S.B. No. 921
AN ACT
1-1 relating to the regulation of certain persons engaged in the
1-2 business of motor vehicle leasing.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 1.03, Texas Motor Vehicle Commission Code
1-5 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
1-6 read as follows:
1-7 Sec. 1.03. Definitions. In this Act:
1-8 (1) "Motor vehicle" means:
1-9 (A) every fully self-propelled vehicle which has
1-10 as its primary purpose the transport of a person or persons, or
1-11 property, on a public highway, and having two or more wheels;
1-12 (B) every two or more wheeled fully
1-13 self-propelled, titled vehicle which has as its primary purpose the
1-14 transport of a person or persons or property and is not
1-15 manufactured for use on public streets, roads, or highways; or
1-16 (C) an engine, transmission, or rear axle
1-17 manufactured for installation in a vehicle having as its primary
1-18 purpose the transport of a person or persons or property on a
1-19 public highway and having a gross vehicle weight rating of more
1-20 than 16,000 pounds, whether or not attached to a vehicle chassis.
1-21 (2) "New motor vehicle" means a motor vehicle which
1-22 has not been the subject of a "retail sale" without regard to the
1-23 mileage of the vehicle.
2-1 (3) "Person" means a natural person, partnership,
2-2 corporation, association, trust, estate, or any other legal entity.
2-3 (4) "Dealer" means any person engaged in the business
2-4 of buying, selling or exchanging new motor vehicles at an
2-5 established and permanent place of business pursuant to a franchise
2-6 in effect with a manufacturer or distributor.
2-7 (5) "Manufacturer" means any person who manufactures
2-8 or assembles new motor vehicles either within or without this
2-9 State.
2-10 (6) "Distributor" means any person who distributes
2-11 and/or sells new motor vehicles to dealers and who is not a
2-12 manufacturer.
2-13 (7) "Representative" means any person who is or acts
2-14 as an agent, employee or representative of a manufacturer,
2-15 distributor, or converter who performs any duties in this State
2-16 relating to promoting the distribution and/or sale of new motor
2-17 vehicles or contacts dealers in this State on behalf of a
2-18 manufacturer, distributor, or converter.
2-19 (8) "Franchise" means one or more contracts between a
2-20 dealer as franchisee, and either a manufacturer or a distributor as
2-21 franchisor under which (A) the franchisee is granted the right to
2-22 sell new motor vehicles manufactured or distributed by the
2-23 franchisor; (B) the franchisee as an independent business is a
2-24 component of franchisor's distribution system; (C) the franchisee
2-25 is substantially associated with franchisor's trademark, tradename
3-1 and commercial symbol; (D) the franchisee's business is
3-2 substantially reliant on franchisor for a continued supply of motor
3-3 vehicles, parts, and accessories for the conduct of its business;
3-4 or (E) any right, duty, or obligation granted or imposed by this
3-5 Act is affected. The term includes a written communication from a
3-6 franchisor to a franchisee by which a duty is imposed on the
3-7 franchisee.
3-8 (10) "Broker" means a person who, for a fee,
3-9 commission, or other valuable consideration, arranges or offers to
3-10 arrange a transaction involving the sale, for purposes other than
3-11 resale, of a new motor vehicle, and who is not:
3-12 (A) a dealer or bona fide employee of a dealer
3-13 when acting on behalf of a dealer;
3-14 (B) a representative or bona fide employee of a
3-15 representative when acting on behalf of a representative;
3-16 (C) a distributor or bona fide employee of a
3-17 distributor when acting on behalf of a distributor; or
3-18 (D) at any point in the transaction the bona
3-19 fide owner of the vehicle involved in the transaction.
3-20 (11) "Motor home" means a motor vehicle which is
3-21 designed to provide temporary living quarters and which:
3-22 (A) is built onto as an integral part of, or is
3-23 permanently attached to, a motor vehicle chassis; and
3-24 (B) contains at least four of the following
3-25 independent life support systems if each is permanently installed
4-1 and designed to be removed only for purposes of repair or
4-2 replacement and meets the standards of the American National
4-3 Standards Institute, Standards for Recreational Vehicles:
4-4 (i) a cooking facility with an on-board
4-5 fuel source;
4-6 (ii) a gas or electric refrigerator;
4-7 (iii) a toilet with exterior evacuation;
4-8 (iv) a heating or air conditioning system
4-9 with an on-board power or fuel source separate from the vehicle
4-10 engine;
4-11 (v) a potable water supply system that
4-12 includes at least a sink, a faucet, and a water tank with an
4-13 exterior service supply connection;
4-14 (vi) a 110-125 volt electric power supply.
4-15 (12) "Conversion" means a motor vehicle, other than a
4-16 motor home, which has been substantially modified by a person other
4-17 than the manufacturer or distributor of the chassis of the motor
4-18 vehicle and which has not been the subject of a retail sale.
4-19 (13) "Motor home manufacturer" means a person other
4-20 than the manufacturer of the chassis of a motor vehicle who, prior
4-21 to the retail sale of the motor vehicle, performs modifications on
4-22 the chassis that result in the finished product being classified as
4-23 a motor home.
4-24 (14) "Chassis manufacturer" means a person who
4-25 manufactures and produces the frame upon which is mounted the body
5-1 of a motor vehicle.
5-2 (15) "Converter" means a person who prior to the
5-3 retail sale of a motor vehicle, assembles, installs, or affixes a
5-4 body, cab, or special equipment to a chassis, or who substantially
5-5 adds, subtracts from, or modifies a previously assembled or
5-6 manufactured motor vehicle.
5-7 (16) "Rule" means a statement by the Commission of
5-8 general and future applicability that implements, interprets, or
5-9 prescribes law or policy or describes the organization or
5-10 procedural practice requirements of the Commission. The term
5-11 includes the amendment or repeal of a prior rule, but does not
5-12 include statements concerning only the internal management of the
5-13 Commission which do not affect the rights of a person not connected
5-14 with the Commission.
5-15 (17) "Party" means each person or agency named or
5-16 admitted as a party and whose legal rights, duties, or privileges
5-17 are to be determined by the Commission after an opportunity for
5-18 adjudicative hearing.
5-19 (18) "Relocation" means the transfer of an existing
5-20 dealership operation to facilities at a different location,
5-21 including a transfer which results in a consolidation or dualing of
5-22 an existing dealer's operation.
5-23 (19) "Retail sale" means the sale of a motor vehicle
5-24 except:
5-25 (A) a sale in which the purchaser acquires a
6-1 vehicle for the purpose of resale; or
6-2 (B) a sale of a vehicle that is operated under
6-3 and in accordance with Article 6686, Revised Statutes.
6-4 (20) "Warranty work" means parts, labor, and any other
6-5 expenses incurred by a dealer in complying with the terms of a
6-6 manufacturer's or distributor's warranty.
6-7 (21) "Department" means the Texas Department of
6-8 Transportation.
6-9 (22) "Transportation Commission" means the Texas
6-10 Transportation Commission of the Texas Department of
6-11 Transportation.
6-12 (23) "Lease" means a transfer of the right to
6-13 possession and use of a motor vehicle for a term in excess of 180
6-14 days in return for consideration.
6-15 (24) "Lessor" means a person who acquires title to a
6-16 new motor vehicle for the purpose of leasing the vehicle to another
6-17 person.
6-18 (25) "Lease facilitator" means a person, other than a
6-19 dealer or a bona fide employee of a dealer, or a vehicle lessor or
6-20 a bona fide employee of a vehicle lessor, who:
6-21 (A) holds himself out to any person as a "motor
6-22 vehicle leasing company" or "motor vehicle leasing agent" or uses a
6-23 similar title, for the purpose of soliciting or procuring a person
6-24 to enter into a contract or agreement to become the lessee of a
6-25 vehicle that is not, and will not be, titled in the name of and
7-1 registered to the lease facilitator; or
7-2 (B) otherwise solicits a person to enter into a
7-3 contract or agreement to become a lessee of a vehicle that is not,
7-4 and will not be, titled in the name of and registered to the lease
7-5 facilitator, or who is otherwise engaged in the business of
7-6 securing lessees or prospective lessees of motor vehicles that are
7-7 not, and will not be, titled in the name of and registered to the
7-8 facilitator.
7-9 (26) "Manufacturer's statement of origin" means a
7-10 certificate on a form prescribed by the Department showing the
7-11 original transfer of a new motor vehicle from the manufacturer to
7-12 the original purchaser.
7-13 SECTION 2. Subsection (a), Section 2.10, Texas Motor Vehicle
7-14 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
7-15 is amended to read as follows:
7-16 (a) Notwithstanding a law to the contrary, including without
7-17 limitation the provisions of Section 403.094(h), Government Code,
7-18 all <All> money paid to the Commission under this Act shall be
7-19 deposited in the State Treasury to the credit of the state highway
7-20 fund.
7-21 SECTION 3. Subsection (a), Section 3.01, Texas Motor Vehicle
7-22 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
7-23 is amended to read as follows:
7-24 (a) The Commission has <is hereby delegated and vested with,
7-25 in the exercise of the State's police power,> the general and
8-1 original power and jurisdiction to regulate all aspects of the
8-2 distribution, <and> sale, and leasing of new motor vehicles and to
8-3 do all things, whether specifically designated in this Act or
8-4 implied herein, or necessary or convenient to the exercise of this
8-5 power and jurisdiction, including the original jurisdiction to
8-6 determine questions of its own jurisdiction.
8-7 SECTION 4. Subsection (a), Section 3.02, Texas Motor Vehicle
8-8 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
8-9 is amended to read as follows:
8-10 (a) The Commission shall, in accordance with this Act,
8-11 administer the provisions of this Act, establish the qualifications
8-12 of licensees <manufacturers, distributors, converters, and
8-13 dealers>, ensure that the distribution, <and> sale, and leasing of
8-14 motor vehicles is conducted as provided herein and under the
8-15 Commission's rules, provide for compliance with warranties, and
8-16 otherwise prevent fraud, unfair practices, discriminations,
8-17 impositions, and other abuses in connection with the distribution
8-18 and sale of new motor vehicles.
8-19 SECTION 5. Section 4.01, Texas Motor Vehicle Commission Code
8-20 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
8-21 read as follows:
8-22 Sec. 4.01. License Required. Except as provided by this
8-23 Section, no <No> person shall engage in business as, serve in the
8-24 capacity of, or act as a dealer, manufacturer, distributor,
8-25 converter, <or> representative, lessor, or lease facilitator in
9-1 this State without obtaining a license therefor as provided in this
9-2 Act and the rules of the Commission. All new license applications
9-3 shall be reviewed and, in the discretion of the Commission,
9-4 investigated to determine compliance with the provisions of this
9-5 Act. License renewals may be administratively granted unless
9-6 protested. Licenses issued by the Commission shall expire one year
9-7 from date of issuance. Notwithstanding the effective date of any
9-8 franchise agreement, all licenses and renewals thereof are issued
9-9 subject to all provisions of this Act and rules of the Commission
9-10 in effect upon the date of issuance as well as all future
9-11 provisions of this Act and rules which may become effective during
9-12 the term of the license. A lessor or lease facilitator is not
9-13 required to obtain a lessor or lease facilitator license or pay a
9-14 license fee under this code if the lessor or lease facilitator is a
9-15 state or federally chartered financial institution or a regulated
9-16 subsidiary of a state or federally chartered financial institution.
9-17 A trust or other entity that owns an interest in a lease and the
9-18 vehicle that is the subject of the lease is not required to obtain
9-19 a lessor license or lease facilitator license or pay a license fee
9-20 with respect to a lease initiated, managed, serviced, and
9-21 administered by a licensed lessor.
9-22 SECTION 6. The Texas Motor Vehicle Commission Code (Article
9-23 4413(36), Vernon's Texas Civil Statutes), is amended by adding
9-24 Sections 4.03A and 4.03B to read as follows:
9-25 Sec. 4.03A. LESSOR APPLICATION. An application for a lessor
10-1 license shall be on a form prescribed by the Commission and shall
10-2 contain evidence of compliance with Article 6686, Revised Statutes,
10-3 if applicable, and other information prescribed by the Commission.
10-4 This Act does not require a separate license for each individual
10-5 employee of a lessor.
10-6 Sec. 4.03B. LEASE FACILITATOR APPLICATION. An application
10-7 of a lease facilitator license shall be on a form prescribed by the
10-8 Commission and shall contain the information prescribed by the
10-9 Commission. This Act does not require a separate license for each
10-10 individual employee of a lease facilitator.
10-11 SECTION 7. Subsection (a), Section 4.05, Texas Motor Vehicle
10-12 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes),
10-13 is amended to read as follows:
10-14 (a) The annual license fees for licenses issued hereunder
10-15 shall be as follows:
10-16 (1) For each manufacturer and distributor, $825.
10-17 (2) For each dealer who sold 200 or fewer new motor
10-18 vehicles during the preceding calendar year, $165.
10-19 (3) For each dealer who sold more than 200, but not
10-20 more than 500, new motor vehicles during the preceding calendar
10-21 year, $275.
10-22 (4) For each dealer who sold more than 500, but not
10-23 more than 1,000, new motor vehicles during the preceding calendar
10-24 year, $385.
10-25 (5) For each dealer who sold more than 1,000 new motor
11-1 vehicles during the preceding calendar year, $495.
11-2 (6) For each representative, $85.
11-3 (7) For each converter, $275.
11-4 (8) For each amendment to a dealer's license, $25.
11-5 (9) For each lessor who leased 200 or fewer motor
11-6 vehicles during the preceding calendar year, $175.
11-7 (10) For each lessor who leased more than 200 but not
11-8 more than 400 motor vehicles during the preceding calendar year,
11-9 $275.
11-10 (11) For each lessor who leased more than 400 but not
11-11 more than 800 motor vehicles during the preceding calendar year,
11-12 $400.
11-13 (12) For each lessor who leased more than 800 but not
11-14 more than 1,200 motor vehicles during the preceding calendar year,
11-15 $500.
11-16 (13) For each lessor who leased more than 1,200 but
11-17 not more than 1,600 motor vehicles during the preceding calendar
11-18 year, $625.
11-19 (14) For each lessor who leased more than 1,600 motor
11-20 vehicles during the preceding calendar year, $750.
11-21 (15) For each lease facilitator, $375.
11-22 SECTION 8. Section 5.01, Texas Motor Vehicle Commission Code
11-23 (Article 4413(36), Vernon's Texas Civil Statutes), is amended to
11-24 read as follows:
11-25 Sec. 5.01. Dealers. It shall be unlawful for any dealer to:
12-1 (1) Require a retail purchaser of a new motor vehicle
12-2 as a condition of sale and delivery thereof to purchase special
12-3 features, equipment, parts, or accessories not ordered or desired
12-4 by the purchaser, provided such features, equipment, parts, or
12-5 accessories are not already installed on the new motor vehicle at
12-6 the time of sale.
12-7 (2) Use false, deceptive, or misleading advertising.
12-8 (3) Fail to perform the obligations placed on the
12-9 selling dealer in connection with the delivery and preparation of a
12-10 new motor vehicle for retail sale as provided in the manufacturer's
12-11 preparation and delivery agreements on file with the Commission and
12-12 applicable to such vehicle.
12-13 (4) Fail to perform the obligations placed on the
12-14 dealer in connection with the manufacturer's warranty agreements on
12-15 file with the Commission.
12-16 (5) Operate as a dealer without a currently valid
12-17 license from the Commission or otherwise violate this Act or rules
12-18 promulgated by the Commission hereunder.
12-19 (6) Operate without appropriate signs readily and
12-20 easily visible to the public, identifying the dealer's place of
12-21 business and the products the dealer offers for sale. In the event
12-22 of a conflict with another law or ordinance, this Subdivision
12-23 prevails, and in the event of a dispute, the Board has exclusive
12-24 jurisdiction to determine whether a sign or signs are in compliance
12-25 with the terms of this Subdivision. In the event of a dispute, the
13-1 Board shall uphold local ordinances of a home-rule city and protect
13-2 dealers from retribution by manufacturers for having complied with
13-3 local ordinances.
13-4 (7) Directly or indirectly pay a fee to a lessor or
13-5 lease facilitator.
13-6 SECTION 9. The Texas Motor Vehicle Commission Code (Article
13-7 4413(36), Vernon's Texas Civil Statutes), is amended by adding
13-8 Sections 5.03A and 5.03B to read as follows:
13-9 Sec. 5.03A. LESSORS. (a) A lessor may not directly or
13-10 indirectly accept a fee from a dealer.
13-11 (b) A lessor may not pay a fee to any person in return for
13-12 the solicitation, procurement, or production by that person of
13-13 prospective lessees of motor vehicles unless the person receiving
13-14 the fee is a lease facilitator who holds a valid license as
13-15 provided by this code and a valid appointment from the lessor as
13-16 provided by this section.
13-17 (c) A lessor may appoint one or more lease facilitators
13-18 licensed pursuant to the terms of this code to represent the lessor
13-19 in obtaining prospective lease customers. An appointment complies
13-20 with the requirements of this subsection if it is in writing,
13-21 discloses its terms, and otherwise complies with rules of the
13-22 Commission.
13-23 (d) In a lease contract or agreement between a lessor and a
13-24 lessee solicited, procured, or produced by a lease facilitator, the
13-25 lessor shall disclose to the lessee that a fee was paid, or will be
14-1 paid to the lease facilitator for the solicitation, procurement, or
14-2 production of the lessee or the lease. The lessor shall include
14-3 the disclosure required by this subsection in a prominent position
14-4 either:
14-5 (1) on the face of the written memorandum of the lease
14-6 contract or agreement; or
14-7 (2) on a separate instrument signed by the lessee at
14-8 the same time as the signing of the lease contract or agreement.
14-9 (e) Except as provided by this subsection or by law of the
14-10 United States or a rule duly promulgated by an agency of the United
14-11 States, a lessor may not, and the terms of a lease agreement may
14-12 not, prohibit the lessee from taking the vehicle that is the
14-13 subject of the lease agreement into a specific foreign nation
14-14 unless the lease agreement prohibits the lessee from taking the
14-15 vehicle into all foreign nations. In the interests of justice and
14-16 giving deference to standard national business practices, the
14-17 Commission may adopt a rule by which a lease agreement may prohibit
14-18 the lessee from taking the leased vehicle into a foreign nation
14-19 whether or not it prohibits the lessee from taking the vehicle into
14-20 another foreign nation. In adopting a rule under this subsection
14-21 the Commission shall give due consideration to the proximity of
14-22 international borders to prospective Texas lessees.
14-23 Sec. 5.03B. LEASE FACILITATORS. (a) No person may hold
14-24 himself out to any person as a "leasing company," "leasing agent,"
14-25 "lease facilitator," or similar title, directly or indirectly
15-1 engaged in the business of lease facilitator, or otherwise engage
15-2 in the solicitation or procurement of prospective lessees for motor
15-3 vehicles not titled in the name of and registered to the person,
15-4 unless the person holds a valid lease facilitator license and is in
15-5 compliance with the terms of this code.
15-6 (b) A lease facilitator may not:
15-7 (1) sell or offer to sell a new motor vehicle;
15-8 (2) accept a fee from a dealer;
15-9 (3) sign a motor vehicle manufacturer's statement of
15-10 origin to a vehicle, accept an assignment of a manufacturer's
15-11 statement of origin to a vehicle, or otherwise assume any element
15-12 of title to a new motor vehicle;
15-13 (4) procure or solicit prospective lessees for or on
15-14 behalf of any person other than a lessor; or
15-15 (5) act in the capacity of or engage in the business
15-16 of lease facilitator without a valid license issued as provided by
15-17 this code and a valid appointment from a lessor to act on behalf of
15-18 the lessor in soliciting prospective lease clients or customers as
15-19 provided by this code.
15-20 (c) Except as provided by Subsection (b)(2) of this section,
15-21 a lease facilitator may accept a fee for procuring a vehicle lessee
15-22 or prospective vehicle lessee for or on behalf of a lessor.
15-23 (d) This section does not limit the ability of a lease
15-24 facilitator to accept an appointment from more than one lessor.
15-25 (e) This section does not prohibit a lease facilitator from
16-1 representing a lessor or lessee in the acquisition of a motor
16-2 vehicle for the purpose of leasing the vehicle to another person.
16-3 SECTION 10. Except as specifically provided by state law,
16-4 the Texas Motor Vehicle Commission may not impose regulations on
16-5 the contents of a motor vehicle lease contract that are more
16-6 stringent or more comprehensive than the minimum standards imposed
16-7 by a law of the United States or regulation promulgated by an
16-8 agency of the United States.
16-9 SECTION 11. The importance of this legislation and the
16-10 crowded condition of the calendars in both houses create an
16-11 emergency and an imperative public necessity that the
16-12 constitutional rule requiring bills to be read on three several
16-13 days in each house be suspended, and this rule is hereby suspended,
16-14 and that this Act take effect and be in force from and after its
16-15 passage, and it is so enacted.