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