Bill Text: TX SB1052 | 2017-2018 | 85th Legislature | Enrolled
Bill Title: Relating to certain retail installment contracts and leases for vehicles; providing for a civil penalty.
Spectrum: Partisan Bill (Republican 2-0)
Status: (Passed) 2017-05-26 - Effective on 9/1/17 [SB1052 Detail]
Download: Texas-2017-SB1052-Enrolled.html
S.B. No. 1052 |
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relating to certain retail installment contracts and leases for | ||
vehicles; providing for a civil penalty. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 345.005, Finance Code, is amended to | ||
read as follows: | ||
Sec. 345.005. ITEMIZED CHARGE. An amount charged to a | ||
retail buyer in a retail installment contract or retail charge | ||
agreement is an itemized charge if the amount is not included in the | ||
cash price and is the amount of: | ||
(1) fees prescribed by law for filing, recording, or | ||
otherwise perfecting, releasing, or satisfying a security interest | ||
created in connection with a retail installment transaction or | ||
nonfiling insurance premiums as authorized by Section 345.212; | ||
(2) fees for registration or a certificate of title; | ||
(3) any taxes; | ||
(4) fees or charges prescribed by law and connected | ||
with the sale or inspection of the goods or services subject to the | ||
contract or agreement; | ||
(5) premiums and other charges for insurance | ||
authorized by Subchapter E; | ||
(6) official fees for a construction permit or the | ||
filing or recording of a construction permit; | ||
(7) a documentary fee authorized under Section | ||
345.251; [ |
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(8) in a retail installment transaction involving | ||
modernization, rehabilitation, repair, alteration, improvement, or | ||
construction of real property, reasonable and necessary costs, | ||
including amounts, paid by the holder: | ||
(A) for title insurance or title examination and | ||
opinion that does not exceed the amount set by the commissioner of | ||
insurance for title insurance for the transaction; | ||
(B) to a person who is not a salaried employee of | ||
the holder for an appraisal or inspection or for investigating the | ||
credit standing or creditworthiness of the retail buyer; or | ||
(C) to an attorney who is not a salaried employee | ||
of the holder as a legal fee for the preparation of documents in | ||
connection with the transaction; and | ||
(9) charges for a debt cancellation agreement under | ||
Chapter 354. | ||
SECTION 2. Subchapter B, Chapter 345, Finance Code, is | ||
amended by adding Section 345.084 to read as follows: | ||
Sec. 345.084. DEBT CANCELLATION AGREEMENT. A debt | ||
cancellation agreement under Chapter 354 may be offered in | ||
connection with a retail installment contract for a covered vehicle | ||
to which this chapter applies. For purposes of this section, | ||
"covered vehicle" has the meaning assigned by Section 354.001. | ||
SECTION 3. Section 348.114, Finance Code, is amended by | ||
amending Subsection (a) and adding Subsection (c) to read as | ||
follows: | ||
(a) If a retail installment contract that provides for a | ||
time price differential that is computed using the add-on method or | ||
the scheduled installment earnings method is amended to defer all | ||
or a part of one or more installments for not longer than three | ||
months, the holder may collect from the retail buyer: | ||
(1) a deferment charge in an amount computed on the | ||
amount deferred for the period of deferment at a rate that does not | ||
exceed the effective return for time price differential permitted | ||
for a monthly payment retail installment contract; and | ||
(2) the amount of the additional cost to the holder | ||
for: | ||
(A) premiums for continuing in force any | ||
insurance coverages provided for by the contract; and | ||
(B) any additional necessary official fees. | ||
(c) If a retail installment contract that provides for a | ||
time price differential that is computed using the true daily | ||
earnings method is amended to defer all or a part of one or more | ||
installments, the holder may charge and receive from the retail | ||
buyer time price differential on the unpaid balance of the contract | ||
at the rate agreed to in the contract. At the time of deferment, the | ||
holder must provide the following written notice to the retail | ||
buyer that is boldfaced, capitalized, or underlined or otherwise | ||
conspicuously set out from any surrounding written material: | ||
"FINANCE CHARGES WILL CONTINUE TO ACCRUE ON THE UNPAID BALANCE AT | ||
THE CONTRACT RATE. BY DEFERRING ONE OR MORE INSTALLMENTS, YOU WILL | ||
PAY MORE FINANCE CHARGES THAN ORIGINALLY DISCLOSED." A holder does | ||
not collect a deferment charge by the accrual of time price | ||
differential on the unpaid balance of the contract. | ||
SECTION 4. Section 348.124(a), Finance Code, is amended to | ||
read as follows: | ||
(a) In connection with a retail installment transaction | ||
under this chapter, a retail seller may offer to the retail buyer a | ||
debt cancellation agreement, including a guaranteed asset | ||
protection waiver or similarly named agreement. If the retail | ||
installment transaction requires insurance coverage as part of the | ||
retail buyer's responsibility to the holder, the debt cancellation | ||
agreement, guaranteed asset protection waiver, or similarly named | ||
agreement must be offered under Chapter 354. The retail seller may | ||
not require that the purchase of a debt cancellation agreement by | ||
the retail buyer be made in order to enter into a retail installment | ||
transaction. | ||
SECTION 5. Section 348.208(b), Finance Code, is amended to | ||
read as follows: | ||
(b) A retail installment contract may include as a separate | ||
charge an amount for: | ||
(1) motor vehicle property damage or bodily injury | ||
liability insurance; | ||
(2) mechanical breakdown insurance; | ||
(3) participation in a motor vehicle theft protection | ||
plan; | ||
(4) insurance to reimburse the retail buyer for the | ||
amount computed by subtracting the proceeds of the buyer's basic | ||
collision policy on the motor vehicle from the amount owed on the | ||
vehicle if the vehicle has been rendered a total loss; | ||
(5) a warranty or service contract relating to the | ||
motor vehicle; | ||
(6) an identity recovery service contract; or | ||
(7) a debt cancellation agreement, including a debt | ||
cancellation agreement under Chapter 354, if the agreement is | ||
included as a term of a retail installment contract under Section | ||
348.124. | ||
SECTION 6. Subchapter G, Chapter 348, Finance Code, is | ||
redesignated as Chapter 354, Finance Code, and amended to read as | ||
follows: | ||
CHAPTER 354 [ |
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FOR CERTAIN RETAIL VEHICLE INSTALLMENT SALES | ||
Sec. 354.001. DEFINITIONS. In this chapter: | ||
(1) "Contract" means a retail installment contract | ||
made under Chapter 345 or 348. | ||
(2) "Covered vehicle" includes a self-propelled or | ||
towed vehicle designed for personal use, including an automobile, | ||
truck, motorcycle, recreational vehicle, all-terrain vehicle, | ||
snowmobile, camper, boat, personal watercraft, and personal | ||
watercraft trailer. | ||
(3) "Debt cancellation agreement" means a contract | ||
term or a contractual arrangement modifying a contract term under | ||
which a retail seller or holder agrees to cancel all or part of an | ||
obligation of the retail buyer to repay an extension of credit from | ||
the retail seller or holder on the occurrence of the total loss or | ||
theft of the covered vehicle that is the subject of the contract but | ||
does not include an offer to pay a specified amount on the total | ||
loss or theft of the covered vehicle. | ||
(4) "Holder" means a person who is: | ||
(A) a retail seller; or | ||
(B) the assignee or transferee of a contract. | ||
(5) "Retail buyer" means a person who purchases or | ||
agrees to purchase a covered vehicle from a retail seller in a | ||
retail installment transaction. | ||
(6) "Retail seller" means a person in the business of | ||
selling covered vehicles to retail buyers in retail installment | ||
transactions. | ||
Sec. 354.002 [ |
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CANCELLATION AGREEMENTS. (a) This chapter [ |
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only to a debt cancellation agreement that includes insurance | ||
coverage as part of the retail buyer's responsibility to the | ||
holder. | ||
(b) The amount charged for a debt cancellation agreement | ||
made in connection with a [ |
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exceed five percent of the amount financed pursuant to the [ |
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cancellation agreement regulated under this chapter [ |
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(c) The debt cancellation agreement becomes a part of or a | ||
separate addendum to the [ |
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a term of the [ |
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sale, or transfer by the holder. | ||
(d) A debt cancellation agreement to which this chapter | ||
applies is not insurance. | ||
Sec. 354.003 [ |
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EXCLUSION LANGUAGE. (a) In addition to the provisions required by | ||
Section 354.004 [ |
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disclose all provisions permitting the exclusion of loss or damage | ||
including, if applicable: | ||
(1) an act occurring after the original maturity date | ||
or date of the holder's acceleration of the [ |
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contract; | ||
(2) any dishonest, fraudulent, illegal, or | ||
intentional act of any authorized driver that directly results in | ||
the total loss of the covered [ |
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(3) any act of gross negligence by an authorized | ||
driver that directly results in the total loss of the covered | ||
[ |
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(4) conversion, embezzlement, or concealment by any | ||
person in lawful possession of the covered [ |
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(5) lawful confiscation by an authorized public | ||
official; | ||
(6) the operation, use, or maintenance of the covered | ||
[ |
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(7) war, whether or not declared, invasion, | ||
insurrection, rebellion, revolution, or an act of terrorism; | ||
(8) normal wear and tear, freezing, or mechanical or | ||
electrical breakdown or failure; | ||
(9) use of the covered [ |
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commercial purposes; | ||
(10) damage that occurs after the covered [ |
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vehicle has been repossessed; | ||
(11) damage to the covered [ |
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purchase of the debt cancellation agreement; | ||
(12) unpaid insurance premiums and salvage, towing, | ||
and storage charges relating to the covered [ |
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(13) damage related to any personal property attached | ||
to or within the covered [ |
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(14) damages associated with falsification of | ||
documents by any person not associated with the retail seller or | ||
other person canceling the retail buyer's obligation; | ||
(15) any unpaid debt resulting from exclusions in the | ||
retail buyer's primary physical damage coverage not included in the | ||
debt cancellation agreement; | ||
(16) abandonment of the covered [ |
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retail buyer only if the retail buyer voluntarily discards, leaves | ||
behind, or otherwise relinquishes possession of the covered [ |
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vehicle to the extent that the relinquishment shows intent to | ||
forsake and desert the covered [ |
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[ |
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(17) any amounts deducted from the primary insurance | ||
carrier's settlement due to prior damages; and | ||
(18) any loss occurring outside the United States or | ||
outside the United States and Canada. | ||
(b) An exclusion of loss or damage not listed in Subsection | ||
(a) may be included in a debt cancellation agreement only if the | ||
exclusion is disclosed in plain, easy to read language. | ||
Sec. 354.004 [ |
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AGREEMENT LANGUAGE. A debt cancellation agreement must state: | ||
(1) the contact information of the retail seller, the | ||
holder, and any administrator of the agreement; | ||
(2) the name and address of the retail buyer; | ||
(3) the cost and term of the debt cancellation | ||
agreement; | ||
(4) the procedure the retail buyer must follow to | ||
obtain benefits under the terms of the debt cancellation agreement, | ||
including a telephone number and address where the retail buyer may | ||
provide notice under the debt cancellation agreement; | ||
(5) the period during which the retail buyer is | ||
required to notify the retail seller, the holder, or any | ||
administrator of the agreement[ |
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debt cancellation agreement for total loss or theft of the covered | ||
[ |
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(6) that in order to make a claim, the retail buyer | ||
must provide or complete some or all of the following documents and | ||
provide those documents to the retail seller, the holder, or any | ||
administrator of the agreement: | ||
(A) a debt cancellation request form; | ||
(B) proof of loss and settlement payment from the | ||
retail buyer's primary comprehensive, collision, or uninsured or | ||
underinsured motorist policy or other parties' liability insurance | ||
policy for the settlement of the insured total loss of the covered | ||
[ |
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(C) verification of the retail buyer's primary | ||
insurance deductible; | ||
(D) a copy of any police report filed in | ||
connection with the total loss or theft of the covered [ |
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vehicle; and | ||
(E) a copy of the damage estimate; | ||
(7) that documentation not described by Subdivision | ||
(6) or required by the retail seller, the holder, or any | ||
administrator of the agreement is not required to substantiate the | ||
loss or determine the amount of debt to be canceled; | ||
(8) that notwithstanding the collection of the | ||
documents under Subdivision (6), on reasonable advance notice the | ||
retail seller, the holder, or any administrator of the agreement | ||
may inspect the retail buyer's covered [ |
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(9) that the retail seller or holder will cancel all or | ||
part of the retail buyer's obligation as provided in the debt | ||
cancellation agreement on the occurrence of total loss or theft of | ||
the covered [ |
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(10) the method to be used to calculate refunds; | ||
(11) the method for calculating the amount to be | ||
canceled under the debt cancellation agreement on the occurrence of | ||
total loss or theft of a covered [ |
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(12) that purchase of a debt cancellation agreement is | ||
not required for the retail buyer to obtain an extension of credit | ||
and will not be a factor in the credit approval process; | ||
(13) that in order to cancel the debt cancellation | ||
agreement and receive a refund, the retail buyer must provide a | ||
written request to cancel to the retail seller, the holder, or any | ||
administrator of the agreement; | ||
(14) that if total loss or theft of the covered [ |
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vehicle has not occurred, the retail buyer has 30 days from the date | ||
of the [ |
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cancellation agreement, whichever is later, or a longer period as | ||
provided under the debt cancellation agreement, to cancel the debt | ||
cancellation agreement and receive a full refund; | ||
(15) that the retail buyer may file a complaint with | ||
the commissioner, and include the address, phone number, and | ||
Internet website of the Office of Consumer Credit Commissioner; and | ||
(16) that the holder will cancel certain amounts under | ||
the debt cancellation agreement for total loss or theft of a covered | ||
[ |
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language: "YOU WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS | ||
CONTRACT IN THE CASE OF A TOTAL LOSS OR THEFT OF THE COVERED VEHICLE | ||
AS STATED IN THE DEBT CANCELLATION AGREEMENT." | ||
Sec. 354.005 [ |
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CANCELLATION AGREEMENTS. (a) Debt cancellation agreement forms | ||
must be submitted to the commissioner for approval. Debt | ||
cancellation agreement forms may include additional language to | ||
supplement the terms of the debt cancellation agreement as required | ||
by this chapter [ |
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(b) If a debt cancellation agreement form is provided to the | ||
commissioner for approval, the commissioner has 45 days to approve | ||
the form or deny approval of the form. On the written request of the | ||
person submitting the form, the commissioner may agree in writing | ||
to extend the approval period for an additional 45 days. If after | ||
the 45th day, or the 90th day if the commissioner agrees to an | ||
extension, the commissioner does not deny the form, the form is | ||
considered approved. | ||
(c) If the debt cancellation agreement form is approved by | ||
the commissioner or considered approved as provided by Subsection | ||
(b), the terms of the debt cancellation agreement are considered to | ||
be in compliance with this chapter [ |
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(d) The commissioner may deny approval of a form only if the | ||
form excludes the language required by Sections 354.003 [ |
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and 354.004 [ |
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provisions. All form denials may be appealed to the finance | ||
commission. | ||
(e) If after approval of a form the Office of Consumer | ||
Credit Commissioner discovers that approval could have been denied | ||
under Subsection (d), the commissioner may order a retail seller, | ||
any administrator of the debt cancellation agreement, or a holder | ||
to submit a corrected form for approval. Beginning as soon as | ||
reasonably practicable after approval of the corrected form, the | ||
retail seller, administrator, or holder shall use the corrected | ||
form for all sales. | ||
(f) A debt cancellation agreement form that has been | ||
approved by the commissioner is public information subject to | ||
disclosure under Chapter 552, Government Code. Section 552.110, | ||
Government Code, does not apply to a form approved under this | ||
chapter [ |
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Sec. 354.006 [ |
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CANCELLATION AGREEMENTS. (a) If a retail buyer purchases a debt | ||
cancellation agreement, the retail seller must provide to the | ||
retail buyer a true and correct copy of the agreement not later than | ||
the 10th day after the date of the [ |
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(b) A holder must comply with the terms of a debt | ||
cancellation agreement not later than the 60th day after the date of | ||
receipt of all necessary information required by the holder or | ||
administrator of the agreement to process the request. | ||
(c) A debt cancellation agreement may not knowingly be | ||
offered by a retail seller if: | ||
(1) the [ |
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protected by gap insurance; or | ||
(2) the purchase of the debt cancellation agreement is | ||
required for the retail buyer to obtain the extension of credit. | ||
(d) This section does not apply to a debt cancellation | ||
agreement offered in connection with the purchase of a commercial | ||
vehicle. | ||
(e) The sale of a debt cancellation agreement must be for a | ||
single payment. | ||
(f) A holder that offers a debt cancellation agreement must | ||
report the sale of and forward money received on all such agreements | ||
to any designated party as prescribed in any applicable | ||
administrative services agreement, contractual liability policy, | ||
other insurance policy, or other specified program documents. | ||
(g) Money received or held by a holder or any administrator | ||
of a debt cancellation agreement and belonging to an insurance | ||
company, holder, or administrator under the terms of a written | ||
agreement must be held by the holder or administrator in a fiduciary | ||
capacity. | ||
(h) A retail seller that negotiates a debt cancellation | ||
agreement and subsequently assigns the contract shall: | ||
(1) maintain documents relating to the agreement that | ||
come into the retail seller's possession; and | ||
(2) on request of the Office of Consumer Credit | ||
Commissioner, cooperate in requesting and obtaining access to | ||
documents relating to the agreement not in the retail seller's | ||
possession. | ||
Sec. 354.007 [ |
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AGREEMENTS. (a) A refund or credit of the debt cancellation | ||
agreement fee must be based on the earliest date of: | ||
(1) the prepayment of the [ |
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contract in full before the original maturity date; | ||
(2) a demand by the holder for payment in full of the | ||
unpaid balance or acceleration; | ||
(3) a request by the retail buyer for cancellation of | ||
the debt cancellation agreement; or | ||
(4) the total denial of a debt cancellation request | ||
based on one of the exclusions listed in Section 354.003 [ |
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except in the case of a partial loss of the covered [ |
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(b) The refund or credit for the debt cancellation agreement | ||
can be rounded to the nearest whole dollar. A refund or credit is | ||
not required if the amount of the refund or credit calculated is | ||
less than $5. | ||
(c) If total loss or theft has not occurred, the retail | ||
buyer may cancel the debt cancellation agreement not later than the | ||
30th day after the date of the [ |
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issuance of the debt cancellation agreement, whichever is later, or | ||
a later date as provided under the debt cancellation agreement. On | ||
cancellation, the holder or any administrator of the agreement | ||
shall refund or credit the entire debt cancellation agreement fee. | ||
A retail buyer may not cancel the debt cancellation agreement and | ||
subsequently receive any benefits under the agreement. | ||
(d) A holder may in good faith rely on a computation by any | ||
administrator of the agreement of the balance waived, unless the | ||
holder has knowledge that the computation is not correct. If a | ||
computation by the administrator of the balance waived is not | ||
correct, the holder must within a reasonable time of learning that | ||
the computation is incorrect make the necessary corrections or | ||
cause the corrections to be made to the retail buyer's account. | ||
This subsection does not prevent the holder from obtaining | ||
reimbursement from the administrator or another responsible for the | ||
debt cancellation agreement or computation. | ||
(e) If the debt cancellation agreement terminates due to the | ||
early termination of the contract, the holder shall, not later than | ||
the 60th day after the date the debt cancellation agreement | ||
terminates: | ||
(1) refund or credit an appropriate amount of the debt | ||
cancellation agreement fee; or | ||
(2) cause to be refunded or credited an appropriate | ||
amount of the debt cancellation agreement fee by providing written | ||
instruction to the appropriate person. | ||
(f) The holder shall ensure that a refund or credit of an | ||
amount of a debt cancellation agreement fee made by another person | ||
under Subsection (e)(2) is made not later than the 60th day after | ||
the date the debt cancellation agreement terminates. | ||
(g) The holder shall maintain records of any refund or | ||
credit of an amount of a debt cancellation agreement fee made under | ||
Subsection (e) and provide electronic access to those records until | ||
the later of the fourth anniversary of the date of the contract or | ||
the second anniversary of the date of the refund or credit. | ||
SECTION 7. Title 5, Finance Code, is amended by adding | ||
Chapter 397 to read as follows: | ||
CHAPTER 397. DEBT CANCELLATION AGREEMENTS FOR CERTAIN VEHICLE | ||
LEASES | ||
Sec. 397.001. DEFINITIONS. In this chapter: | ||
(1) "Covered vehicle" includes a self-propelled or | ||
towed vehicle designed for personal use, including an automobile, | ||
truck, motorcycle, recreational vehicle, all-terrain vehicle, | ||
snowmobile, camper, boat, personal watercraft, and personal | ||
watercraft trailer. | ||
(2) "Debt cancellation agreement" means a lease term | ||
or a contractual arrangement modifying a lease term under which a | ||
lessor or holder agrees to cancel all or part of an obligation of | ||
the lessee to pay the lessor or holder on the occurrence of the | ||
total loss or theft of the covered vehicle that is the subject of | ||
the lease but does not include an offer to pay a specified amount on | ||
the total loss or theft of the covered vehicle. | ||
(3) "Holder" means a person who is: | ||
(A) a lessor; or | ||
(B) the assignee or transferee of a lease. | ||
(4) "Lease" means a lease for a covered vehicle. | ||
Sec. 397.002. APPLICABILITY. This chapter does not apply | ||
to a lease that is a retail installment transaction under Section | ||
345.068 or 348.002. | ||
Sec. 397.003. RELATIONSHIP TO INSURANCE. A debt | ||
cancellation agreement to which this chapter applies is not | ||
insurance. | ||
Sec. 397.004. LIMITATION ON CERTAIN DEBT CANCELLATION | ||
AGREEMENTS. (a) This chapter applies only to a debt cancellation | ||
agreement, including a gap waiver agreement or other similarly | ||
named agreement, that includes insurance coverage as part of the | ||
lessee's responsibility to the holder. | ||
(b) The amount charged for a debt cancellation agreement | ||
made in connection with a lease may not exceed five percent of the | ||
adjusted capitalized cost financed pursuant to the lease. | ||
(c) The debt cancellation agreement becomes a part of or a | ||
separate addendum to the lease and remains a term of the lease on | ||
the assignment, sale, or transfer by the holder. | ||
Sec. 397.005. DEBT CANCELLATION AGREEMENTS EXCLUSION | ||
LANGUAGE. (a) In addition to the provisions required by Section | ||
397.006, a debt cancellation agreement must fully disclose all | ||
provisions permitting the exclusion of loss or damage including, if | ||
applicable: | ||
(1) an act occurring after the original maturity date | ||
or date of the holder's acceleration of the lease; | ||
(2) any dishonest, fraudulent, illegal, or | ||
intentional act of any authorized driver that directly results in | ||
the total loss of the covered vehicle; | ||
(3) any act of gross negligence by an authorized | ||
driver that directly results in the total loss of the covered | ||
vehicle; | ||
(4) conversion, embezzlement, or concealment by any | ||
person in lawful possession of the covered vehicle; | ||
(5) lawful confiscation by an authorized public | ||
official; | ||
(6) the operation, use, or maintenance of the covered | ||
vehicle in any race or speed contest; | ||
(7) war, whether or not declared, invasion, | ||
insurrection, rebellion, revolution, or an act of terrorism; | ||
(8) normal wear and tear, freezing, or mechanical or | ||
electrical breakdown or failure; | ||
(9) use of the covered vehicle for primarily | ||
commercial purposes; | ||
(10) damage that occurs after the covered vehicle has | ||
been repossessed; | ||
(11) damage to the covered vehicle before the purchase | ||
of the debt cancellation agreement; | ||
(12) unpaid insurance premiums and salvage, towing, | ||
and storage charges relating to the covered vehicle; | ||
(13) damage related to any personal property attached | ||
to or within the covered vehicle; | ||
(14) damages associated with falsification of | ||
documents by any person not associated with the lessor or other | ||
person canceling the lessee's obligation; | ||
(15) any unpaid debt resulting from exclusions in the | ||
lessee's primary physical damage coverage not included in the debt | ||
cancellation agreement; | ||
(16) abandonment of the covered vehicle by the lessee | ||
only if the lessee voluntarily discards, leaves behind, or | ||
otherwise relinquishes possession of the covered vehicle to the | ||
extent that the relinquishment shows intent to forsake and desert | ||
the covered vehicle so that the covered vehicle may be appropriated | ||
by any other person; | ||
(17) any amounts deducted from the primary insurance | ||
carrier's settlement due to prior damages; and | ||
(18) any loss occurring outside the United States or | ||
outside the United States and Canada. | ||
(b) An exclusion of loss or damage not listed in Subsection | ||
(a) may be included in a debt cancellation agreement only if the | ||
exclusion is disclosed in plain, easy to read language. | ||
Sec. 397.006. REQUIRED DEBT CANCELLATION AGREEMENT | ||
LANGUAGE. A debt cancellation agreement must state: | ||
(1) the contact information of the lessor, the holder, | ||
and any administrator of the agreement; | ||
(2) the name and address of the lessee; | ||
(3) the cost and term of the debt cancellation | ||
agreement; | ||
(4) the procedure the lessee must follow to obtain | ||
benefits under the terms of the debt cancellation agreement, | ||
including a telephone number and address where the lessee may | ||
provide notice under the debt cancellation agreement; | ||
(5) the period during which the lessee is required to | ||
notify the lessor, the holder, or any administrator of the | ||
agreement of any potential loss under the debt cancellation | ||
agreement for total loss or theft of the covered vehicle; | ||
(6) that in order to make a claim, the lessee must | ||
provide or complete some or all of the following documents and | ||
provide those documents to the lessor, the holder, or any | ||
administrator of the agreement: | ||
(A) a debt cancellation request form; | ||
(B) proof of loss and settlement payment from the | ||
lessee's primary comprehensive, collision, or uninsured or | ||
underinsured motorist policy or other parties' liability insurance | ||
policy for the settlement of the insured total loss of the covered | ||
vehicle; | ||
(C) verification of the lessee's primary | ||
insurance deductible; | ||
(D) a copy of any police report filed in | ||
connection with the total loss or theft of the covered vehicle; and | ||
(E) a copy of the damage estimate; | ||
(7) that documentation not described by Subdivision | ||
(6) or required by the lessor, the holder, or any administrator of | ||
the agreement is not required to substantiate the loss or determine | ||
the amount of debt to be canceled; | ||
(8) that notwithstanding the collection of the | ||
documents under Subdivision (6), on reasonable advance notice the | ||
lessor, the holder, or any administrator of the agreement may | ||
inspect the lessee's covered vehicle; | ||
(9) that the lessor or holder will cancel all or part | ||
of the lessee's obligation as provided in the debt cancellation | ||
agreement on the occurrence of total loss or theft of the covered | ||
vehicle; | ||
(10) the method to be used to calculate refunds; | ||
(11) the method for calculating the amount to be | ||
canceled under the debt cancellation agreement on the occurrence of | ||
total loss or theft of a covered vehicle; | ||
(12) that purchase of a debt cancellation agreement is | ||
not required for the lessee to obtain a lease and will not be a | ||
factor in the lease approval process; | ||
(13) that in order to cancel the debt cancellation | ||
agreement and receive a refund, the lessee must provide a written | ||
request to cancel to the lessor, the holder, or any administrator of | ||
the agreement; | ||
(14) that if total loss or theft of the covered vehicle | ||
has not occurred, the lessee has 30 days from the date of the lease | ||
or the issuance of the debt cancellation agreement, whichever is | ||
later, or a longer period as provided under the debt cancellation | ||
agreement, to cancel the debt cancellation agreement and receive a | ||
full refund; and | ||
(15) that the lessor will cancel certain amounts under | ||
the debt cancellation agreement for total loss or theft of a covered | ||
vehicle, in the following or substantially similar language: "YOU | ||
WILL CANCEL CERTAIN AMOUNTS I OWE UNDER THIS LEASE IN THE CASE OF A | ||
TOTAL LOSS OR THEFT OF THE COVERED VEHICLE AS STATED IN THE DEBT | ||
CANCELLATION AGREEMENT." | ||
Sec. 397.007. ADDITIONAL REQUIREMENTS FOR DEBT | ||
CANCELLATION AGREEMENTS. (a) If a lessee purchases a debt | ||
cancellation agreement, the lessor must provide to the lessee a | ||
true and correct copy of the agreement not later than the 10th day | ||
after the date of the lease. | ||
(b) A holder must comply with the terms of a debt | ||
cancellation agreement not later than the 60th day after the date of | ||
receipt of all necessary information required by the holder or | ||
administrator of the agreement to process the request. | ||
(c) A debt cancellation agreement may not knowingly be | ||
offered by a lessor if: | ||
(1) the lease is already protected by gap insurance; | ||
or | ||
(2) the purchase of the debt cancellation agreement is | ||
required for the lessee to obtain the lease. | ||
(d) This section does not apply to a debt cancellation | ||
agreement offered in connection with the lease of a commercial | ||
vehicle. | ||
(e) The sale of a debt cancellation agreement must be for a | ||
single payment. | ||
(f) A holder that offers a debt cancellation agreement must | ||
report the sale of and forward money received on all such agreements | ||
to any designated party as prescribed in any applicable | ||
administrative services agreement, contractual liability policy, | ||
other insurance policy, or other specified program documents. | ||
(g) Money received or held by a holder or any administrator | ||
of a debt cancellation agreement and belonging to an insurance | ||
company, holder, or administrator under the terms of a written | ||
agreement must be held by the holder or administrator in a fiduciary | ||
capacity. | ||
(h) A lessor that negotiates a debt cancellation agreement | ||
and subsequently assigns the lease shall maintain documents | ||
relating to the agreement that come into the lessor's possession. | ||
Sec. 397.008. REFUND FOR DEBT CANCELLATION AGREEMENTS. | ||
(a) A refund or credit of the debt cancellation agreement fee must | ||
be based on the earliest date of: | ||
(1) the prepayment of the lease in full before the | ||
original maturity date; | ||
(2) a demand by the holder for payment in full of the | ||
unpaid balance or acceleration; | ||
(3) a request by the lessee for cancellation of the | ||
debt cancellation agreement; or | ||
(4) the total denial of a debt cancellation request | ||
based on one of the exclusions listed in Section 397.005, except in | ||
the case of a partial loss of the covered vehicle. | ||
(b) The refund or credit for the debt cancellation agreement | ||
can be rounded to the nearest whole dollar. A refund or credit is | ||
not required if the amount of the refund or credit calculated is | ||
less than $5. | ||
(c) If total loss or theft has not occurred, the lessee may | ||
cancel the debt cancellation agreement not later than the 30th day | ||
after the date of the lease or the issuance of the debt cancellation | ||
agreement, whichever is later, or a later date as provided under the | ||
debt cancellation agreement. On cancellation, the holder or any | ||
administrator of the agreement shall refund or credit the entire | ||
debt cancellation agreement fee. A lessee may not cancel the debt | ||
cancellation agreement and subsequently receive any benefits under | ||
the agreement. | ||
(d) A holder may in good faith rely on a computation by any | ||
administrator of the agreement of the balance waived, unless the | ||
holder has knowledge that the computation is not correct. If a | ||
computation by the administrator of the balance waived is not | ||
correct, the holder must within a reasonable time of learning that | ||
the computation is incorrect make the necessary corrections or | ||
cause the corrections to be made to the lessee's account. This | ||
subsection does not prevent the holder from obtaining reimbursement | ||
from the administrator or another responsible for the debt | ||
cancellation agreement or computation. | ||
(e) If the debt cancellation agreement terminates due to the | ||
early termination of the lease, the holder shall, not later than the | ||
60th day after the date the debt cancellation agreement terminates: | ||
(1) refund or credit an appropriate amount of the debt | ||
cancellation agreement fee; or | ||
(2) cause to be refunded or credited an appropriate | ||
amount of the debt cancellation agreement fee by providing written | ||
instruction to the appropriate person. | ||
(f) The holder shall ensure that a refund or credit of an | ||
amount of a debt cancellation agreement fee made by another person | ||
under Subsection (e)(2) is made not later than the 60th day after | ||
the date the debt cancellation agreement terminates. | ||
(g) The holder shall maintain records of any refund or | ||
credit of an amount of a debt cancellation agreement fee made under | ||
Subsection (e) and provide electronic access to those records until | ||
the later of the fourth anniversary of the date of the lease or the | ||
second anniversary of the date of the refund or credit. | ||
Sec. 397.009. ENFORCEMENT. (a) If the attorney general | ||
has reason to believe that a person is engaging in, has engaged in, | ||
or is about to engage in any method, act, or practice that is a | ||
violation of this chapter, the attorney general may bring an action | ||
in the name of the state against the person to restrain the person | ||
by temporary restraining order, temporary injunction, or permanent | ||
injunction from engaging in the method, act, or practice. | ||
(b) An action brought under Subsection (a) may be commenced | ||
in the district court of the county in which the person against whom | ||
the action is brought resides, has the person's principal place of | ||
business, or has done business, in the district court of the county | ||
in which any or all parts of the method, act, or practice giving | ||
rise to the action occurred, or, on the consent of the parties, in a | ||
district court of Travis County. The court may issue a temporary | ||
restraining order, temporary injunction, or permanent injunction | ||
to restrain or prevent a violation of this chapter and injunctive | ||
relief must be issued without bond. | ||
(c) In addition to the request for a temporary restraining | ||
order, temporary injunction, or permanent injunction, the attorney | ||
general may request, and the trier of fact may award, a civil | ||
penalty to be paid to the state in an amount of not more than $20,000 | ||
per violation. | ||
(d) The attorney general may recover reasonable expenses | ||
incurred in obtaining injunctive relief or a civil penalty under | ||
this section, including reasonable investigative costs, court | ||
costs, and attorney's fees. | ||
SECTION 8. Section 2301.002(36), Occupations Code, is | ||
amended to read as follows: | ||
(36) "Vehicle lessor" means a person who leases or | ||
offers to lease a motor vehicle[ |
||
another person under a lease agreement [ |
||
|
||
SECTION 9. Subchapter L, Chapter 2301, Occupations Code, is | ||
amended by adding Section 2301.5555 to read as follows: | ||
Sec. 2301.5555. AUTHORITY TO SIGN VEHICLE LEASE AS LESSOR. | ||
Notwithstanding Section 2301.251, a licensed vehicle lease | ||
facilitator may sign a vehicle lease agreement as a vehicle lessor | ||
before the vehicle lease is assigned, transferred, or conveyed to | ||
an ultimate lessor. | ||
SECTION 10. This Act takes effect September 1, 2017. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 1052 passed the Senate on | ||
April 19, 2017, by the following vote: Yeas 31, Nays 0; and that | ||
the Senate concurred in House amendments on May 16, 2017, by the | ||
following vote: Yeas 30, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 1052 passed the House, with | ||
amendments, on May 11, 2017, by the following vote: Yeas 146, | ||
Nays 0, one present not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |