1-1 By: Uher (Senate Sponsor - Cain) H.B. No. 2098 1-2 (In the Senate - Received from the House May 1, 1997; 1-3 May 2, 1997, read first time and referred to Committee on State 1-4 Affairs; May 16, 1997, reported adversely, with favorable Committee 1-5 Substitute by the following vote: Yeas 13, Nays 0; May 16, 1997, 1-6 sent to printer.) 1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 2098 By: Cain 1-8 A BILL TO BE ENTITLED 1-9 AN ACT 1-10 relating to the licensing of certain franchised dealers who engage 1-11 in the leasing of motor vehicles. 1-12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-13 SECTION 1. Section 4.01(a), Texas Motor Vehicle Commission 1-14 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 1-15 to read as follows: 1-16 Sec. 4.01. (a) Except as provided by this Section, no 1-17 person shall engage in business as, serve in the capacity of, or 1-18 act as a dealer, manufacturer, distributor, converter, 1-19 representative, lessor, or lease facilitator in this State or 1-20 perform or offer to perform repair services on a motor vehicle 1-21 pursuant to the terms of a franchise and a motor vehicle 1-22 manufacturer's warranty, whether or not the person sells or offers 1-23 to sell motor vehicles at the same location, without obtaining a 1-24 license therefor as provided in this Act and the rules of the 1-25 Commission. All new license applications shall be reviewed and, in 1-26 the discretion of the Commission, investigated to determine 1-27 compliance with the provision of this Act. License renewals may be 1-28 administratively granted unless protested. Licenses issued by the 1-29 Commission shall expire one year from date of issuance. All 1-30 licenses and renewals thereof are issued subject to all provisions 1-31 of this Act and rules of the Commission in effect upon the date of 1-32 issuance as well as all future provisions of this Act and rules 1-33 which may become effective during the term of the license. A 1-34 lessor or lease facilitator is not required to obtain a lessor or 1-35 lease facilitator license or pay a license fee under this code if 1-36 the lessor or lease facilitator is a state or federally chartered 1-37 financial institution or a regulated subsidiary of a state or 1-38 federally chartered financial institution. A trust or other entity 1-39 that owns an interest in a lease and the vehicle that is the 1-40 subject of the lease is not required to obtain a lessor license or 1-41 lease facilitator license or pay a license fee with respect to a 1-42 lease initiated, managed, serviced, and administered by a licensed 1-43 lessor. A franchised dealer licensed under this code is not 1-44 required to obtain a lessor or lease facilitator license or pay a 1-45 license fee under this code to engage in the business of leasing 1-46 motor vehicles, including new motor vehicles, that the dealer is 1-47 licensed to sell. 1-48 SECTION 2. Section 5.03A(b), Texas Motor Vehicle Commission 1-49 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 1-50 to read as follows: 1-51 (b) A lessor may not pay a fee to any person in return for 1-52 the solicitation, procurement, or production by that person of 1-53 prospective lessees of motor vehicles unless the person receiving 1-54 the fee is a lease facilitator who holds a valid license as 1-55 provided by this code and a valid appointment from the lessor as 1-56 provided by this section. The fees prohibited by this section do 1-57 not include amounts paid to a franchised dealer as a part of the 1-58 consideration for the sale or assignment of a lease or leased 1-59 vehicle or other amounts paid to the franchised dealer who 1-60 transfers title of the vehicle or assigns the lease contract to the 1-61 lessor of the motor vehicle. 1-62 SECTION 3. Section 5.03A, Texas Motor Vehicle Commission 1-63 Code (Article 4413(36), Vernon's Texas Civil Statutes), is amended 1-64 by adding Subsection (f) to read as follows: 2-1 (f) As used in Sections 5.01(7) and 5.03A(a), the term "fee" 2-2 does not include any adjustments in the purchase price paid for the 2-3 lease or leased vehicle. Provided, however, that this section does 2-4 not authorize any fees for referring leases or prospective lessees, 2-5 SECTION 4. SECTION 5, Texas Motor Vehicle Commission Code 2-6 (Article 4413(36), Vernon's Texas Civil Statutes), is amended by 2-7 adding Section 5.05 to read as follows: 2-8 Section 5.05. USE OF CERTAIN TERMS PROHIBITED. A person may 2-9 not use the words "lease" or "leasing" or any variation of those 2-10 words in the person's name or in the name of an entity owned by the 2-11 person unless the person is: 2-12 (1) licensed under this Act as a lessor or lease 2-13 facilitator; or 2-14 (2) exempt under Section 4.01 of this Act from the 2-15 requirement to obtain a license. 2-16 SECTION 5. This Act takes effect September 1, 1997. 2-17 SECTION 6. The importance of this legislation and the 2-18 crowded condition of the calendars in both houses create an 2-19 emergency and an imperative public necessity that the 2-20 constitutional rule requiring bills to be read on three several 2-21 days in each house be suspended, and this rule is hereby suspended. 2-22 * * * * *