By: Solomons H.B. No. 1851

A BILL TO BE ENTITLED

AN ACT

relating to rental agreements.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Business and Commerce Code Title 5, Regulation of Businesses and Services, Subtitle B, Rental Practices, is amended by adding Chapter 93 to read as follows:

CHAPTER 93. RENTAL AGREEMENTS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 93.001. DEFINITIONS. In this chapter:

(1) "Commission" means the Texas Commission of Licensing and Regulation.

(2) "Consumer" means an individual who rents personal property under a rental agreement.

(3) "Department" means the Texas Department of Licensing and Regulation.

(4) "Loss damage waiver" means a rental company's agreement to not hold a consumer liable for loss from all or part of any damage to merchandise.

(5) "Merchandise" means the personal property that is the subject of a rental agreement.

(6) "Rental agreement" means an agreement for 30 days or less that states the terms governing the consumers use of merchandise rented by a rental company and that does not permit the consumer to become the owner of the merchandise.

(7) "Rental Company" means a person who, in the ordinary course of business, regularly rents, offers to rent, or arranges for the renting of merchandise under a rental agreement.

SUBCHAPTER B. FORM AND CONTENT OF AGREEMENTS

Sec. 93.051. FORM OF AGREEMENT. (a) A rental agreement must be written in plain English.

(b) A numerical amount included in a rental agreement must be stated in figures.

(c) A disclosure required by this chapter must be printed or typed in each rental agreement in a size equal to at least 10-point boldfaced type.

Sec. 93.052. REQUIRED DISCLOSURES. (a) A rental agreement must disclose:

(1) the rental time period;

(2) the base charge for the rental time period;

(3) the amount and purpose of any payment, charge, or fee in addition to the base charge for the rental time period; and

(4) whether the consumer is liable for loss or damage to the merchandise and, if so, the maximum amount for which the consumer may be liable.

Sec. 93.053. OTHER REQUIRED PROVISIONS. A rental agreement must provide that any payment, charge, or fee in addition to the base charge for the rental time period must be reasonably related to the service performed.

Sec. 93.054. PROHIBITED PROVISIONS. (a) A rental agreement may not:

(1) require a consumer to purchase insurance or a loss damage waiver from the rental company to cover the merchandise;

(2) require a confession of judgment; or

(3) waive a defense, counterclaim, or right the consumer may have against the rental company or an agent of the rental company.

SUBCHAPTER C. LOSS DAMAGE WAIVERS AND MANDATORY CHARGES

Sec. 93.101. LOSS DAMAGE WAIVER MUST BE AGREED TO IN WRITING. The purchase of a loss damage waiver must be agreed to in writing by the consumer at or before the time the rental agreement is executed.

Sec. 93.102. NOTICE TO CONSUMER. A rental agreement that offers a loss damage waiver must include the following notice:

NOTICE: Your rental agreement offers, for an additional charge, an optional waiver to cover all or a part of your responsibility for damage to or loss to the merchandise rented. Before deciding whether to purchase the waiver, you may wish to determine whether your own homeowners or renters insurance or credit card agreement provides you coverage for loss or damage to rental merchandise and the amount of the deductible you would pay under your own insurance coverage. The purchase of the waiver is not mandatory. The waiver is not insurance.

Sec. 93.103. POSTED NOTICE. In addition to providing the notice required by Section 91.052, a rental company shall post in a conspicuous location where the damage waiver is offered the following notice:

Notice to Texas Residents Regarding Loss Damage Waivers

Your homeowners or renters insurance policy may or may not provide coverage for your responsibility for the loss of or damage to rented merchandise during the rental term. Before deciding whether to purchase a loss damage waiver, you may wish to determine whether your homeowners or renters insurance policy provides you coverage for damage or loss to the rented merchandise.

Sec. 93.104. PROHIBITED REPRESENTATIONS AND COERCION. (a) An employee or agent of a rental company may not:

(1) make an oral or written representation that contradicts this chapter; or

(2) use coercive language or a coercive act in an attempt to persuade a consumer to purchase a damage waiver.

(b) For purposes of this section, if the consumer has declined the damage waiver, a further statement or question by the employee or agent that refers to the damage waiver, other than a statement made in conjunction with review of the rental agreement that the waiver has been declined, is considered coercive.

Sec. 93.105. MANDATORY CHARGE. (a) A rental company that includes a mandatory charge in a rental agreement shall prominently display and fully disclose the charge:

(1) separately on the face of the agreement; and

(2) in all of the rental company's price advertising, price quotes, price offers, and price displays, including displays in computerized reservation systems.

(b) A rental company may not impose or require the purchase of a loss damage waiver as a mandatory charge.

Sec. 93.106. AUTHORIZED EXCLUSIONS. A loss damage waiver may exclude:

(1) damage that is intentionally caused by the consumer or;

(2) damage that results from the consumer's wilful or wanton misconduct.

Sec. 93.107. RELATIONSHIP TO INSURANCE. A loss damage waiver is not insurance.

Sec. 93.108. RULES. The commission may adopt rules consistent with this chapter relating to loss damage waivers in rental agreements.

Sec. 93.109. FEES. The commission may by rule establish a fee for the administration of this chapter by the department.

SUBCHAPTER D. ENFORCEMENT PROVISIONS

Sec. 93.151. ADMINISTRATIVE ENFORCEMENT OF CHAPTER. (a) The department shall enforce this chapter and, as necessary may investigate a rental company who has one of more rental agreements that include a loss damage waiver.

(b) A person may file a complaint with the department alleging a violation of this chapter. The department shall investigate the alleged violation on receipt of the complaint and may inspect any record relevant to the complaint.

(c) If, as a result of an investigation the department determines that a violation may have occurred, the commission shall provide an opportunity for a hearing in the manner provided for a contested case under Chapter 2001, Government Code.

(d) If, after opportunity for hearing, the commission determines that the rental company has violated this chapter, the commission may:

(1) impose an administrative penalty under Chapter 51, Occupations Code; and

(2) award the complainant damages in an amount not to exceed the amount of the price in the rental agreement.

Sec. 93.152. CIVIL ACTION FOR VIOLATION OF CHAPTER. (a) A consumer damaged by a rental company's violation of this chapter is entitled to recover from the rental company:

(1) actual damages; and

(2) reasonable attorney's fees and court costs.

(b) A rental company is not liable under this section for a violation of this chapter caused by the rental company's error if, subject to Subsection (c), the rental company:

(1) provides the consumer written notice of the error; and

(2) makes adjustments in the consumer's account as necessary to ensure:

(A) the consumer will not be required to pay an amount in excess of the amount disclosed; and

(B) the agreement otherwise complies with this chapter.

(c) A rental company must take action under Subsection (b) before:

(1) the 31st day after the date the rental company discovers the error; and

(2) the rental company receives written notice of the error from the consumer or an action under this section is filed.

Sec. 93.153. DECEPTIVE TRADE PRACTICE. A violation of this chapter is a deceptive trade practice under Subchapter E, Chapter 17.

SECTION 2. Business and Commerce Code Title 5, Regulation of Businesses and Services, Subtitle B, Rental Practices, is amended by adding Chapter 94 to read as follows:

CHAPTER 94. COMMERCIAL RENTAL AGREEMENTS

Sec. 94.001. DEFINITIONS. In this chapter:

(1) "Business" means a trade, occupation, profession, or other commercial activity.

(2) "Department" means the Texas Department of Licensing and Regulation.

(3) "Loss damage waiver" means a rental company's agreement to not hold a business liable for loss from all or part of any damage to merchandise.

(4) "Rental agreement" means an agreement that states the terms governing the use of merchandise rented by a rental company and that does not permit the consumer to become the owner of the merchandise.

(5) "Rental Company" means a person who, in the ordinary course of business, regularly rents, offers to rent, or arranges for the renting of merchandise under a rental agreement.

Sec. 94.002. RENTAL AGREEMENTS WITH BUSINESSES EXEMPTED FROM DEPARTMENT REGULATION. The Department shall not regulate rental agreements with businesses.

Sec. 94.003. RELATIONSHIP OF LOSS DAMAGE WAIVERS TO INSURANCE. A loss damage waiver in a rental agreement with a business is not insurance.

SECTION 3. This Act applies to rental agreements entered into on or after January 1, 2010. A rental agreement entered into before January 1, 2010, is governed by the law in effect immediately before the effective date, and the former law is continued in effect for that purpose.

SECTION 4. This Act takes effect September 1, 2009.