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AN ACT
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relating to the rights and duties of the parties to a motor vehicle |
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retail installment contract or a conditional delivery agreement |
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involving the sale or conditional delivery of a motor vehicle; |
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providing an administrative penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 348, Finance Code, is |
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amended by adding Section 348.013 to read as follows: |
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Sec. 348.013. CONDITIONAL DELIVERY AGREEMENT. (a) In this |
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section, "conditional delivery agreement" means a contract between |
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a retail seller and prospective retail buyer under the terms of |
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which the retail seller allows the prospective retail buyer the use |
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and benefit of a motor vehicle for a specified term. |
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(b) Subject to this section, a retail seller and prospective |
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retail buyer may enter into a conditional delivery agreement. |
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(c) A conditional delivery agreement is: |
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(1) an enforceable contract; and |
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(2) void on the execution of a retail installment |
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contract between the parties of the conditional delivery agreement |
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for the sale of the motor vehicle that is the subject of the |
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conditional delivery agreement. |
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(d) A conditional delivery agreement may only confer rights |
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consistent with this section and may not confer any legal or |
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equitable rights of ownership, including ownership of the motor |
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vehicle that is the subject of the conditional delivery agreement. |
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(e) A conditional delivery agreement may not exceed a term |
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of 15 days. |
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(f) If a prospective retail buyer tenders to a retail seller |
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a trade-in motor vehicle in connection with a conditional delivery |
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agreement: |
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(1) the parties must agree on the value of the trade-in |
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motor vehicle; |
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(2) the conditional delivery agreement must contain |
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the agreed value of the trade-in motor vehicle described by |
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Subdivision (1); and |
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(3) the retail seller must use reasonable care to |
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conserve the trade-in motor vehicle while the vehicle is in the |
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retail seller's possession. |
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(g) If the parties to a conditional delivery agreement do |
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not subsequently enter into a retail installment contract for the |
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sale of the motor vehicle that is the subject of the conditional |
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delivery agreement, the retail seller shall, not later than the |
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seventh day after termination of the conditional delivery |
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agreement: |
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(1) deliver to the prospective retail buyer any |
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trade-in motor vehicle that the prospective retail buyer tendered |
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in connection with the conditional delivery agreement in the same |
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or substantially the same condition as it was at the time of |
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execution of the agreement and shall return any down payment or |
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other consideration received from the prospective retail buyer in |
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connection with the agreement; or |
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(2) if the trade-in motor vehicle cannot be returned |
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in the same or substantially the same condition as it was at the |
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time of execution of the conditional delivery agreement, deliver to |
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the prospective retail buyer a sum of money equal to the agreed |
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value of the trade-in motor vehicle as described by Subsection (f) |
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and shall return any down payment or other consideration described |
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by Subdivision (1). |
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(h) Any money that a retail seller is obligated to provide a |
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prospective retail buyer under Subsection (g) must be tendered at |
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the same time that the trade-in motor vehicle is delivered for |
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return to the prospective retail buyer or when the trade-in motor |
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vehicle would have been delivered if the vehicle was damaged or |
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could not be returned. |
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(i) If a prospective retail buyer returns a motor vehicle |
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under a conditional delivery agreement at the request of the retail |
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seller, the retail seller, notwithstanding the period prescribed by |
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Subsection (g), must return the trade-in vehicle at the same time |
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that the motor vehicle under the conditional delivery agreement is |
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returned by the prospective retail buyer. |
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(j) The prospective retail buyer shall return the motor |
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vehicle received under the conditional delivery agreement in the |
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same or substantially the same condition as it was at the time of |
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the execution of the conditional delivery agreement. |
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(k) An amount paid or required to be paid by the retail |
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seller under Subsection (g) is subject to review by the |
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commissioner. If the commissioner determines that the retail |
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seller in fact owes the prospective retail buyer a certain amount |
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under Subsection (g), the commissioner may order the retail seller |
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to pay the amount to the prospective retail buyer. If the trade-in |
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motor vehicle is not returned by the retail seller in accordance |
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with this section and the retail seller does not pay the prospective |
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retail buyer an amount equal to the agreed value of the trade-in |
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motor vehicle within the period prescribed by this section, the |
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commissioner may assess an administrative penalty against the |
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retail seller in an amount that is reasonable in relation to the |
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value of the trade-in motor vehicle. The commissioner shall |
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provide notice to the retail seller and the prospective retail |
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buyer of the commissioner's determination under this subsection. |
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(l) Not later than the 30th day after the date the parties |
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receive notice of the commissioner's determination under |
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Subsection (k), the retail seller or prospective retail buyer may |
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file with the commissioner an appeal of the commissioner's |
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determination requesting a time and place for a hearing before a |
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hearings officer designated by the commissioner. A hearing under |
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this subsection is governed by Chapter 2001, Government Code. |
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After the hearing, based on the findings of fact, conclusions of |
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law, and recommendations of the hearings officer, the commissioner |
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shall enter a final order. |
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(m) A person who requests an appeal under Subsection (l) is |
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required to pay a deposit to secure the payment of the costs of the |
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hearing in a reasonable amount as determined by the commissioner, |
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unless the person cannot afford to pay the deposit and files an |
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affidavit to that effect with the hearings officer in the form and |
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content prescribed by finance commission rule. The entire deposit |
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must be refunded to the person if the person prevails in the |
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hearing. If the person does not prevail, any portion of the deposit |
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in excess of the costs of the hearing assessed against the person is |
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refundable. |
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(n) Notice of the commissioner's final order under |
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Subsection (l), given to the person in accordance with Section |
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2001, Government Code, must include a statement of the person's |
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right to judicial review of the order. |
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(o) The hearings officer may order the retail seller or the |
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prospective retail buyer, or both, to pay reasonable expenses |
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incurred by the commissioner in connection with obtaining a final |
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order under Subsection (l), including attorney's fees, |
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investigative costs, and witness fees. |
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(p) This section does not: |
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(1) apply to a bailment agreement under Section |
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348.002; or |
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(2) create a private right of action. |
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(q) Except as otherwise provided by this section, the |
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commissioner has exclusive jurisdiction to enforce this section. |
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SECTION 2. Subchapter B, Chapter 348, Finance Code, is |
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amended by adding Section 348.1015 to read as follows: |
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Sec. 348.1015. CONTRACT CONDITIONED ON SUBSEQUENT |
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ASSIGNMENT PROHIBITED. (a) A retail installment contract may not be |
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conditioned on the subsequent assignment of the contract to a |
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holder. |
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(b) A provision in violation of this section is void. This |
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subsection does not affect the validity of other provisions of the |
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contract that may be given effect without the voided provision, and |
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to that extent those provisions are severable. |
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(c) This section does not create a private right of action. |
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(d) The commissioner has exclusive jurisdiction to enforce |
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this section. |
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SECTION 3. The changes in law made by this Act apply only to |
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a contract entered into on or after the effective date of this Act. |
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A contract entered into before the effective date of this Act is |
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governed by the law in effect when the contract was entered into, |
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and the former law is continued in effect for that purpose. |
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SECTION 4. This Act takes effect September 1, 2009. |
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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. 2556 was passed by the House on May 4, |
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2009, by the following vote: Yeas 142, Nays 0, 1 present, not |
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voting. |
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______________________________ |
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Chief Clerk of the House |
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I certify that H.B. No. 2556 was passed by the Senate on May |
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25, 2009, by the following vote: Yeas 31, Nays 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 |