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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of residential service companies and |
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residential service contracts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1303.101(b), Occupations Code, is |
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amended to read as follows: |
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(b) Except for the license requirement in Subsection (a), a |
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person who administers, issues, makes, provides, sells, markets, or |
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offers to sell a residential service contract is exempt from any |
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other licensing requirements of this state with respect to the |
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administration, issuance, making, provision, sale, marketing, or |
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offering for sale of [A person may not sell, offer to sell, arrange
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or solicit the sale of, or receive an application for] a residential |
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service contract [unless:
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[(1) the person is:
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[(A)
employed by a residential service company
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licensed under this chapter; or
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[(B)
licensed as a real estate salesperson, real
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estate broker, mobile home dealer, or insurance agent in this
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state; and
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[(2)
the contract is issued by a residential service
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company licensed under this chapter]. |
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SECTION 2. Section 1303.152(a), Occupations Code, is |
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amended to read as follows: |
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(a) The amount of the reserve required by Section 1303.151 |
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is based on the amount of liability remaining under outstanding |
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residential service contracts written in this state by the |
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residential service company, as determined by multiplying the total |
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number of days [months] remaining on all of those contracts by the |
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pro rata daily [monthly] contract charge. |
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SECTION 3. Section 1303.202(b), Occupations Code, is |
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amended to read as follows: |
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(b) The report must: |
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(1) be on a form prescribed by the commission; |
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(2) be verified by at least two of the residential |
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service company's principal officers; and |
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(3) include: |
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(A) financial statements of the residential |
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service company, including its balance sheet and receipts and |
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disbursements for the preceding year, certified as accurate by: |
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(i) an independent public accountant; or |
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(ii) at least two of the residential |
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service company's principal officers[, if the residential service
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company uses a reimbursement insurance policy to insure its
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outstanding residential service contracts written in this state in
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accordance with Section 1303.151(b)]; |
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(B) any material change to the information |
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submitted under Section 1303.103, except an amendment to a |
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residential service contract filed with the commission under |
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Section 1303.251; |
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(C) if the residential service company maintains |
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a reserve required by Section 1303.151(a), the number of |
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residential service contracts entered into during the year, the |
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number of contract holders as of the end of the year, and the number |
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of contracts terminating during the year; and |
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(D) any other information that: |
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(i) relates to the performance and solvency |
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of the residential service company; and |
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(ii) is necessary for the commission to |
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perform its duties under this chapter. |
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SECTION 4. Section 1303.253, Occupations Code, is amended |
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by amending Subsections (c), (e), and (f) and adding Subsection (k) |
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to read as follows: |
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(c) A filing made under Subsection (a) by a residential |
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service company that maintains a reserve required by Section |
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1303.151(a) may [not] be implemented beginning on the later of the |
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date: |
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(1) the filing is made; or |
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(2) the commission receives any associated filing fee |
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[until approved by the commission]. |
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(e) If the commission determines that a filing made under |
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Subsection (a) is not reasonably related to the amount, term, and |
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conditions of the contract to which the filing applies [as
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described by Subsection (d)], the commission may disapprove the |
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filing. If the commission disapproves the filing, the commission |
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shall notify the company of the disapproval and shall specify in |
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detail the reason for the disapproval. |
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(f) For a filing made under Subsection (a) by a residential |
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service company described by Subsection (c) after the residential |
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service company is licensed, the commission shall have 30 days to |
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disapprove [consider] the filing from the date of the filing or the |
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date that the commission receives any associated filing fee, |
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whichever is later. On the 31st day after that date[,] the filing |
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is considered approved [unless the commission disapproves the
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filing or notifies the residential service company in writing that
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the filing is not reasonably related to the amount, term, and
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conditions of the contract to which the filing applies]. |
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(k) If a filing is disapproved under Subsection (f), the |
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commission may order the residential service company to pay a |
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refund as provided by Section 1101.659. |
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SECTION 5. Section 1303.302(b), Occupations Code, is |
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amended to read as follows: |
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(b) A sales contract must state [A seller of a residential
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property or the buyer's or seller's agent shall provide to the buyer
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a statement that clearly and conspicuously states] that: |
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(1) the purchase of a residential service contract is |
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optional; and |
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(2) the buyer and seller of a residential property may |
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negotiate the amount paid toward, the coverage provided by, and the |
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provider of a [purchase similar coverage through another] |
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residential service contract [company or insurance company
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authorized to engage in business in this state]. |
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SECTION 6. Section 1303.352(a), Occupations Code, is |
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amended to read as follows: |
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(a) The commission may discipline a residential service |
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company under Section 1303.351 if the continued operation of the |
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company would be hazardous to its contract holders or if the |
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company: |
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(1) operates in conflict with its basic organizational |
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document or in a manner that is contrary to that described in and |
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reasonably inferred from information submitted under Section |
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1303.103, unless an amendment to the information has been filed |
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with and approved by the commission; |
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(2) issues a residential service contract that does |
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not comply with Sections 1303.251 and 1303.252; |
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(3) uses a schedule of charges that does not comply |
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with Section 1303.253; |
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(4) is not financially responsible and may be |
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reasonably expected to be unable to meet the company's obligations |
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to contract holders; |
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(5) did not comply with Subchapter D; |
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(6) advertised or marketed the company's services in a |
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false, misrepresentative, misleading, deceptive, or unfair manner; |
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[or] |
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(7) fails to pay the fee for filing the report under |
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Section 1303.202; |
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(8) provides false or misleading information to the |
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commission on a report required by Subchapter E or on a filing |
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required by Subchapter F; |
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(9) fails to provide, within a reasonable time, |
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information requested by the commission that relates to a formal or |
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informal complaint to the commission; or |
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(10) otherwise did not substantially comply with this |
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chapter or a rule adopted under this chapter. |
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SECTION 7. Sections 1303.101(c) and 1303.253(d), |
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Occupations Code, are repealed. |
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SECTION 8. The changes in law made by this Act apply only to |
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a residential service contract entered into or renewed on or after |
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the effective date of this Act. A residential service contract |
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entered into or renewed before that date is governed by the law as |
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it existed immediately before the effective date of this Act, and |
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that law is continued in effect for that purpose. |
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SECTION 9. This Act takes effect September 1, 2019. |