   4-21  above the buyer's signature.  No agreement executed on or after the
   4-22  effective date of this Chapter shall be signed by the buyer when it
   4-23  contains blank spaces to be filled in after it has been signed.
   4-24  The buyer's acknowledgment, conforming to the requirements of this
   4-25  section, of delivery of a copy of an agreement, shall be
   4-26  presumptive proof, in any action or proceeding, of such delivery
   4-27  and that the agreement, when signed, did not contain any blank
    5-1  spaces as herein provided.  If no copy of the agreement is retained
    5-2  by the seller, a notation in his permanent record showing that such
    5-3  agreement was mailed and the date of mailing shall serve as
    5-4  presumptive proof of such mailing.  Any such agreement shall
    5-5  contain substantially the following notice printed or typed in a
    5-6  size equal to at least ten-point <bold> type that is boldface,
    5-7  capitalized, underlined, or otherwise set out from surrounding
    5-8  written material so as to be conspicuous:
    5-9        "NOTICE TO THE BUYER--DO NOT SIGN THIS AGREEMENT BEFORE
   5-10        YOU READ IT OR IF IT CONTAINS BLANK SPACES.  YOU ARE
   5-11        ENTITLED TO A COPY OF THE AGREEMENT YOU SIGN.  KEEP
   5-12        THIS AGREEMENT TO PROTECT YOUR LEGAL RIGHTS."
   5-13        SECTION 4.  Chapter 6, Title 79, Revised Statutes (Article
   5-14  5069-6.01 et seq., Vernon's Texas Civil Statutes), is amended by
   5-15  adding Article 6.13 to read as follows:
   5-16        Art. 6.13.  RATES FOR MEDICAL AND DENTAL SERVICES.  Medical
   5-17  or dental services may be financed only at rates authorized by
   5-18  Article 1.04 of this title.
   5-19        SECTION 5.  Section (1), Article 6.06, Title 79, Revised
   5-20  Statutes (Article 5069-6.06, Vernon's Texas Civil Statutes), is
   5-21  amended to read as follows:
   5-22        (1)  A seller who has entered into a retail installment
   5-23  transaction to perform services or install goods for the
   5-24  modernization, rehabilitation, repair, alteration, improvement or
   5-25  construction of improvements on real property shall obtain a
   5-26  certificate of completion or certificate of satisfaction
   5-27  (hereinafter designated "certificate") signed by the buyer, when
    6-1  all such goods and/or services purchased under a retail installment
    6-2  contract have been performed or installed as required by such
    6-3  contract; and may obtain such a certificate whether or not any
    6-4  guarantee or warranty of the goods or services remains in force.
    6-5  Such certificate shall be a separate writing and shall have the
    6-6  following notation at the top thereof in at least ten-point <bold>
    6-7  type that is boldface, capitalized, underlined, or otherwise set
    6-8  out from surrounding written material so as to be conspicuous:
    6-9        WARNING TO BUYER--DO NOT SIGN THIS CERTIFICATE UNTIL
   6-10        ALL SERVICES HAVE BEEN SATISFACTORILY PERFORMED AND
   6-11        MATERIALS SUPPLIED OR GOODS RECEIVED AND FOUND
   6-12        SATISFACTORY.
   6-13        SECTION 6.  Article 6.07, Title 79, Revised Statutes (Article
   6-14  5069-6.07, Vernon's Texas Civil Statutes), is amended to read as
   6-15  follows:
   6-16        Art. 6.07.  ASSIGNMENT AND NEGOTIATION.  Notwithstanding the
   6-17  provisions of any other law, a person may purchase or acquire or
   6-18  agree to purchase or acquire any retail installment contract or
   6-19  retail charge agreement or any outstanding balance under either
   6-20  from another person on such terms and conditions and for such price
   6-21  as may be mutually agreed upon.  Notice to the buyer of the
   6-22  assignment or negotiation and any requirement that the seller be
   6-23  deprived of dominion over payments upon a retail installment
   6-24  contract or retail charge agreement, or over the goods if returned
   6-25  to or repossessed by the seller, is not necessary to the validity
   6-26  of a written assignment or negotiation of the retail installment
   6-27  contract or retail charge agreement or any outstanding balance
    7-1  under either, as against creditors, subsequent purchasers, pledges,
    7-2  mortgagees and lien claimants of the seller.  Unless the buyer has
    7-3  notice of the assignment or negotiation of his retail installment
    7-4  contract, retail charge agreement or any outstanding balance under
    7-5  either, payment therefor made by the buyer to the holder last known
    7-6  to him shall be binding upon all subsequent holders.  No right of
    7-7  action or defense of a buyer arising out of a retail installment
    7-8  transaction which would be cut off by negotiation, shall be cut off
    7-9  by negotiation of the retail installment contract or retail charge
   7-10  agreement to any third party unless such holder acquires the
   7-11  contract relying in good faith upon a certificate of completion or
   7-12  certificate of satisfaction, if required by the provisions of
   7-13  Article 6.06; and such holder gives notice of the negotiation to
   7-14  the buyer as provided in this Article, and within thirty days of
   7-15  the mailing of such notice receives no written notice from the
   7-16  buyer of any facts giving rise to any claim or defense of the
   7-17  buyer.  Such notice of negotiation shall be in writing addressed to
   7-18  the buyer at the address shown on the contract and shall:  identify
   7-19  the contract; state the names and addresses of the seller and
   7-20  buyer; describe the goods or services; state the time balance and a
   7-21  description of the payment schedule.  The notice of negotiation
   7-22  shall contain the following warning to the buyer in at least
   7-23  ten-point <bold face> type that is boldface, capitalized,
   7-24  underlined, or otherwise set out from surrounding written material
   7-25  so as to be conspicuous:
   7-26        ARE THE TERMS OF THE CONTRACT DESCRIBED ABOVE CORRECT
   7-27        AND ARE YOU SATISFIED WITH THE GOODS OR SERVICES
    8-1        FURNISHED? IF NOT, YOU SHOULD NOTIFY US GIVING DETAILS
    8-2        WITHIN 30 DAYS FROM THE DATE THE ABOVE NOTICE WAS
    8-3        MAILED.
    8-4        SECTION 7.  Section (b), Article 6.10, Title 79, Revised
    8-5  Statutes (Article 5069-6.10, Vernon's Texas Civil Statutes), is
    8-6  amended to read as follows:
    8-7        (b)  Preliminary worksheets that are shown to the buyer in
    8-8  which a sale price is computed, an order from the buyer, and the
    8-9  retail installment contract must include, in reasonable proximity
   8-10  to the place in the worksheet, order, or contract where the
   8-11  documentary fee is disclosed, the amount of the fee and the
   8-12  following notice in <bold-faced> type that is boldface,
   8-13  capitalized, underlined, or otherwise set out from surrounding
   8-14  written material so as to be conspicuous:
   8-15        "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE.  A
   8-16        DOCUMENTARY FEE <AND> IS NOT REQUIRED BY LAW, BUT MAY
   8-17        BE CHARGED TO BUYERS <A BUYER> FOR <THE> HANDLING <OF>
   8-18        DOCUMENTS AND <THE> PERFORMING <OF> SERVICES RELATING
   8-19        <RELATED> TO THE CLOSING OF A SALE.  BUYERS <A BUYER>
   8-20        MAY AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING
   8-21        THE <THESE> DOCUMENTS AND PERFORMING THE <THESE>
   8-22        SERVICES RELATING TO THE CLOSING OF THE SALE.  A
   8-23        DOCUMENTARY FEE MAY NOT EXCEED $50.  THIS NOTICE IS
   8-24        REQUIRED BY LAW."
   8-25        SECTION 8.  Section (d), Article 7.01, Title 79, Revised
   8-26  Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
   8-27  amended to read as follows:
    9-1        (d)  "Retail Installment Transaction" or "Transaction" means
    9-2  any transaction as a result of which a retail buyer acquires a
    9-3  motor vehicle from a retail seller <under a retail installment
    9-4  contract for a sum consisting of the cash sale price and other
    9-5  charges as limited by this Chapter> and agrees with a retail seller
    9-6  to pay part or all of the cash price <such sum> in one or more
    9-7  deferred installments.  All such transactions shall be under a
    9-8  retail installment contract and be subject to the provisions of
    9-9  this chapter.  The term shall include every transaction wherein the
   9-10  promise or agreement to pay the deferred balance of the cash price
   9-11  <such sum> is made by the retail buyer to the retail seller
   9-12  notwithstanding the existence or occurrence of any one or more of
   9-13  the following events:  (i) that the retail seller has arranged or
   9-14  arranges to sell, transfer or assign the retail buyer's obligation;
   9-15  (ii) that the amount of any <the> charges is determined by
   9-16  reference to charts or information furnished by a financing
   9-17  institution; (iii) that the forms of instruments used to evidence
   9-18  the retail installment transaction are furnished by a financing
   9-19  institution; and (iv) that the credit standing of the retail buyer
   9-20  is or has been evaluated by a financing institution.
   9-21        SECTION 9.  Sections (2), (3), and (4), Article 7.02, Title
   9-22  79, Revised Statutes (Article 5069-7.02, Vernon's Texas Civil
   9-23  Statutes), are amended to read as follows:
   9-24        (2)  The printed portion of the retail installment contract,
   9-25  other than instructions for completion, shall be in a size equal to
   9-26  at least eight-point type.  Such contract shall contain
   9-27  substantially the following notice in a size equal to at least
   10-1  ten-point <bold> type that is boldface, capitalized, underlined, or
   10-2  otherwise set out from surrounding written material so as to be
   10-3  conspicuous:
   10-4        "NOTICE TO THE BUYER--DO NOT SIGN THIS CONTRACT BEFORE
   10-5        YOU READ IT OR IF IT CONTAINS ANY BLANK SPACES.  YOU
   10-6        ARE ENTITLED TO A COPY OF THE CONTRACT YOU SIGN.  UNDER
   10-7        THE LAW YOU HAVE THE RIGHT TO PAY OFF IN ADVANCE THE
   10-8        FULL AMOUNT DUE AND UNDER CERTAIN CONDITIONS MAY OBTAIN
   10-9        A PARTIAL REFUND OF THE FINANCE CHARGE.  KEEP THIS
  10-10        CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
  10-11        (3)  A retail installment contract or separate written
  10-12  statement shall also contain, in a size equal to at least ten-point
  10-13  <bold> type that is boldface, capitalized, underlined, or otherwise
  10-14  set out from surrounding written material so as to be conspicuous,
  10-15  a specific statement that liability insurance coverage for bodily
  10-16  injury and property damage caused to others is not included, if
  10-17  that is the case.
  10-18        (4)  The seller shall deliver to the buyer, or mail to him at
  10-19  his address shown on the retail installment contract, a copy of
  10-20  such contract as accepted by the seller.  Until the seller does so,
  10-21  a buyer who has not received delivery of the motor vehicle shall
  10-22  have the right to rescind his contract and to receive a refund of
  10-23  all payments made and a return of all goods traded in to the seller
  10-24  on account of or in contemplation of such contract, or if the goods
  10-25  traded in cannot be returned, the value thereof.  Any
  10-26  acknowledgment by the buyer of delivery of a copy of the retail
  10-27  installment contract shall be in a size equal to at least ten-point
   11-1  <bold> type that is boldface, capitalized, underlined, or otherwise
   11-2  set out from surrounding written material so as to be conspicuous
   11-3  and shall appear directly above the buyer's signature.
   11-4        SECTION 10.  This Act applies only to acts done and
   11-5  transactions entered into on or after the effective date of this
   11-6  Act.  Acts done and transactions entered into before the effective
   11-7  date of this Act are governed by the law in effect immediately
   11-8  before this Act takes effect, and that law continues in effect for
   11-9  that purpose.
  11-10        SECTION 11.  This Act takes effect September 1, 1995.
  11-11        SECTION 12.  The importance of this legislation and the
  11-12  crowded condition of the calendars in both houses create an
  11-13  emergency and an imperative public necessity that the
  11-14  constitutional rule requiring bills to be read on three several
  11-15  days in each house be suspended, and this rule is hereby suspended.