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A BILL TO BE ENTITLED
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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 Subsection (b-1) to read as |
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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) The amount of the security deposit required under |
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Subsection (b) may not be less than $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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SECTION 2. This Act takes effect September 1, 2019. |