S.B. No. 1445
AN ACT
1-1 relating to transfer of title to a motor vehicle, procurement of a
1-2 copy of a motor vehicle certificate of title, the collection and
1-3 administration of the motor vehicle sales tax, and certain
1-4 disclosures that must be made to the purchaser of a motor vehicle.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. Section 152.001, Tax Code, is amended to read as
1-7 follows:
1-8 Sec. 152.001. Definitions. In this chapter:
1-9 (1) "Sale" includes:
1-10 (A) an installment and credit sale;
1-11 (B) an exchange of property for property or
1-12 money;
1-13 (C) an exchange in which property is transferred
1-14 but the seller retains title as security for payment of the
1-15 purchase price; and
1-16 (D) any other closed transaction that
1-17 constitutes a sale.
1-18 (2) "Retail sale" means a sale of a motor vehicle
1-19 except:
1-20 (A) a sale in which the purchaser is a dealer
1-21 who holds a general distinguishing number issued pursuant to the
1-22 terms of Article 6686, Revised Statutes, who acquires a vehicle for
1-23 the exclusive purpose of resale; or
2-1 (B) a sale of a vehicle that is operated under
2-2 and in accordance with Article 6686, Revised Civil Statutes of
2-3 Texas, 1925, as amended.
2-4 (3) "Motor Vehicle" includes:
2-5 (A) a self-propelled vehicle designed to
2-6 transport persons or property on a public highway;
2-7 (B) a trailer and semitrailer, including a van,
2-8 flatbed, tank, dumpster, dolly, jeep, stinger, auxiliary axle, or
2-9 converter gear; and
2-10 (C) a house trailer as defined by the
2-11 Certificate of Title Act (Article 6687-1, Vernon's Texas Civil
2-12 Statutes).
2-13 (4) "Motor Vehicle" does not include:
2-14 (A) a device moved only by human power;
2-15 (B) a device used exclusively on stationary
2-16 rails or tracks;
2-17 (C) road-building machinery; <or>
2-18 (D) a mobile office;
2-19 (E) a vehicle with respect to which the
2-20 certificate of title has been surrendered in exchange for:
2-21 (i) a salvage certificate issued pursuant
2-22 to the Certificate of Title Act (Article 6687-1, Vernon's Texas
2-23 Civil Statutes);
2-24 (ii) a certificate of authority issued
2-25 pursuant to Article V, Chapter 741, Acts of the 67th Legislature,
3-1 Regular Session, 1981 (Article 4477-9a, Vernon's Texas Civil
3-2 Statutes);
3-3 (iii) a nonrepairable motor vehicle
3-4 certificate of title issued pursuant to Section 37A, Certificate of
3-5 Title Act (Article 6687-1, Vernon's Texas Civil Statutes), as added
3-6 by H.B. No. 2151, Acts of the 74th Legislature, Regular Session,
3-7 1995;
3-8 (iv) an ownership document issued by
3-9 another state if the document is comparable to a document issued
3-10 pursuant to Subparagraph (i), (ii), or (iii); or
3-11 (F) a vehicle that has been declared a total
3-12 loss by an insurance company pursuant to the settlement or
3-13 adjustment of a claim.
3-14 (5) "Rental" means:
3-15 (A) an agreement by the owner of a motor vehicle
3-16 to give for not longer than 180 days the exclusive use of that
3-17 vehicle to another for consideration;
3-18 (B) an agreement by the original manufacturer of
3-19 a motor vehicle to give exclusive use of the motor vehicle to
3-20 another for consideration; or
3-21 (C) an agreement to give exclusive use of a
3-22 motor vehicle to another for re-rental purposes.
3-23 (6) "Lease" means an agreement, other than a rental,
3-24 by an owner of a motor vehicle to give for longer than 180 days
3-25 exclusive use of the vehicle to another for consideration.
4-1 (7) "Public agency" means:
4-2 (A) a department, commission, board, office,
4-3 institution, or other agency of this state or of a county, city,
4-4 town, school district, hospital district, water district, or other
4-5 special district or authority or political subdivision created by
4-6 or under the constitution or the statutes of this state; or
4-7 (B) an unincorporated agency or instrumentality
4-8 of the United States.
4-9 (8) "Gross rental receipts" means value received or
4-10 promised as consideration to the owner of a motor vehicle for
4-11 rental of the vehicle, but does not include:
4-12 (A) separately stated charges for insurance;
4-13 (B) charges for damages to the motor vehicle
4-14 occurring during the rental agreement period;
4-15 (C) separately stated charges for motor fuel
4-16 sold by the owner of the motor vehicle; or
4-17 (D) discounts.
4-18 (9) "Owner of a motor vehicle" means:
4-19 (A) a person named in the certificate of title
4-20 as the owner of the vehicle; or
4-21 (B) a person who has the exclusive use of a
4-22 motor vehicle by reason of a rental and holds the vehicle for
4-23 re-rental.
4-24 (10) "Orthopedically handicapped person" means a
4-25 person who because of a physical impairment is unable to operate or
5-1 reasonably be transported in a motor vehicle that has not been
5-2 specially modified.
5-3 (11) "Volunteer fire department" means a company,
5-4 department, or association whose members receive no or nominal
5-5 compensation and which is organized for the purpose of answering
5-6 fire alarms and extinguishing fires or answering fire alarms,
5-7 extinguishing fires, and providing emergency medical services.
5-8 (12) "Motor vehicle used for religious purposes" means
5-9 a motor vehicle that is:
5-10 (A) designed to carry more than six passengers;
5-11 (B) sold to, rented to, or used by a church or
5-12 religious society;
5-13 (C) used primarily for the purpose of providing
5-14 transportation to and from a church or religious service or
5-15 meeting; and
5-16 (D) not registered as a passenger vehicle and
5-17 not used primarily for the personal or official needs or duties of
5-18 a minister.
5-19 (13) "Farm machine" means a self-propelled motor
5-20 vehicle specially adapted for use in the production of crops or
5-21 rearing of livestock, including poultry, and use in feedlots and
5-22 includes a self-propelled motor vehicle specially adapted for
5-23 applying plant food materials, agricultural chemicals, or feed for
5-24 livestock. "Farm machine" does not include any self-propelled
5-25 motor vehicle specifically designed or specially adapted for the
6-1 sole purpose of transporting agricultural products, plant food
6-2 materials, agricultural chemicals, or feed for livestock.
6-3 (14) <(15)> "Nonprofit" means:
6-4 (A) organized as a nonprofit corporation under
6-5 the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
6-6 Vernon's Texas Civil Statutes); or
6-7 (B) organized and operated in a way that does
6-8 not result in accrual of distributable profits, realization of
6-9 private gain resulting from payment of compensation other than
6-10 reasonable compensation for services rendered by persons who are
6-11 not members of the organization, or realization of any other form
6-12 of private gain.
6-13 (15) <(16)> "Seller-financed sale" means a retail sale
6-14 of a motor vehicle by a dealer licensed under Article 6686, Revised
6-15 Statutes, in which the seller collects all or part of the total
6-16 consideration in periodic payments and retains a lien on the motor
6-17 vehicle until all payments have been received. The term does not
6-18 include a:
6-19 (A) retail sale of a motor vehicle in which a
6-20 person other than the seller provides the consideration for the
6-21 sale and retains a lien on the motor vehicle as collateral;
6-22 (B) lease; or
6-23 (C) rental.
6-24 (16) "Mobile office" means a trailer designed to be
6-25 used as an office, sales outlet, or other workplace.
7-1 SECTION 2. Subsection (a), Section 152.021, Tax Code, is
7-2 amended to read as follows:
7-3 (a) A tax is imposed on every retail sale of every motor
7-4 vehicle sold in this state. Except as provided by this chapter
7-5 <Section 152.047>, the tax is an obligation of and shall be paid by
7-6 the purchaser of the motor vehicle.
7-7 SECTION 3. Chapter 152, Tax Code, is amended by adding
7-8 Section 152.0411 to read as follows:
7-9 Sec. 152.0411. COLLECTION BY SELLERS. (a) A seller who
7-10 makes a sale subject to the sales tax imposed by Section 152.021
7-11 shall add the amount of the tax to the sales price, and when the
7-12 amount of the tax is added:
7-13 (1) it is a debt of the purchaser to the seller until
7-14 paid; and
7-15 (2) if unpaid, it is recoverable at law in the same
7-16 manner as the original sales price.
7-17 (b) The seller shall collect the tax from the purchaser and
7-18 remit it to the tax assessor-collector in the time and manner
7-19 provided by law.
7-20 (c) This section applies only to the sale of a vehicle that
7-21 is to be titled and registered in Texas. If a purchaser intends to
7-22 register a vehicle outside Texas, the purchaser shall comply with
7-23 the terms of Section 152.092.
7-24 (d) This section does not apply to a seller-financed sale.
7-25 (e) This section applies only to a sale in which the seller
8-1 is a motor vehicle dealer who holds a dealer license issued
8-2 pursuant to the authority of Article 6686, Revised Statutes, or the
8-3 Texas Motor Vehicle Commission Code (Article 4413(36), Vernon's
8-4 Texas Civil Statutes).
8-5 SECTION 4. Section 152.044, Tax Code, is amended to read as
8-6 follows:
8-7 Sec. 152.044. Payment by Seller. (a) If the comptroller on
8-8 an audit of the records of a seller finds that the amount of tax
8-9 due was incorrectly reported on a joint statement and that the
8-10 amount of tax paid was less than the amount due <or that the seller
8-11 failed to execute and deliver to the purchaser a joint statement
8-12 and any other documents necessary to register the vehicle>, the
8-13 seller and purchaser are jointly and severally liable for the
8-14 amount of the tax determined to be due.
8-15 (b) The comptroller shall ascertain compliance with the
8-16 terms of this section. If the comptroller on an audit of the
8-17 records of a motor vehicle dealer finds that the documents
8-18 necessary to title and register a motor vehicle in the name of the
8-19 purchaser of the motor vehicle have not been executed and delivered
8-20 to the tax assessor-collector, together with tax due, if any, the
8-21 motor vehicle dealer is liable for the amount of the tax due, plus
8-22 penalty and interest, if any.
8-23 SECTION 5. Section 27, Certificate of Title Act (Article
8-24 6687-1, Vernon's Texas Civil Statutes), is amended to read as
8-25 follows:
9-1 Sec. 27. (a) Before selling or disposing of any motor
9-2 vehicle required to be registered or licensed in this State on any
9-3 highway or public place within this State, except with dealer's
9-4 metal or cardboard license number thereto attached as now provided
9-5 by law, the owner shall make application to the designated agent in
9-6 the county of his domicile or the county in which the vehicle is
9-7 purchased or encumbered upon a form to be prescribed by the
9-8 Department for a certificate of title for such motor vehicle.
9-9 (b) The seller of a motor vehicle shall apply for the
9-10 registration of and Texas certificate of title in the name of the
9-11 purchaser of the motor vehicle that is the subject of the sale.
9-12 The seller shall file with the appropriate designated agent all
9-13 documents necessary to transfer title to the vehicle and register
9-14 the vehicle in the name of the purchaser and at the same time shall
9-15 remit motor vehicle sales tax, if any. The duty placed on the
9-16 seller by this section is solely that of the seller and applies
9-17 both to a first sale and a subsequent sale.
9-18 (c) The seller shall complete the transfer of title and
9-19 registration requirements placed on the seller by Subsection (b) of
9-20 this section in the time and manner provided by law.
9-21 (d) This section does not apply to a vehicle that has been
9-22 declared a total loss by an insurance company pursuant to the
9-23 settlement or adjustment of a claim or to a vehicle with respect to
9-24 which the certificate of title has been surrendered in exchange
9-25 for:
10-1 (1) a salvage certificate issued pursuant to this Act;
10-2 (2) a certificate of authority issued pursuant to
10-3 Article V, Chapter 741, Acts of the 67th Legislature, Regular
10-4 Session, 1981 (Article 4477-9a, Vernon's Texas Civil Statutes);
10-5 (3) a nonrepairable motor vehicle certificate of title
10-6 issued pursuant to Section 37A of this Act, as added by H.B. No.
10-7 2151, Acts of the 74th Legislature, Regular Session, 1995; or
10-8 (4) an ownership document issued by another state if
10-9 the document is comparable to a document issued pursuant to
10-10 Subdivision (1), (2), or (3) of this subsection.
10-11 (e) The provisions of Subsections (b) and (c) of this
10-12 section apply only to a sale in which the seller is a motor vehicle
10-13 dealer who holds a dealer license issued pursuant to the authority
10-14 of Article 6686, Revised Statutes, or the Texas Motor Vehicle
10-15 Commission Code (Article 4413(36), Vernon's Texas Civil Statutes).
10-16 SECTION 6. Section 36, Certificate of Title Act (Article
10-17 6687-1, Vernon's Texas Civil Statutes), is amended to read as
10-18 follows:
10-19 Sec. 36. (a) Should a certificate of title, "Duplicate
10-20 Original" or "Original," be lost or destroyed, the owner or lien
10-21 holder thereof may, in the manner provided by this section and the
10-22 rules of the Department, procure a certified copy of same directly
10-23 from the Department by making application upon such form as may be
10-24 prescribed by the Department from time to time, accompanied by a
10-25 fee of $2, which shall be deposited in the State Highway Fund and
11-1 be expended as provided by Section 57 of this Act, provided
11-2 however, that the certified copy of the certificate of title marked
11-3 "Original" shall issue only to the first lien holder where a lien
11-4 is disclosed thereon. Said certified copy and all subsequent
11-5 certificates of title issued, until transfer of ownership of said
11-6 motor vehicle, shall be plainly marked across their faces
11-7 "Certified Copy," and all subsequent purchasers or lien holders of
11-8 said motor vehicle shall acquire only such rights, title, or
11-9 interest in such motor vehicles as the holder of the said certified
11-10 copy had, provided however, that upon the transfer of title to said
11-11 motor vehicle, the words "Certified Copy" shall be eliminated from
11-12 the new certificate of title. Any purchasers or lien holders of
11-13 such motor vehicle may at the time of such purchase or at the time
11-14 lien is established require the seller or owner to indemnify him
11-15 and all subsequent purchasers of said motor vehicle against any
11-16 loss which he or they may suffer by reason of any claim or claims
11-17 presented upon the said original certificate of title. In the
11-18 event of recovery of the said certificate of title, "Duplicate
11-19 Original" or "Original" thereof, the said owner shall forthwith
11-20 surrender the same to the Department for cancellation and the words
11-21 "Certified Copy" shall be eliminated from said certificates
11-22 thereafter issued by the Department.
11-23 (b) Except as provided by this subsection, the Department
11-24 may not issue a certified copy of a certificate of title before the
11-25 fourth business day after application has been made. The
12-1 Department may issue a certified copy of a certificate of title to
12-2 the registered owner of the vehicle or the holder of a recorded
12-3 lien against the vehicle, or a verified agent of either, before the
12-4 fourth business day following application if the applicant submits
12-5 personal identification, including a photograph, issued by an
12-6 agency of this state or the United States. If the applicant is an
12-7 agent seeking issuance of a certified copy of a certificate of
12-8 title to a motor vehicle on behalf of the registered owner or lien
12-9 holder, the agent shall submit verifiable proof that the person is
12-10 an agent of the registered owner or lien holder and personal
12-11 identification, including a photograph, issued by an agency of this
12-12 state or the United States. In addition to the other requirements
12-13 of this subsection, if an applicant for a certified copy of a
12-14 certificate of title is a person other than the registered owner of
12-15 the vehicle or the registered holder of a lien against the vehicle,
12-16 or a verified agent of either, the Department may not issue a
12-17 certified copy of a certificate of title to a vehicle except by
12-18 mail.
12-19 SECTION 7. Section 3, Article 6687-5, Revised Statutes, is
12-20 amended to read as follows:
12-21 Sec. 3. (a) On receipt of written notice of transfer from
12-22 the transferor of a motor vehicle, the Texas <State> Department of
12-23 <Highways and Public> Transportation shall mark its motor vehicle
12-24 records to indicate the transfer.
12-25 (b) The department may design the written notice of transfer
13-1 to be part of the certificate of title for the vehicle. The form
13-2 shall be provided by the department and must include a place for
13-3 the transferor to state:
13-4 (1) the vehicle identification number of the vehicle;
13-5 (2) the number of the license plate issued to the
13-6 vehicle, if any;
13-7 (3) the full name and address of the transferor;
13-8 (4) the full name and address of the transferee;
13-9 (5) the date the transferor delivered possession of
13-10 the vehicle to the transferee;
13-11 (6) the signature of the transferor; and
13-12 (7) the date the transferor signed the form.
13-13 (c) After the date of the transfer of the vehicle shown on
13-14 the records of the department, the transferee of the vehicle shown
13-15 on the records is rebuttably presumed to be:
13-16 (1) the owner of the vehicle; and
13-17 (2) subject to civil and criminal liability arising
13-18 out of the use, operation, or abandonment of the vehicle, to the
13-19 extent that ownership of the vehicle subjects the owner of the
13-20 vehicle to criminal or civil liability under another provision of
13-21 law.
13-22 (d) The department may:
13-23 (1) adopt rules to implement this section; and
13-24 (2) adopt a fee for filing a notice of transfer under
13-25 this section in an amount that may not exceed the lesser of the
14-1 actual cost to the department of implementing this section or $5.
14-2 (e) Nothing in this section imposes or establishes civil or
14-3 criminal liability on the owner of a motor vehicle who transfers
14-4 ownership of the vehicle but does not make the voluntary disclosure
14-5 of the transfer to the department.
14-6 (f) This section does not require the department to issue a
14-7 title to the transferee. A <However, a> title may not be issued
14-8 until the transferee applies to the designated agent as provided by
14-9 the Certificate of Title Act (Article 6687-1, Vernon's Texas Civil
14-10 Statutes).
14-11 SECTION 8. Subsection (b), Article 6.10, Title 79, Revised
14-12 Statutes (Article 5069-6.10, Vernon's Texas Civil Statutes), is
14-13 amended to read as follows:
14-14 (b) Preliminary worksheets that are shown to the buyer in
14-15 which a sale price is computed, an order from the buyer, and the
14-16 retail installment contract must include, in reasonable proximity
14-17 to the place in the worksheet, order, or contract where the
14-18 documentary fee is disclosed, the amount of the fee and the
14-19 following notice in bold-faced type:
14-20 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE AND IS NOT
14-21 REQUIRED BY LAW, BUT MAY BE CHARGED TO A BUYER FOR THE
14-22 HANDLING OF DOCUMENTS AND THE PERFORMING OF SERVICES
14-23 RELATED TO THE CLOSING OF A SALE. <A BUYER MAY AVOID
14-24 PAYMENT OF THE FEE BY HANDLING THESE DOCUMENTS AND
14-25 PERFORMING THESE SERVICES.> A DOCUMENTARY FEE MAY NOT
15-1 EXCEED $50. THIS NOTICE IS REQUIRED BY LAW."
15-2 SECTION 9. Subsection (h-1), Article 7.01, Title 79, Revised
15-3 Statutes (Article 5069-7.01, Vernon's Texas Civil Statutes), is
15-4 amended to read as follows:
15-5 (h-1) In addition to the provisions of Section (h) of this
15-6 article, "principal balance" includes a motor vehicle inspection
15-7 fee and a documentary fee for services actually rendered to, for or
15-8 on behalf of the retail buyer in preparing, handling, and
15-9 processing documents relating to the motor vehicle and the closing
15-10 of the transaction evidenced by the retail installment contract.
15-11 If a documentary fee is charged:
15-12 (i) it must be charged to both cash and
15-13 credit buyers;
15-14 (ii) it may not exceed $50;
15-15 (iii) it shall be disclosed on the retail
15-16 installment contract as a separate itemized charge; and
15-17 (iv) the buyer's order and the retail
15-18 installment contract shall include in reasonable proximity to the
15-19 point in the buyer's order and retail installment contract where
15-20 the documentary fee is disclosed the amount of the documentary fee
15-21 to be charged and the following notice in type that is boldfaced,
15-22 capitalized, underlined, or otherwise set out from surrounding
15-23 written material so as to be conspicuous:
15-24 "A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A
15-25 DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE
16-1 CHARGED TO BUYERS FOR HANDLING DOCUMENTS AND PERFORMING
16-2 SERVICES RELATING TO THE CLOSING OF A SALE. <BUYERS MAY
16-3 AVOID PAYMENT OF THE FEE TO THE SELLER BY HANDLING THE
16-4 DOCUMENTS AND PERFORMING THE SERVICES RELATING TO THE
16-5 CLOSING OF THE SALE.> A DOCUMENTARY FEE MAY NOT EXCEED
16-6 $50. THIS NOTICE IS REQUIRED BY LAW."
16-7 (v) If the language primarily used in the
16-8 oral sales presentation is not the same as that in which the retail
16-9 installment contract is written, the seller shall furnish to the
16-10 buyer a written statement containing the notice set out in
16-11 Subsection (iv) in the language primarily used in the oral sales
16-12 presentation.
16-13 SECTION 10. This Act takes effect January 1, 1996.
16-14 SECTION 11. The importance of this legislation and the
16-15 crowded condition of the calendars in both houses create an
16-16 emergency and an imperative public necessity that the
16-17 constitutional rule requiring bills to be read on three several
16-18 days in each house be suspended, and this rule is hereby suspended,
16-19 and that this Act take effect and be in force according to its
16-20 terms, and it is so enacted.