1-1 AN ACT 1-2 relating to the licensing of certain franchised dealers who engage 1-3 in the leasing of motor vehicles. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Section 4.01(a), Texas Motor Vehicle Commission 1-6 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 1-7 to read as follows: 1-8 (a) Except as provided by this Section, no person shall 1-9 engage in business as, serve in the capacity of, or act as a 1-10 dealer, manufacturer, distributor, converter, representative, 1-11 lessor, or lease facilitator in this State or perform or offer to 1-12 perform repair services on a motor vehicle pursuant to the terms of 1-13 a franchise and a motor vehicle manufacturer's warranty, whether or 1-14 not the person sells or offers to sell motor vehicles at the same 1-15 location, without obtaining a license therefor as provided in this 1-16 Act and the rules of the Commission. All new license applications 1-17 shall be reviewed and, in the discretion of the Commission, 1-18 investigated to determine compliance with the provisions of this 1-19 Act. License renewals may be administratively granted unless 1-20 protested. Licenses issued by the Commission shall expire one year 1-21 from date of issuance. All licenses and renewals thereof are 1-22 issued subject to all provisions of this Act and rules of the 1-23 Commission in effect upon the date of issuance as well as all 1-24 future provisions of this Act and rules which may become effective 2-1 during the term of the license. A lessor or lease facilitator is 2-2 not required to obtain a lessor or lease facilitator license or pay 2-3 a license fee under this code if the lessor or lease facilitator is 2-4 a state or federally chartered financial institution or a regulated 2-5 subsidiary of a state or federally chartered financial institution. 2-6 A trust or other entity that owns an interest in a lease and the 2-7 vehicle that is the subject of the lease is not required to obtain 2-8 a lessor license or lease facilitator license or pay a license fee 2-9 with respect to a lease initiated, managed, serviced, and 2-10 administered by a licensed lessor. A franchised dealer licensed 2-11 under this code is not required to obtain a lessor or lease 2-12 facilitator license or pay a license fee under this code to engage 2-13 in the business of leasing motor vehicles, including new motor 2-14 vehicles, that the dealer is licensed to sell. 2-15 SECTION 2. Section 5.03A(b), Texas Motor Vehicle Commission 2-16 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 2-17 to read as follows: 2-18 (b) A lessor may not pay a fee to any person in return for 2-19 the solicitation, procurement, or production by that person of 2-20 prospective lessees of motor vehicles unless the person receiving 2-21 the fee is a lease facilitator who holds a valid license as 2-22 provided by this code and a valid appointment from the lessor as 2-23 provided by this section. The fees prohibited by this section do 2-24 not include amounts paid to a franchised dealer as a part of the 2-25 consideration for the sale or assignment of a lease or leased 2-26 vehicle or other amounts paid to the franchised dealer who 2-27 transfers title of the vehicle or assigns the lease contract to the 3-1 lessor of the motor vehicle. 3-2 SECTION 3. Section 5.03A, Texas Motor Vehicle Commission 3-3 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 3-4 by adding Subsection (f) to read as follows: 3-5 (f) As used in Sections 5.01(7) and 5.03A(a), the term "fee" 3-6 does not include any adjustments in the purchase price paid for the 3-7 lease or leased vehicle. Provided, however, that this section does 3-8 not authorize any fees for referring leases or prospective lessees. 3-9 SECTION 4. Subchapter E, Texas Motor Vehicle Commission Code 3-10 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by 3-11 adding Section 5.05 to read as follows: 3-12 Sec. 5.05. USE OF CERTAIN TERMS PROHIBITED. A person may 3-13 not use the words "lease" or "leasing" or any variation of those 3-14 words in the person's name or in the name of an entity owned by the 3-15 person unless the person is: 3-16 (1) licensed under this Act as a lessor or lease 3-17 facilitator; or 3-18 (2) exempt under Section 4.01 of this Act from the 3-19 requirement to obtain a license. 3-20 SECTION 5. This Act takes effect September 1, 1997. 3-21 SECTION 6. The importance of this legislation and the 3-22 crowded condition of the calendars in both houses create an 3-23 emergency and an imperative public necessity that the 3-24 constitutional rule requiring bills to be read on three several 3-25 days in each house be suspended, and this rule is hereby suspended. _______________________________ _______________________________ President of the Senate Speaker of the House I certify that H.B. No. 2098 was passed by the House on April 30, 1997, by a non-record vote; and that the House concurred in Senate amendments to H.B. No. 2098 on May 29, 1997, by a non-record vote. _______________________________ Chief Clerk of the House I certify that H.B. No. 2098 was passed by the Senate, with amendments, on May 26, 1997, by the following vote: Yeas 31, Nays 0. _______________________________ Secretary of the Senate APPROVED: _____________________ Date _____________________ Governor