SRC-SEW H.B. 1535 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 1535
77R2426 DWS-DBy: Davis, Yvonne (Ellis)
State Affairs
4/17/2001
Engrossed


DIGEST AND PURPOSE 

Currently, when a vehicle is purchased through a loan, the Texas Department
of Transportation (TxDOT) issues an original paper title to the lienholder
and a nonnegotiable copy of the title to the purchaser of the vehicle. The
lienholder is required to store the original title until the loan is paid
in full. When a loan is paid in full, TxDOT must issue one original paper
title to the vehicle owner. An electronic system for lienholders would
remove the administrative burden placed on a lienholder in the processing,
filing, and storage of paper titles. As proposed, H.B. 1535 allows TxDOT to
issue electronic titles to lienholders.  

RULEMAKING AUTHORITY

Rulemaking authority is expressly granted to the Texas Department of
Transportation in SECTION 1 (Section 501.117, Transportation Code) of this
bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter Chapter 501F, Transportation Code, by adding
Section 501.117, as follows: 
 
Sec. 501.117.  ELECTRONIC LIEN SYSTEM. (a) Requires the Texas Department of
Transportation (department) by rule to develop a system under which a
security interest in a motor vehicle may be perfected, assigned,
discharged, and canceled electronically instead of by record maintained on
a certificate of title.  Provides that participation by a lienholder in the
system is voluntary. 
 
(b)  Requires the department to publish and distribute procedures for using
the system to county assessor-collectors and to financial institutions and
other potential motor vehicle lienholders. 

(c)  Provides that the provisions of this chapter relating to perfecting,
assigning, discharging, and canceling a security interest in a motor
vehicle by record maintained on a certificate of title do not apply to the
extent the security interest is governed by rules adopted under this
section. 

SECTION 2.  Effective date:  September 1, 2001.