By Uher                                         H.B. No. 2098

      75R7814 JMM-F                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to the regulation 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 5.01, Texas Motor Vehicle Commission Code

2-16     (Article 4413(36), Vernon's Texas Civil Statutes), as amended by

2-17     Chapters 345 and 357, Acts of the 74th Legislature, Regular

2-18     Session, 1995, is amended to read as follows:

2-19           Sec. 5.01.  FRANCHISED DEALERS.  It is unlawful for any

2-20     franchised dealer to:

2-21                 (1)  Require a retail purchaser of a new motor vehicle

2-22     as a condition of sale and delivery thereof to purchase special

2-23     features, equipment, parts, or accessories not ordered or desired

2-24     by the purchaser, provided such features, equipment, parts, or

2-25     accessories are not already installed on the new motor vehicle at

2-26     the time of sale.

2-27                 (2)  Fail to perform the obligations placed on the

 3-1     selling franchised dealer in connection with the delivery and

 3-2     preparation of a new motor vehicle for retail sale as provided in

 3-3     the manufacturer's preparation and delivery agreements on file with

 3-4     the Commission and applicable to such vehicle.

 3-5                 (3)  Fail to perform the obligations placed on the

 3-6     franchised dealer in connection with the manufacturer's warranty

 3-7     agreements on file with the Commission.

 3-8                 (4)  Operate without appropriate signs readily and

 3-9     easily visible to the public, identifying the franchised dealer's

3-10     place of business and the products the franchised dealer offers for

3-11     sale.  In the event of a conflict with another law or ordinance,

3-12     this Subdivision prevails, and in the event of a dispute, the Board

3-13     has exclusive jurisdiction to determine whether a sign or signs are

3-14     in compliance with the terms of this Subdivision.  In the event of

3-15     a dispute, the Board shall uphold local ordinances of a home-rule

3-16     city and protect franchised dealers from retribution by

3-17     manufacturers or distributors for having complied with local

3-18     ordinances.

3-19                 (5) [(7)]  Directly or indirectly pay a fee to a lessor

3-20     or lease facilitator, other than a fee that is an element of the

3-21     terms or considerations relating to the sale or assignment of a

3-22     lease or leased motor vehicle by a franchised dealer to another

3-23     person licensed under this code.

3-24           SECTION 3.  Section 5.03A, Texas Motor Vehicle Commission

3-25     Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended

3-26     by adding Subsection (f) to read as follows:

3-27           (f)  A fee prohibited under this section does not include a

 4-1     fee that is an element of the terms or considerations relating to

 4-2     the sale or assignment of a lease or leased motor vehicle by a

 4-3     franchised dealer to another person licensed under this code.

 4-4           SECTION 4.  This Act takes effect September 1, 1997.

 4-5           SECTION 5.  The importance of this legislation and the

 4-6     crowded condition of the calendars in both houses create an

 4-7     emergency and an imperative public necessity that the

 4-8     constitutional rule requiring bills to be read on three several

 4-9     days in each house be suspended, and this rule is hereby suspended.