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A BILL TO BE ENTITLED
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AN ACT
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relating to the regulation of a residential service contract. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 1303.004, Occupations Code, is amended |
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to read as follows: |
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Sec. 1303.004. NONAPPLICABILITY TO CERTAIN PERSONS. (a) |
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This chapter does not apply to a person who: |
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(1) manufactures or sells a product or part of a |
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product; and |
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(2) sells, offers to sell, or issues a service or |
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maintenance agreement that provides for the maintenance, repair, |
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replacement, or performance of the product or part of the product. |
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(b) A person described by Subsection (a) or an employee or |
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agent of a person described by Subsection (a) is not required to be |
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licensed or regulated under this chapter. |
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(c) This chapter does not apply to a person who engages in |
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the business of structural pest control in compliance with Chapter |
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1951. |
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(d) This chapter does not apply to a person who sells a |
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service contract as defined by Section 1304.003, Occupations Code, |
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but only to the extent the service contract does not provide |
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benefits with respect to a structural component, or an electrical |
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or plumbing system of a residential property. However, a |
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residential service contract providing benefits only with respect |
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to an appliance or a heating, cooling, or air-conditioning system |
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of a residential property may be offered pursuant to this Chapter |
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without having to also comply with Chapter 1304, Occupations Code. |
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SECTION 2. Section 1303.103, Occupations Code, is amended |
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to add subsection (d) as follows: |
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(d) Any financial information submitted to the commission |
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in connection with an application shall be considered confidential |
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and for the exclusive use of the commission. |
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SECTION 3. Section 1303.153, Occupations Code, is amended |
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to read as follows: |
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Sec. 1303.153. SECURITY REQUIRED. (a) As a guarantee that |
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a residential service company will meet its obligations to its |
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contract holders, the company shall maintain with the commission a |
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bond or other security accepted by the commission. |
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(b) A bond posted as security must: |
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(1) be issued by a carrier admitted in this state; |
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(2) be continuous; |
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(3) be cancellable by the surety only after not less |
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than 90 days' notice to the commission; and |
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(4) recognize that the obligation continues for the |
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terms of the residential service contracts written by the |
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residential service company while the bond is in force. |
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(c) Any security provided under this section in a form other |
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than a bond must be convertible to cash by the commission for the |
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benefit of contract holders in this state, without resort to the |
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courts, if the commission determines that the residential service |
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company is in default of its financial obligations to the contract |
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holders. Any amount remaining after all contract holders' claims |
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are paid must be returned to the residential service company not |
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later than the 120th day after the date the last outstanding |
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residential service contract expires. |
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(d) This section shall not be applicable to a residential |
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service company that reinsures one hundred percent of its |
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outstanding risk under residential service contracts issued and |
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outstanding in this state in accordance with subsection (c) of |
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Section 1303.152. |
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SECTION 4. The change in law made by this Act applies only |
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to a contract entered into or renewed on or after the effective date |
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of this Act. A contract entered into or renewed before that date is |
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governed by the law in effect immediately before the effective date |
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of this Act, and that law is continued in effect for that purpose. |
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SECTION 5. This Act takes effect September 1, 2017. |