S.B. No. 1965

	AN ACT
	relating to the regulation of retail installment contracts for
	commercial vehicles.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Subsection (f), Section 307.051, Finance Code,
	is amended to read as follows:
	(f)  Collateral protection insurance does not include
	insurance coverage that:
	(1)  is purchased by the creditor for which the debtor
	is not charged;
	(2)  is purchased at the inception of a credit
	transaction in which the debtor is a party or to which the debtor
	agrees, whether or not costs are included in a payment plan under
	the credit transaction;
	(3)  is maintained by the creditor for the protection
	of collateral that comes into the possession or control of the
	creditor through foreclosure, repossession, or a similar event;
	(4)  is credit insurance, mortgage protection
	insurance, insurance issued to cover the life or health of the
	debtor, or any other insurance maintained to cover the inability or
	failure of the debtor to make payment under the credit agreement;
	(5)  is title insurance; [or]
	(6)  is flood insurance required to be placed by
	creditors under Section 102, National Flood Insurance Act of 1968
	(42 U.S.C. Section 4012a); or
	(7)  is insurance on a commercial vehicle securing a
	retail installment contract under Chapter 348.
	SECTION 2.  Subsection (a), Section 341.502, Finance Code,
	is amended to read as follows:
	(a)  A contract for a loan under Chapter 342, a retail
	installment transaction under Chapter 348 other than a contract for
	a commercial vehicle, or a home equity loan regulated by the Office
	of Consumer Credit Commissioner must be:
	(1)  written in plain language designed to be easily
	understood by the average consumer; and
	(2)  printed in an easily readable font and type size.
	SECTION 3.  Section 348.001, Finance Code, is amended by
	adding Subdivision (1-a) to read as follows:
	(1-a)  "Commercial vehicle" means a motor vehicle that
	is not used primarily for personal, family, or household use.  The
	term includes:
	(A)  a motor vehicle with a gross vehicular weight
	of 10,001 pounds or more;
	(B)  a motor vehicle that will be owned by a
	corporation, limited liability company, limited partnership, or
	other business entity formed, organized, or registered in this
	state, another state, or another country; and
	(C)  a motor vehicle that will be part of a fleet
	of five or more vehicles owned by the same person.
	SECTION 4.  Subchapter A, Chapter 348, Finance Code, is
	amended by adding Section 348.0015 to read as follows:
	Sec. 348.0015.  PRESUMPTION REGARDING NONCOMMERCIAL
	VEHICLES; EXCEPTION.  (a)  A motor vehicle that is not described by
	Section 348.001(1-a)(A), (B), or (C) or a motor vehicle that is of a
	type typically used for personal, family, or household use, as
	determined by finance commission rule, is presumed not to be a
	commercial vehicle.
	(b)  Notwithstanding Subsection (a), if a retail buyer
	represents in writing that a motor vehicle is not for personal,
	family, or household use, or that the vehicle is for commercial use,
	a retail seller or holder to whom the representation is made may
	rely on that representation unless the retail seller or holder, as
	applicable, has actual knowledge that the representation is not
	true.
	SECTION 5.  Subchapter A, Chapter 348, Finance Code, is
	amended by adding Section 348.0051 to read as follows:
	Sec. 348.0051.  CONTRACTS FOR COMMERCIAL VEHICLES;
	ADDITIONAL CHARGES PERMITTED. (a)  Notwithstanding Sections
	348.004 and 348.005 and in addition to the amounts allowed under
	those sections, the following amounts may be included as an
	itemized charge or in the cash price in a retail installment
	contract for a commercial vehicle:
	(1)  any fees prescribed by law;
	(2)  any amounts charged by a titling or registration
	service relating to the sale;
	(3)  any other amount agreed to by the retail buyer and
	retail seller, including amounts payable to the retail seller or
	another person for the provision of goods or services relating to:
	(A)  the commercial vehicle;
	(B)  the sale or use of the commercial vehicle; or
	(C)  the retail buyer's business in which the
	commercial vehicle will be used; and
	(4)  an amount paid to the retail seller or other person
	as consideration for the agreement of the holder of the retail
	installment contract to waive:
	(A)  all or part of the difference between the
	amount owed under a retail installment contract and the amount paid
	under a physical damage insurance policy maintained by the retail
	buyer or its assign, in the event the vehicle is a total loss;
	(B)  all or part of the amount owed under the
	retail installment contract, in the event of the death of the retail
	buyer; or
	(C)  one or more payments owed under the retail
	installment contract, in the event of the disability of the retail
	buyer.
	(b)  If a charge under Subsection (a)(4) is included in the
	contract, the contract and any agreement to waive an amount
	described by Subsection (a)(4) must each conspicuously disclose
	that the waiver is optional.
	(c)  Notwithstanding any other law, the amount described by
	Subsection (a)(4) is not a charge for insurance, and the sale,
	provision, or waiving of a balance owed or other action relating to
	a waiver of all or part of the amount owed under a retail
	installment contract for a commercial vehicle is not considered
	insurance or engaging in the business of insurance.
	SECTION 6.  Subsections (c) and (d), Section 348.006,
	Finance Code, are amended to read as follows:
	(c)  For a documentary fee to be included in the principal
	balance of a retail installment contract:
	(1)  the retail seller must charge the documentary fee
	to cash buyers and credit buyers;
	(2)  the documentary fee may not exceed:
	(A)  $50 for a motor vehicle retail installment
	contract; or
	(B)  an [a reasonable] amount agreed to in writing
	by the retail seller and retail buyer for a [heavy] commercial
	vehicle retail installment contract; and
	(3)  the buyer's order and the retail installment
	contract must include:
	(A)  a statement of the amount of the documentary
	fee; and
	(B)  except for a buyer's order or retail
	installment contract for a commercial vehicle, in reasonable
	proximity to the place in each where the amount of the documentary
	fee is disclosed, the following notice in type that is bold-faced,
	capitalized, underlined, or otherwise conspicuously set out from
	surrounding written material:
	"A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE
	IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING
	DOCUMENTS AND PERFORMING SERVICES RELATING TO THE CLOSING OF A
	SALE. A DOCUMENTARY FEE MAY NOT EXCEED $50 FOR A MOTOR VEHICLE
	CONTRACT [OR A REASONABLE AMOUNT AGREED TO BY THE PARTIES FOR A
	HEAVY COMMERCIAL VEHICLE CONTRACT]. THIS NOTICE IS REQUIRED BY
	LAW."
	(d)  Except for a retail installment contract for a
	commercial vehicle, if [If] the language primarily used in an oral
	sales presentation is not the same as the language in which the
	retail installment contract is written, the retail seller shall
	furnish to the retail buyer a written statement containing the
	notice set out in Subsection (c)(3)(B) in the language primarily
	used in the oral sales presentation.
	SECTION 7.  Section 348.007, Finance Code, is amended by
	amending Subsection (a) and adding Subsection (a-2) to read as
	follows:
	(a)  Except as otherwise provided by this section, each
	[Each] retail installment transaction is subject to this chapter.
	(a-2)  A retail installment transaction in which a retail
	buyer purchases a commercial vehicle is only subject to the
	following provisions of this chapter:
	(1)  Subchapter A, unless expressly stated otherwise;
	(2)  Subchapter B, except Sections 348.102 and 348.123;
	(3)  Subchapter C, except Sections 348.204(b),
	348.206, 348.209, and 348.210;
	(4)  Subchapter D;
	(5)  Subchapter E, except Section 348.407; and
	(6)  Subchapter F, except Sections 348.504(a)(2),
	348.514, 348.516, and 348.517.
	SECTION 8.  Subsection (c), Section 348.102, Finance Code,
	is amended to read as follows:
	(c)  A retail installment contract that provides for a
	variable contract rate must set out the method by which the rate is
	computed. [A contract for a heavy commercial vehicle is not
	required to set out the total amount of the time price
	differential.]
	SECTION 9.  Section 348.109, Finance Code, is amended to
	read as follows:
	Sec. 348.109.  ACCELERATION OF DEBT MATURITY. A retail
	installment contract may not authorize the holder to accelerate the
	maturity of all or a part of the amount owed under the contract
	unless:
	(1)  the retail buyer is in default in the performance
	of any of the buyer's obligations; [or]
	(2)  the holder believes in good faith that the
	prospect of buyer's payment or performance is impaired; or
	(3)  if the retail installment contract is for a
	commercial vehicle, the retail buyer or an affiliate of the retail
	buyer is in default in its obligations under another financing
	agreement or leasing agreement held by the same holder or an
	affiliate of the holder.
	SECTION 10.  Section 348.208, Finance Code, is amended by
	adding Subsections (d), (e), and (f) to read as follows:
	(d)  In addition to a charge for insurance coverage under
	Subsection (a) or (b), a retail installment contract for a
	commercial vehicle may include a charge for insurance coverage
	relating to:
	(1)  the commercial vehicle;
	(2)  the use of the commercial vehicle; or
	(3)  the retail installment contract.
	(e)  Insurance coverage under Subsection (d) may be provided
	only by:
	(1)  an insurer authorized under the Insurance Code to
	engage in the business of insurance in this state; or
	(2)  if permitted under the Insurance Code, a surplus
	lines insurer eligible to provide the insurance under Chapter 981,
	Insurance Code.
	(f)  A retail installment contract for a commercial vehicle
	must set forth the amount of each charge for insurance coverage
	under Subsection (d) and the type of the coverage provided for that
	charge.
	SECTION 11.  Subsection (b), Section 348.213, Finance Code,
	is amended to read as follows:
	(b)  A policy of insurance described by Subsection (a) must
	comply with the applicable requirements of Sections 348.201,
	348.203, and 348.208, and, except if the policy relates to a retail
	installment contract for a commercial vehicle, Section 348.209.
	SECTION 12.  The changes in law provided by this Act apply
	only to a retail installment contract entered into on or after the
	effective date of this Act. A retail installment contract entered
	into before the effective date of this Act is governed by the law in
	effect on the date the contract was entered into, and the former law
	remains in effect for that purpose.
	SECTION 13.  This Act takes effect September 1, 2009.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1965 passed the Senate on
	April 16, 2009, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1965 passed the House on
	May 15, 2009, by the following vote:  Yeas 144, Nays 0, one
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor