H.B. No. 2556

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