78R13500 RCJ-D


By:  Solomons                                                     H.B. No. 1494

Substitute the following for H.B. No. 1494:                                   

By:  Eiland                                                   C.S.H.B. No. 1494



A BILL TO BE ENTITLED

AN ACT

relating to loss damage waivers and payment of certain charges and 
fees in certain rental-purchase agreements.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 35.71, Business & Commerce Code, is 
amended by adding Subdivision (3-a) to read as follows:
		(3-a)  "Loss damage waiver" means a merchant's 
agreement not to hold a consumer liable for loss from all or a part 
of any damage to merchandise.
	SECTION 2.  Section 35.72(c), Business & Commerce Code, is 
amended to read as follows:
	(c)  A rental-purchase agreement may not contain a 
provision:                
		(1)  requiring a confession of judgment;                                      
		(2)  authorizing a merchant or an agent of the merchant 
to commit a breach of the peace in the repossession of merchandise;
		(3)  waiving a defense, counterclaim, or right the 
consumer may have against the merchant or an agent of the merchant;
		(4)  requiring the purchase of insurance or a loss 
damage waiver from the merchant to cover the merchandise;
		(5)  requiring the payment of a late charge or 
reinstatement fee unless a periodic payment is delinquent for more 
than seven days if the payment is due monthly, or is delinquent for 
more than three days if the payment is due more frequently than 
monthly, and the charge or fee is in an amount equal to not more than 
the lesser of five percent of the delinquent payment or $5, and not 
less than $2; or
		(6)  requiring a payment at the end of the scheduled 
rental-purchase term in excess of or in addition to a regular 
periodic payment in order to acquire ownership of the merchandise.  
In no event shall the consumer be required to pay a sum greater than 
the total amount to be paid to acquire ownership, as disclosed in 
Subsection (g)(3) of this section.
	SECTION 3.  Subchapter F, Chapter 35, Business & Commerce 
Code, is amended by adding Section 35.721 to read as follows:
	Sec. 35.721.  LOSS DAMAGE WAIVER.  (a)  In addition to other 
charges permitted by this subchapter, a consumer may contract for a 
loss damage waiver.  A loss damage waiver is not insurance.
	(b)  A merchant may not sell a loss damage waiver unless the 
consumer agrees to the waiver in writing.  A merchant may not impose 
or require the purchase of a loss damage waiver as a mandatory 
charge.
	(c)  A loss damage waiver may exclude loss or damage to the 
merchandise that is caused by an unexplained disappearance or 
abandonment of the merchandise, or any other damage that is 
intentionally caused by the consumer or that results from the 
consumer's wilful or wanton misconduct.
	(d)  A loss damage waiver agreement must include a statement 
of the total charge for the loss damage waiver.
	(e)  A merchant may charge a fee for a loss damage waiver that 
may not exceed 10 percent of the periodic rental payment.
	(f)  A contract that offers a loss damage waiver must include 
the following notice:
	"This contract offers an optional loss damage waiver for an 
additional charge to cover your responsibility for loss of or 
damage to the merchandise.  You do not have to purchase this 
coverage.  Before deciding whether or not to purchase this loss 
damage waiver, you may consider whether your own homeowners' or 
casualty insurance policy affords you coverage for loss of or 
damage to rental merchandise and the amount of the deductible you 
would pay under your policy."
	SECTION 4.  The change in law made by this Act applies only 
to a rental-purchase agreement entered into on or after the 
effective date of this Act.  A rental-purchase agreement entered 
into before the effective date of this Act is governed by the law in 
effect on the date on which the rental-purchase agreement was 
entered into, and the former law is continued in effect for that 
purpose.
	SECTION 5.  This Act takes effect September 1, 2003.