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.

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