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.