HBA-CMT H.B. 1535 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1535
By: Davis, Yvonne
Transportation
2/27/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, when a vehicle is purchased through a loan, the Texas Department
of Transportation (department) 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, the department must
issue one original paper title to the vehicle owner.  An electronic titling
system for lienholders would remove the administrative burden placed on a
lienholder in the processing, filing, and storage of paper titles.  House
Bill 1535 allows the department to issue electronic titles to lienholders.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking is
expressly delegated to the Texas Department of Transportation in SECTION 1
(Section 501.117, Transportation Code) of this bill. 

ANALYSIS

House Bill 1535 amends the Transportation Code to require the Texas
Department of Transportation (department) to develop, by rule, a system in
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. The department is required to publish and
distribute procedures for using the system to county assessorcollectors,
financial institutions, and other potential motor vehicle lienholders.
Participation by a lienholder in the system is voluntary.  The provisions
of the Certificate of Title Act that relate 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 these provisions. 

EFFECTIVE DATE

September 1, 2001.