H.B. No. 4120
 
 
 
 
AN ACT
  relating to the financial security requirement for providers
  obligated under certain service contracts.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1304.151, Occupations Code, is amended
  by amending Subsection (b) and adding Subsections (b-1), (b-2), and
  (b-3) to read as follows:
         (b)  If the provider ensures its obligations under
  Subsection (a)(2), the amount maintained in the reserve account may
  not be less than an amount equal to 40 percent of the gross
  consideration the provider received from consumers from the sale of
  all service contracts issued and outstanding in this state, minus
  any claims paid. The executive director may review and examine the
  reserve account. Except as provided by Subsection (b-1), the [The]
  amount of the security deposit may not be less than $250,000. The
  provider must submit to the executive director on request a copy of
  the provider's financial statements that must be prepared in
  accordance with generally accepted accounting principles, be
  without qualification as to the going concern status of the
  provider, and be audited by an independent certified public
  accountant. The commission by rule may require the provider to
  submit additional financial reports.
         (b-1)  Subject to Subsection (b-2), the amount of the
  security deposit required under Subsection (b) may not be less than
  $25,000 if the provider:
               (1)  is a motor vehicle dealer licensed under Chapter
  2301; and
               (2)  offers to sell service contracts only on motor
  vehicles sold by the provider.
         (b-2)  The amount of the security deposit required under
  Subsection (b-1) is:
               (1)  $25,000 for a motor vehicle dealer that generated
  $1,125,000 or less in annual gross revenue in this state from the
  sale of service contracts in the preceding year;
               (2)  $50,000 for a motor vehicle dealer that generated
  more than $1,125,000 and not more than $2,500,000 in annual gross
  revenue in this state from the sale of service contracts in the
  preceding year; and
               (3)  $75,000 for a motor vehicle dealer that generated
  more than $2,500,000 in annual gross revenue in this state from the
  sale of service contracts in the preceding year.
         (b-3)  If a motor vehicle dealer described by Subsection
  (b-1) has no gross revenue in this state from the sale of service
  contracts in the preceding year, the security deposit shall be
  $25,000.
         SECTION 2.  This Act takes effect September 1, 2019.
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
 
         I certify that H.B. No. 4120 was passed by the House on April
  25, 2019, by the following vote:  Yeas 131, Nays 5, 1 present, not
  voting; and that the House concurred in Senate amendments to H.B.
  No. 4120 on May 24, 2019, by the following vote:  Yeas 139, Nays 3,
  2 present, not voting.
 
  ______________________________
  Chief Clerk of the House   
 
         I certify that H.B. No. 4120 was passed by the Senate, with
  amendments, on May 22, 2019, by the following vote:  Yeas 31, Nays
  0.
 
  ______________________________
  Secretary of the Senate   
  APPROVED: __________________
                  Date       
   
           __________________
                Governor