H.B. No. 2556
 
 
 
 
AN ACT
  relating to the rights and duties of the parties to a motor vehicle
  retail installment contract or a conditional delivery agreement
  involving the sale or conditional delivery of a motor vehicle;
  providing an administrative penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter A, Chapter 348, Finance Code, is
  amended by adding Section 348.013 to read as follows:
         Sec. 348.013.  CONDITIONAL DELIVERY AGREEMENT. (a) In this
  section, "conditional delivery agreement" means a contract between
  a retail seller and prospective retail buyer under the terms of
  which the retail seller allows the prospective retail buyer the use
  and benefit of a motor vehicle for a specified term.
         (b)  Subject to this section, a retail seller and prospective
  retail buyer may enter into a conditional delivery agreement.
         (c)  A conditional delivery agreement is:
               (1)  an enforceable contract; and
               (2)  void on the execution of a retail installment
  contract between the parties of the conditional delivery agreement
  for the sale of the motor vehicle that is the subject of the
  conditional delivery agreement.
         (d)  A conditional delivery agreement may only confer rights
  consistent with this section and may not confer any legal or
  equitable rights of ownership, including ownership of the motor
  vehicle that is the subject of the conditional delivery agreement.
         (e)  A conditional delivery agreement may not exceed a term
  of 15 days.
         (f)  If a prospective retail buyer tenders to a retail seller
  a trade-in motor vehicle in connection with a conditional delivery
  agreement:
               (1)  the parties must agree on the value of the trade-in
  motor vehicle;
               (2)  the conditional delivery agreement must contain
  the agreed value of the trade-in motor vehicle described by
  Subdivision (1); and
               (3)  the retail seller must use reasonable care to
  conserve the trade-in motor vehicle while the vehicle is in the
  retail seller's possession.
         (g)  If the parties to a conditional delivery agreement do
  not subsequently enter into a retail installment contract for the
  sale of the motor vehicle that is the subject of the conditional
  delivery agreement, the retail seller shall, not later than the
  seventh day after termination of the conditional delivery
  agreement:
               (1)  deliver to the prospective retail buyer any
  trade-in motor vehicle that the prospective retail buyer tendered
  in connection with the conditional delivery agreement in the same
  or substantially the same condition as it was at the time of
  execution of the agreement and shall return any down payment or
  other consideration received from the prospective retail buyer in
  connection with the agreement; or
               (2)  if the trade-in motor vehicle cannot be returned
  in the same or substantially the same condition as it was at the
  time of execution of the conditional delivery agreement, deliver to
  the prospective retail buyer a sum of money equal to the agreed
  value of the trade-in motor vehicle as described by Subsection (f)
  and shall return any down payment or other consideration described
  by Subdivision (1).
         (h)  Any money that a retail seller is obligated to provide a
  prospective retail buyer under Subsection (g) must be tendered at
  the same time that the trade-in motor vehicle is delivered for
  return to the prospective retail buyer or when the trade-in motor
  vehicle would have been delivered if the vehicle was damaged or
  could not be returned.
         (i)  If a prospective retail buyer returns a motor vehicle
  under a conditional delivery agreement at the request of the retail
  seller, the retail seller, notwithstanding the period prescribed by
  Subsection (g), must return the trade-in vehicle at the same time
  that the motor vehicle under the conditional delivery agreement is
  returned by the prospective retail buyer.
         (j)  The prospective retail buyer shall return the motor
  vehicle received under the conditional delivery agreement in the
  same or substantially the same condition as it was at the time of
  the execution of the conditional delivery agreement.
         (k)  An amount paid or required to be paid by the retail
  seller under Subsection (g) is subject to review by the
  commissioner. If the commissioner determines that the retail
  seller in fact owes the prospective retail buyer a certain amount
  under Subsection (g), the commissioner may order the retail seller
  to pay the amount to the prospective retail buyer.  If the trade-in
  motor vehicle is not returned by the retail seller in accordance
  with this section and the retail seller does not pay the prospective
  retail buyer an amount equal to the agreed value of the trade-in
  motor vehicle within the period prescribed by this section, the
  commissioner may assess an administrative penalty against the
  retail seller in an amount that is reasonable in relation to the
  value of the trade-in motor vehicle. The commissioner shall
  provide notice to the retail seller and the prospective retail
  buyer of the commissioner's determination under this subsection.
         (l)  Not later than the 30th day after the date the parties
  receive notice of the commissioner's determination under
  Subsection (k), the retail seller or prospective retail buyer may
  file with the commissioner an appeal of the commissioner's
  determination requesting a time and place for a hearing before a
  hearings officer designated by the commissioner. A hearing under
  this subsection is governed by Chapter 2001, Government Code.
  After the hearing, based on the findings of fact, conclusions of
  law, and recommendations of the hearings officer, the commissioner
  shall enter a final order.
         (m)  A person who requests an appeal under Subsection (l) is
  required to pay a deposit to secure the payment of the costs of the
  hearing in a reasonable amount as determined by the commissioner,
  unless the person cannot afford to pay the deposit and files an
  affidavit to that effect with the hearings officer in the form and
  content prescribed by finance commission rule. The entire deposit
  must be refunded to the person if the person prevails in the
  hearing. If the person does not prevail, any portion of the deposit
  in excess of the costs of the hearing assessed against the person is
  refundable.
         (n)  Notice of the commissioner's final order under
  Subsection (l), given to the person in accordance with Section
  2001, Government Code, must include a statement of the person's
  right to judicial review of the order.
         (o)  The hearings officer may order the retail seller or the
  prospective retail buyer, or both, to pay reasonable expenses
  incurred by the commissioner in connection with obtaining a final
  order under Subsection (l), including attorney's fees,
  investigative costs, and witness fees.
         (p)  This section does not:
               (1)  apply to a bailment agreement under Section
  348.002; or
               (2)  create a private right of action.
         (q)  Except as otherwise provided by this section, the
  commissioner has exclusive jurisdiction to enforce this section.
         SECTION 2.  Subchapter B, Chapter 348, Finance Code, is
  amended by adding Section 348.1015 to read as follows:
         Sec. 348.1015.  CONTRACT CONDITIONED ON SUBSEQUENT
  ASSIGNMENT PROHIBITED. (a) A retail installment contract may not be
  conditioned on the subsequent assignment of the contract to a
  holder.
         (b)  A provision in violation of this section is void. This
  subsection does not affect the validity of other provisions of the
  contract that may be given effect without the voided provision, and
  to that extent those provisions are severable.
         (c)  This section does not create a private right of action.
         (d)  The commissioner has exclusive jurisdiction to enforce
  this section.
         SECTION 3.  The changes in law made by this Act apply only to
  a contract entered into on or after the effective date of this Act.
  A contract entered into before the effective date of this Act is
  governed by the law in effect when the contract was entered into,
  and the former law is continued in effect for that purpose.
         SECTION 4.  This Act takes effect September 1, 2009.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 2556 was passed by the House on May 4,
  2009, by the following vote:  Yeas 142, Nays 0, 1 present, not
  voting.
 
  ______________________________
  Chief Clerk of the House   
 
 
         I certify that H.B. No. 2556 was passed by the Senate on May
  25, 2009, by the following vote:  Yeas 31, Nays 0.
 
  ______________________________
  Secretary of the Senate    
  APPROVED:  _____________________
                     Date          
   
            _____________________
                   Governor