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A BILL TO BE ENTITLED
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AN ACT
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relating to the use of proceeds of an extension of credit as |
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collateral for the extension of credit. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. The heading to Chapter 276, Finance Code, is |
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amended to read as follows: |
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CHAPTER 276. FINANCIAL INSTITUTION AND OTHER LENDER ACCOUNTS |
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SECTION 2. The heading to Section 276.003, Finance Code, is |
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amended to read as follows: |
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Sec. 276.003. USE OF PROCEEDS OF EXTENSION OF CREDIT AS |
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COLLATERAL [FOR FINANCIAL INSTITUTION ACCOUNT]. |
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SECTION 3. Section 276.003, Finance Code, is amended by |
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amending Subsection (a) and adding Subsection (a-1) to read as |
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follows: |
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(a) An obligor may use proceeds of an extension of credit |
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made by a financial institution or other lender [for business,
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commercial, investment, or similar purposes] to establish |
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collateral for the extension of credit by: |
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(1) making deposits; |
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(2) purchasing certificates of deposit; or |
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(3) establishing other accounts: |
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(A) at the financial institution; or |
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(B) if the extension of credit is made by a lender |
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other than a financial institution, with the lender or with a |
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financial institution in accordance with Subsection (a-1). |
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(a-1) If the extension of credit is made by a lender other |
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than a financial institution, the obligor must have the contractual |
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right to, on request: |
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(1) use the collateral to repay the extension of |
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credit; and |
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(2) to the extent the collateral amount exceeds the |
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outstanding balance of the extension of credit, have that amount |
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deposited and maintained in an account at a financial institution. |
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SECTION 4. This Act takes effect September 1, 2011. |