CHAPTER 348. MOTOR VEHICLE INSTALLMENT SALES
FINANCE CODE
TITLE 4. REGULATION OF INTEREST, LOANS, AND FINANCED TRANSACTIONS
SUBTITLE B. LOANS AND FINANCED TRANSACTIONS
CHAPTER 348. MOTOR VEHICLE INSTALLMENT SALES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 348.001. DEFINITIONS. In this chapter:
(1) "Buyer's order" means a nonbinding, preliminary written
computation relating to the purchase in a retail installment
transaction of a motor vehicle that describes specifically:
(A) the motor vehicle being purchased; and
(B) each motor vehicle being traded in.
Text of subdivision as added by Acts 2009, 81st Leg., R.S., Ch.
149, Sec. 1
(1-a) "Debt cancellation agreement" means a retail installment
contract term or a contractual arrangement modifying a retail
installment 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 motor vehicle
that is the subject of the retail installment contract but does
not include an offer to pay a specified amount on the total loss
or theft of the motor vehicle.
Text of subdivision as added by Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 3
(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.
(2) "Heavy commercial vehicle" means:
(A) a truck or truck tractor that:
(i) has a gross vehicular weight of 19,000 pounds or more; and
(ii) is not used primarily for personal, family, or household
use; or
(B) a trailer or semitrailer designed for use in combination
with a vehicle described by Paragraph (A).
(3) "Holder" means a person who is:
(A) a retail seller; or
(B) the assignee or transferee of a retail installment contract.
(3-a) "Motor home" means a motor vehicle that is designed to
provide temporary living quarters and that:
(A) is built on a motor vehicle chassis as an integral part of
or a permanent attachment to the chassis; and
(B) contains at least four of the following independent life
support systems that are permanently installed and designed to be
removed only for repair or replacement and that meet the
standards of the American National Standards Institute, Standards
for Recreational Vehicles:
(i) a cooking facility with an on-board fuel source;
(ii) a gas or electric refrigerator;
(iii) a toilet with exterior evacuation;
(iv) a heating or air-conditioning system with an on-board power
or fuel source separate from the vehicle engine;
(v) a potable water supply system that includes at least a sink,
a faucet, and a water tank with an exterior service supply
connection; or
(vi) a 110-125 volt electric power supply.
(4) "Motor vehicle" means an automobile, motor home, truck,
truck tractor, trailer, semitrailer, or bus designed and used
primarily to transport persons or property on a highway. The
term includes a commercial vehicle or heavy commercial vehicle.
The term does not include:
(A) a boat trailer;
(B) a vehicle propelled or drawn exclusively by muscular power;
(C) a vehicle that is designed to run only on rails or tracks;
or
(D) machinery that is not designed primarily for highway
transportation but may incidentally transport persons or property
on a public highway.
(5) "Retail buyer" means a person who purchases or agrees to
purchase a motor vehicle from a retail seller in a retail
installment transaction.
(6) "Retail installment contract" means one or more instruments
entered into in this state that evidence a retail installment
transaction. The term includes a chattel mortgage, a conditional
sale contract, a security agreement, and a document that
evidences a bailment or lease described by Section 348.002. The
term does not include a buyer's order.
(7) "Retail installment transaction" means a transaction in
which a retail buyer purchases a motor vehicle from a retail
seller other than principally for the purpose of resale and
agrees with the retail seller to pay part or all of the cash
price in one or more deferred installments.
(8) "Retail seller" means a person in the business of selling
motor vehicles to retail buyers in retail installment
transactions.
(9) "Time price differential" means the total amount added to
the principal balance to determine the balance of the retail
buyer's indebtedness under a retail installment contract.
(10-a) "Towable recreation vehicle" means a nonmotorized vehicle
that:
(A) was originally designed and manufactured primarily to
provide temporary human habitation in conjunction with
recreational, camping, or seasonal use;
(B) is titled and registered with the Texas Department of Motor
Vehicles as a travel trailer through a county tax
assessor-collector;
(C) is permanently built on a single chassis;
(D) contains at least one life support system; and
(E) is designed to be towable by a motor vehicle.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch.
1018, Sec. 2.19, eff. September 1, 2005.
Acts 2009, 81st Leg., R.S., Ch.
149, Sec. 1, eff. September 1, 2009.
Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 3, eff. September 1, 2009.
Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 1, eff. September 1, 2009.
Acts 2009, 81st Leg., R.S., Ch.
933, Sec. 3D.02, eff. September 1, 2009.
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.
Added by Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 4, eff. September 1, 2009.
Sec. 348.002. BAILMENT OR LEASE AS RETAIL INSTALLMENT
TRANSACTION. A bailment or lease of a motor vehicle is a retail
installment transaction if the bailee or lessee:
(1) contracts to pay as compensation for use of the vehicle an
amount that is substantially equal to or exceeds the value of the
vehicle; and
(2) on full compliance with the bailment or lease is bound to
become the owner or, for no or nominal additional consideration,
has the option to become the owner of the vehicle.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.003. CLASSIFICATION AS RETAIL INSTALLMENT TRANSACTION
UNAFFECTED. A transaction is not excluded as a retail
installment transaction because:
(1) the retail seller arranges to transfer the retail buyer's
obligation;
(2) the amount of any charge in the transaction is determined by
reference to a chart or other information furnished by a
financing institution;
(3) a form for all or part of the retail installment contract is
furnished by a financing institution; or
(4) the credit standing of the retail buyer is evaluated by a
financing institution.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.004. CASH PRICE. (a) The cash price is the price at
which the retail seller offers in the ordinary course of business
to sell for cash the goods or services that are subject to the
transaction. An advertised price does not necessarily establish
a cash price.
(b) The cash price does not include any finance charge.
(c) At the retail seller's option, the cash price may include:
(1) the price of accessories;
(2) the price of services related to the sale;
(3) the price of service contracts;
(4) taxes; and
(5) fees for license, title, and registration.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 4, eff. September 1, 2009.
Sec. 348.005. ITEMIZED CHARGE. An amount in a retail
installment contract is an itemized charge if the amount is not
included in the cash price and is the amount of:
(1) fees for registration, certificate of title, and license and
any additional registration fees charged by a full service deputy
under Section 502.114, Transportation Code;
(2) any taxes;
(3) fees or charges prescribed by law and connected with the
sale or inspection of the motor vehicle; and
(4) charges authorized for insurance, service contracts,
warranties, or a debt cancellation agreement by Subchapter C.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
149, Sec. 2, eff. September 1, 2009.
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.
Added by Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 5, eff. September 1, 2009.
Sec. 348.006. PRINCIPAL BALANCE; INCLUSION OF DOCUMENTARY FEE.
(a) The principal balance under a retail installment contract is
computed by:
(1) adding:
(A) the cash price of the motor vehicle;
(B) each amount included in the retail installment contract for
an itemized charge; and
(C) subject to Subsection (c), a documentary fee for services
rendered for or on behalf of the retail buyer in handling and
processing documents relating to the motor vehicle sale; and
(2) subtracting from the results under Subdivision (1) the
amount of the retail buyer's down payment in money, goods, or
both.
(b) The computation of the principal balance may include an
amount authorized under Section 348.404(b).
(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) for a motor vehicle retail installment contract other than a
contract for a commercial vehicle, a reasonable amount agreed to
by the retail seller and retail buyer for the documentary
services; or
(B) for a commercial vehicle retail installment contract, an
amount agreed to in writing by the retail seller and retail
buyer; and
(3) except for a buyer's order or retail installment contract
for a commercial vehicle, the buyer's order and the retail
installment contract must include:
(A) a statement of the amount of the documentary fee; and
(B) 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 RELATING TO THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED
A REASONABLE AMOUNT AGREED TO BY THE PARTIES. THIS NOTICE IS
REQUIRED BY LAW."
(d) A retail seller shall post the documentary fee notice
prescribed in Subsection (c) so that it is clearly visible in
each place where a vehicle sale is finalized. 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.
(e) Prior to increasing the maximum amount of the documentary
fee the retail seller charges, a retail seller shall provide
written notice to the commissioner of the maximum amount of the
documentary fee the retail seller intends to charge. The
commissioner may review the amount of a documentary fee for
reasonableness. In determining whether a fee charged by a retail
seller is reasonable, the commissioner may consider the resources
required by the retail seller to perform the retail seller's
duties under state and federal law with respect to the handling
and processing of documents relating to the sale and financing of
a motor vehicle. If the commissioner determines that a
documentary fee charged is not reasonable, the commissioner may
require that the documentary fee charged be reduced or suspended.
(f) A documentary fee charged in accordance with this section
before September 1, 2009, is considered reasonable for purposes
of this section.
(g) This section does not:
(1) create a private right of action; or
(2) require that the commissioner approve a specific documentary
fee amount before a retail seller charges the fee.
(h) The finance commission may adopt rules, including rules
relating to the standards for a reasonableness determination or
disclosures, necessary to enforce this section. A rule adopted
under this subsection may not require a retail seller to submit
to the commissioner for prior approval the amount of a
documentary fee that the retail seller intends to charge under
this section.
(i) The commissioner has exclusive jurisdiction to enforce this
section.
(j) Subsections (d), (e), and (h) do not apply with respect to a
retail installment transaction for the purchase of a commercial
vehicle.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 800, Sec. 1, eff. Sept. 1,
1999.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
1327, Sec. 1, eff. September 1, 2009.
Sec. 348.007. APPLICABILITY OF CHAPTER. (a) Except as
otherwise provided by this section, each retail installment
transaction is subject to this chapter.
(a-1) A transaction in which a retail buyer purchases a towable
recreation vehicle from a retail seller other than principally
for the purpose of resale and agrees with the retail seller to
pay part or all of the cash price in one or more deferred
installments may be subject to this chapter instead of Chapter
345 at the option of the seller.
Text of subsection as added by Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 7
(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.
Text of subsection as added by Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 2
(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, except Section 348.0091 or 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 Sections 348.404(d) and 348.407; and
(6) Subchapter F, except Sections 348.504(a)(2), 348.514,
348.516, and 348.517.
(b) This chapter does not affect or apply to a loan made or the
business of making loans under other law of this state and does
not affect a rule of law applicable to a retail installment sale
that is not a retail installment transaction.
(c) The provisions of this chapter defining specific rates and
amounts of charges and requiring certain credit disclosures to be
made control over any contrary law of this state respecting those
subjects.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch.
1018, Sec. 2.20, eff. September 1, 2005.
Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 7, eff. September 1, 2009.
Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 2, eff. September 1, 2009.
Sec. 348.008. APPLICABILITY OF OTHER STATUTES TO RETAIL
INSTALLMENT TRANSACTION. (a) A loan or interest statute of this
state, other than Chapter 303, does not apply to a retail
installment transaction.
(b) Except as provided by this chapter, an applicable statute,
including Title 1, Business & Commerce Code, or a principle
of common law continues to apply to a retail installment
transaction unless it is displaced by this chapter.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.009. FEDERAL DISCLOSURE REQUIREMENTS APPLICABLE. (a)
The disclosure requirements of 12 C.F.R. Part 226 (Regulation Z)
adopted under the Truth in Lending Act (15 U.S.C. Section 1601 et
seq.) and specifically 12 C.F.R. Section 226.18(f), regarding
variable rate disclosures, apply according to their terms to
retail installment transactions.
(b) If a disclosure requirement of this chapter and one of a
federal law, including a regulation or an interpretation of law,
are inconsistent or conflict, federal law controls and the
inconsistent or conflicting disclosures required by this chapter
need not be given.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.0091. DISCLOSURE OF EQUITY IN TRADE-IN MOTOR VEHICLE.
(a) A retail seller may not accept a trade-in motor vehicle for
a motor vehicle sold under a retail installment contract unless
the retail seller provides to the retail buyer, before the buyer
signs the contract, a completed disclosure of trade-in equity
form prescribed by this section.
(b) The finance commission shall by rule adopt a standard form
for the disclosure of the equity in a retail buyer's trade-in
motor vehicle.
(c) The form adopted by the finance commission under Subsection
(b), at a minimum, must:
(1) contain:
(A) the name of the retail buyer;
(B) the name, address, and telephone number of the retail
seller;
(C) the make, model, year, and vehicle identification number of
the trade-in motor vehicle;
(D) the date of the retail installment transaction;
(E) the amount offered by the retail seller to the retail buyer
for the trade-in motor vehicle;
(F) the amount the retail buyer owes on the trade-in motor
vehicle as of the date of the retail installment transaction;
(G) a statement indicating whether the retail buyer's equity in
the trade-in motor vehicle is positive or negative;
(H) a disclosure containing substantially similar words to the
following: "If the EQUITY amount is NEGATIVE, the value the
retail seller is offering you for your trade-in motor vehicle is
less than what you currently owe on your trade-in. The amount of
negative equity may be further reduced by the amount of any cash
down payment and manufacturer's rebate and may be included in the
amount financed under your retail installment contract as an
itemized charge.";
(I) the cash price of the vehicle being purchased under the
retail installment transaction; and
(J) the amount financed under the retail installment contract;
(2) include a space for the signature of both the retail seller
and retail buyer and the printed name of the retail seller; and
(3) be signed and dated by the retail seller and retail buyer.
(d) The retail seller is solely responsible for the content and
delivery of the disclosure form required by Subsection (a). An
assignee of a retail installment contract may not be held
responsible for a retail seller's failure to comply with the
requirements of this section.
(e) This section does not create a private right of action. The
commissioner has exclusive jurisdiction to enforce this section.
Added by Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 3, eff. September 1, 2009.
Sec. 348.010. ADDITIONAL INFORMATION ALLOWED IN CONTRACT.
Information not required by this chapter may be included in a
retail installment contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.011. ORDER OF ITEMS IN CONTRACT. Items required by
this chapter to be in a retail installment contract are not
required to be stated in the order set forth in this chapter.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.012. APPLICABILITY OF INSURANCE PREMIUM FINANCING
PROVISIONS. Chapter 651, Insurance Code, does not apply to a
retail installment transaction.
Added by Acts 2001, 77th Leg., ch. 1235, Sec. 17, eff. Sept. 1,
2001.
Amended by:
Acts 2005, 79th Leg., Ch.
728, Sec. 11.117, eff. September 1, 2005.
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.
Added by Acts 2009, 81st Leg., R.S., Ch.
683, Sec. 1, eff. September 1, 2009.
SUBCHAPTER B. RETAIL INSTALLMENT CONTRACT
Sec. 348.101. RETAIL INSTALLMENT CONTRACT GENERAL REQUIREMENTS.
(a) A retail installment contract is required for each retail
installment transaction. A retail installment contract may be
more than one document.
(b) A retail installment contract must be:
(1) in writing;
(2) dated;
(3) signed by the retail buyer and retail seller; and
(4) completed as to all essential provisions before it is signed
by the retail buyer except as provided by Subsection (d).
(c) The printed part of a retail installment contract, other
than instructions for completion, must be in at least eight-point
type unless a different size of type is required under this
subchapter.
(d) If the motor vehicle is not delivered when the retail
installment contract is executed, the following information may
be inserted after the contract is executed:
(1) the identifying numbers or marks of the vehicle or similar
information; and
(2) the due date of the first installment.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
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.
Added by Acts 2009, 81st Leg., R.S., Ch.
683, Sec. 2, eff. September 1, 2009.
Sec. 348.102. CONTENTS OF CONTRACT. (a) A retail installment
contract must contain:
(1) the name of the retail seller and the name of the retail
buyer;
(2) the place of business or address of the retail seller;
(3) the residence or other address of the retail buyer as
specified by the retail buyer;
(4) a description of the motor vehicle being sold;
(5) the cash price of the retail installment transaction;
(6) the amount of any down payment by the retail buyer,
specifying the amounts paid in money and in goods traded in; and
(7) each itemized charge.
(b) A charge for insurance, a service contract, or a warranty
authorized by Subchapter C may be disclosed as provided by that
subchapter.
(c) A retail installment contract that provides for a variable
contract rate must set out the method by which the rate is
computed.
(d) The contract must contain substantially the following notice
in at least 10-point type that is bold-faced, capitalized, or
underlined or otherwise conspicuously set out from the
surrounding written material:
"NOTICE TO THE BUYER--DO NOT SIGN THIS CONTRACT BEFORE YOU READ
IT OR IF IT CONTAINS ANY BLANK SPACES. YOU ARE ENTITLED TO A COPY
OF THE CONTRACT YOU SIGN. UNDER THE LAW YOU HAVE THE RIGHT TO PAY
OFF IN ADVANCE THE FULL AMOUNT DUE AND UNDER CERTAIN CONDITIONS
MAY OBTAIN A PARTIAL REFUND OF THE FINANCE CHARGE. KEEP THIS
CONTRACT TO PROTECT YOUR LEGAL RIGHTS."
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 8, eff. September 1, 2009.
Sec. 348.103. TIME PRICE DIFFERENTIAL FOR RETAIL INSTALLMENT
CONTRACT. A retail installment contract may provide for:
(1) any amount of time price differential permitted under
Section 348.104, 348.105, or 348.106; or
(2) any rate of time price differential not exceeding a yield
permitted under Section 348.104, 348.105, or 348.106.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.104. TIME PRICE DIFFERENTIAL FOR CONTRACT WITH EQUAL
MONTHLY SUCCESSIVE PAYMENTS. (a) A retail installment contract
that is payable in substantially equal successive monthly
installments beginning one month after the date of the contract
may provide for a time price differential that does not exceed:
(1) the add-on charge provided by this section; or
(2) $25 if the add-on charge under Subdivision (1) is less than
$25.
(b) The add-on charge is $7.50 per $100 per year on the
principal balance for a new motor vehicle, other than a heavy
commercial vehicle, designated by the manufacturer by a model
year that is not earlier than the year in which the sale is made.
(c) The add-on charge is $10 per $100 per year on the principal
balance for:
(1) a new motor vehicle not covered by Subsection (b);
(2) a used motor vehicle designated by the manufacturer by a
model year that is not more than two years before the year in
which the sale is made; or
(3) a new or used heavy commercial vehicle designated by the
manufacturer by a model year that is not more than two years
before the year in which the sale is made.
(d) The add-on charge is $12.50 per $100 per year on the
principal balance for a used motor vehicle not covered by
Subsection (c) that is a motor vehicle designated by the
manufacturer by a model year that is not more than four years
before the year in which the sale is made.
(e) For a used motor vehicle not covered by Subsection (c) or
(d), the add-on charge is:
(1) $15 per $100 per year on the principal balance; or
(2) $18 per $100 per year on the principal balance if the
principal balance under the retail installment contract does not
exceed $300.
(f) The time price differential is computed on the original
principal balance under the retail installment contract from the
date of the contract until the maturity of the final installment,
notwithstanding that the balance is payable in installments.
(g) If the retail installment contract is payable for a period
that is shorter or longer than a year or is for an amount that is
less or greater than $100, the amount of the maximum time price
differential computed under this section is decreased or
increased proportionately.
(h) For the purpose of a computation under this section, 16 or
more days of a month may be considered a full month.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
676, Sec. 5, eff. September 1, 2009.
Sec. 348.105. USE OF OPTIONAL CEILING. As an alternative to the
maximum rate or amount authorized for a time price differential
under Section 348.104 or 348.106, a retail installment contract
may provide for a rate or amount of time price differential that
does not exceed the rate or amount authorized by Chapter 303.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.106. TIME PRICE DIFFERENTIAL FOR OTHER CONTRACTS. A
retail installment contract that is payable other than in
substantially equal successive monthly installments or the first
installment of which is not payable one month from the date of
the contract may provide for a time price differential that does
not exceed an amount that, having due regard for the schedule of
payments, provides the same effective return as if the contract
were payable in substantially equal successive monthly
installments beginning one month from the date of the contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.107. CHARGE FOR DEFAULT IN PAYMENT OF INSTALLMENT. (a)
A retail installment contract may provide that if an installment
remains unpaid after the 10th day after the maturity of the
installment for a heavy commercial vehicle or after the 15th day
after the maturity of the installment for any other motor vehicle
the holder may collect:
(1) a delinquency charge that does not exceed five percent of
the amount of the installment; or
(2) interest on the amount of the installment accruing after the
maturity of the installment and until the installment is paid in
full at a rate that does not exceed the maximum rate authorized
for the contract.
(b) A retail installment contract that provides for the accrual
earnings method may provide for the delinquency charge authorized
by Subsection (a)(1), the interest authorized by Subsection
(a)(2), or both.
(c) Only one delinquency charge may be collected on an
installment under this section regardless of the duration of the
default.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 2001, 77th Leg., ch. 1077, Sec. 1, eff. Sept. 1,
2001.
Sec. 348.108. CHARGES FOR COLLECTING DEBT. A retail installment
contract may provide for the payment of:
(1) reasonable attorney's fees if the contract is referred for
collection to an attorney who is not a salaried employee of the
holder;
(2) court costs and disbursements; and
(3) reasonable out-of-pocket expenses incurred in connection
with the repossession or sequestration of the motor vehicle
securing the payment of the contract or foreclosure of a security
interest in the vehicle, including the costs of storing,
reconditioning, and reselling the vehicle, subject to the
standards of good faith and commercial reasonableness set by
Title 1, Business & Commerce Code.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
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;
(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.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by:
Acts 2009, 81st Leg., R.S., Ch.
238, Sec. 9, eff. September 1, 2009.
Sec. 348.110. DELIVERY OF COPY OF CONTRACT. A retail seller
shall:
(1) deliver to the retail buyer a copy of the retail installment
contract as accepted by the retail seller; or
(2) mail to the retail buyer at the address shown on the retail
installment contract a copy of the retail installment contract as
accepted by the retail seller.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.111. BUYER'S RIGHT TO RESCIND CONTRACT. Until the
retail seller complies with Section 348.110, a retail buyer who
has not received delivery of the motor vehicle is entitled to:
(1) rescind the contract;
(2) receive a refund of all payments made under or in
contemplation of the contract; and
(3) receive the return of all goods traded in to the retail
seller under or in contemplation of the contract or, if those
goods cannot be returned, to receive the value of those goods.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.112. BUYER'S ACKNOWLEDGMENT OF DELIVERY OF CONTRACT
COPY. (a) Any retail buyer's acknowledgment of delivery of a
copy of the retail installment contract must:
(1) be in at least 10-point type that is bold-faced,
capitalized, or underlined or otherwise conspicuously set out
from the surrounding written material; and
(2) appear directly above the buyer's signature.
(b) Any retail buyer's acknowledgment conforming to this section
of delivery of a copy of the retail installment contract is, in
an action or proceeding by or against a holder of the contract
who was without knowledge to the contrary when the holder
purchased it, conclusive proof:
(1) that the copy was delivered to the buyer;
(2) that the contract did not contain a blank space that was
required to have been completed under this chapter when the
contract was signed by the buyer; and
(3) of compliance with Sections 348.009, 348.101, 348.102,
348.123, 348.205, 348.405, 348.406, and 348.408.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.113. AMENDMENT OF RETAIL INSTALLMENT CONTRACT. On
request by a retail buyer, the holder may agree to one or more
amendments to the retail installment contract to:
(1) extend or defer the scheduled due date of all or a part of
one or more installments; or
(2) renew, restate, or reschedule the unpaid balance under the
contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.114. CHARGES FOR DEFERRING INSTALLMENT. (a) If a
retail installment contract 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) 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.
(b) The minimum charge under Subsection (a)(1) is $1.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.115. CHARGE FOR OTHER AMENDMENT. (a) If the unpaid
balance of a retail installment contract is extended, renewed,
restated, or rescheduled under this subchapter and Section
348.114 does not apply, the holder may collect an amount computed
on the principal balance of the amended contract for the term of
the amended contract at the time price differential for a retail
installment contract that is applicable after reclassifying the
motor vehicle by its model year at the time of the amendment.
(b) The principal balance of the amended contract is computed
by:
(1) adding:
(A) the unpaid balance as of the date of amendment;
(B) the cost of any insurance incidental to the amendment;
(C) the amount of each additional necessary official fee; and
(D) the amount of each accrued delinquency or collection charge;
and
(2) subtracting from the total computed under Subdivision (1) an
amount equal to the prepayment refund credit required by Section
348.120 or 348.121, as applicable.
(c) The provisions of this chapter relating to minimum charges
under Section 348.104 and acquisition costs under the refund
schedule under Section 348.120 do not apply in computing the
principal balance of the amended contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.116. CONFIRMATION OF AMENDMENT. An amendment to a
retail installment contract must be confirmed in a writing signed
by the retail buyer. The holder shall:
(1) deliver a copy of the confirmation to the buyer; or
(2) mail a copy of the confirmation to the buyer at the buyer's
most recent address shown on the records of the holder.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.117. CONTRACT AFTER AMENDMENT. After amendment the
retail installment contract is the original contract and each
amendment to the original contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.118. PREPAYMENT OF CONTRACT. A retail buyer may prepay
a retail installment contract in full at any time before
maturity. This section prevails over a conflicting provision of
the contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.119. REFUND CREDIT ON PREPAYMENT. If a retail buyer
prepays a retail installment contract in full or if the holder of
the contract demands payment of the unpaid balance of the
contract in full before the contract's final installment is due,
the buyer is entitled to receive a refund credit as provided by
Section 348.120 or 348.121, as applicable.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.120. AMOUNT OF REFUND CREDIT FOR MONTHLY INSTALLMENT
CONTRACT. (a) This section applies only to a refund credit on
the prepayment of a retail installment contract that is payable
in substantially equal successive monthly installments beginning
one month after the date of the contract.
(b) On a contract for a motor vehicle other than a heavy
commercial vehicle the minimum amount of the refund credit is
computed by:
(1) subtracting an acquisition cost of $25 from the original
time price differential; and
(2) multiplying the amount computed under Subdivision (1) by the
percentage of refund computed under Subsection (d).
(c) On a contract for a heavy commercial vehicle the minimum
amount of the refund credit is computed by:
(1) multiplying the amount of the original time price
differential by the percentage of refund computed under
Subsection (d); and
(2) subtracting an acquisition cost of $150 from the amount
computed under Subdivision (1).
(d) The percentage of refund is computed by:
(1) computing the sum of all of the monthly balances under the
contract's schedule of payments; and
(2) dividing the amount computed under Subdivision (1) into the
sum of the unpaid monthly balances under the contract's schedule
of payments beginning:
(A) on the first day, after the date of the prepayment or demand
for payment in full, that is the date of a month that corresponds
to the date of the month that the first installment is due under
the contract; or
(B) if the prepayment or demand for payment in full is made
before the first installment date under the contract, one month
after the next monthly anniversary date of the contract occurring
after the prepayment or demand.
(e) A refund credit is not required if the amount of the refund
credit is less than $1.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.121. AMOUNT OF REFUND CREDIT FOR OTHER CONTRACTS. The
minimum amount of the refund credit on a retail installment
contract to which Section 348.120 does not apply shall be
computed in a manner proportionate to the method set out by that
section for the type of motor vehicle being sold, having due
regard for:
(1) the amount of each installment;
(2) the irregularity of the installment periods; and
(3) the requirements of Sections 348.104(f) and 348.106.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.122. REINSTATEMENT OF CONTRACT AFTER DEMAND FOR
PAYMENT. After a demand for payment in full under a retail
installment contract, the retail buyer and holder of the contract
may:
(1) agree to reinstate the contract; and
(2) amend the contract as provided by Section 348.113.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.123. REFINANCING OF LARGE INSTALLMENT. (a) If a
scheduled installment of a retail installment contract is more
than an amount equal to twice the average of all installments
scheduled before that installment, other than the down payment,
the retail buyer is entitled to refinance that installment:
(1) when the installment is due;
(2) without an acquisition cost;
(3) in installments that are not greater or more frequent than
the average amount and frequency of installments preceding that
installment; and
(4) at a rate of time price differential that does not exceed
the rate applicable to the original contract.
(b) This section does not apply to:
(1) a lease;
(2) a retail installment transaction for a vehicle that is to be
used primarily for a purpose other than personal, family, or
household use;
(3) a transaction for which the payment schedule is adjusted to
the seasonal or irregular income or scheduled payments or
obligations of the buyer;
(4) a transaction of a type that the commissioner determines
does not require the protection for the buyer provided by this
section; or
(5) a retail installment transaction in which:
(A) the seller is a franchised dealer licensed under Chapter
2301, Occupations Code; and
(B) the buyer is entitled, at the end of the term of the retail
installment contract, to choose one of the following:
(i) sell the vehicle back to the holder according to a written
agreement:
(a) entered into between the buyer and holder concurrently with
or as a part of the transaction; and
(b) under which the buyer will be released from liability or
obligation for the final scheduled payment under the contract on
compliance with the agreement;
(ii) pay the final scheduled payment under the contract; or
(iii) if the buyer is not in default under the contract,
refinance the final scheduled payment with the holder for
repayment in not fewer than 24 equal monthly installments or on
other terms agreed to by the buyer and holder at the time of
refinancing and at a rate of time price differential not to
exceed the lesser of:
(a) a rate equal to the maximum rate authorized under this
subchapter; or
(b) an annual percentage rate of five percent a year more than
the annual percentage rate of the original contract.
(c) A retail installment contract under Subsection (b)(5) must
disclose that any refinancing may be for any period and payment
schedule to which the buyer and holder agree.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 62, Sec. 7.22(a), eff. Sept.
1, 1999; Acts 2003, 78th Leg., ch. 1276, Sec. 14A.774, eff. Sept.
1, 2003.
Sec. 348.124. DEBT CANCELLATION AGREEMENTS. (a) In connection
with a retail installment transaction under this chapter, a
retail seller may offer to the retail buyer a debt cancellation
agreement. 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.
(b) A debt cancellation agreement is not considered an insurance
product.
(c) The amount charged for a debt cancellation agreement made in
connection with a retail installment contract must be reasonable.
(d) In addition to other disclosures required by state or
federal law, the retail seller shall provide to the retail buyer
a separate notice in connection with the retail installment
contract stating that the retail buyer is not required to accept
or provide a debt cancellation agreement in order to purchase the
motor vehicle under a retail installment contract.
Added by Acts 2009, 81st Leg., R.S., Ch.
149, Sec. 3, eff. September 1, 2009.
SUBCHAPTER C. INSURANCE
Sec. 348.201. PROPERTY INSURANCE. (a) A holder may request or
require a retail buyer to insure the motor vehicle purchased
under a retail installment transaction and accessories and
related goods subject to the holder's security interest.
(b) The insurance and the premiums or charges for the insurance
must bear a reasonable relationship to:
(1) the amount, term, and conditions of the retail installment
contract; and
(2) the existing hazards or risk of loss, damage, or
destruction.
(c) The insurance may not:
(1) cover unusual or exceptional risks; or
(2) provide coverage not ordinarily included in policies issued
to the public.
(d) The holder may include the cost of insurance provided under
this section as a separate charge in the contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.202. CREDIT LIFE AND CREDIT HEALTH AND ACCIDENT
INSURANCE. (a) As additional protection for the contract, a
holder may request or require a retail buyer to provide credit
life insurance and credit health and accident insurance.
(b) As additional protection for the contract, a seller may
offer involuntary unemployment insurance to the buyer at the time
the contract is executed.
(c) A holder may include the cost of insurance provided under
Subsection (a) or (b), and a policy or agent fee charged in
connection with insurance provided under Subsection (a) or (b),
as a separate charge in the contract.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Amended by Acts 1999, 76th Leg., ch. 1107, Sec. 1, eff. June 18,
1999; Acts 2001, 77th Leg., ch. 409, Sec. 1, eff. Sept. 1, 2001.
Sec. 348.203. MAXIMUM AMOUNT OF CREDIT LIFE AND CREDIT HEALTH
AND ACCIDENT COVERAGE. (a) At any time the total amount of the
policies of credit life insurance in force on one retail buyer on
one retail installment contract may not exceed:
(1) the total amount repayable under the contract; and
(2) the greater of the scheduled or actual amount of unpaid
indebtedness if the indebtedness is repayable in substantially
equal installments.
(b) At any time the total amount of the policies of credit
health and accident insurance in force on one retail buyer on one
retail installment contract may not exceed the total amount
payable under the contract, and the amount of each periodic
indemnity payment may not exceed the scheduled periodic payment
on the indebtedness.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.204. INSURANCE STATEMENT. (a) If insurance is
required in connection with a retail installment contract, the
holder shall give to the retail buyer a written statement that
clearly and conspicuously states that:
(1) insurance is required in connection with the contract; and
(2) the buyer as an option may furnish the required insurance
through:
(A) an existing policy of insurance owned or controlled by the
buyer; or
(B) an insurance policy obtained through an insurance company
authorized to do business in this state.
(b) If requested or required insurance is sold or obtained by
the holder and the retail installment contract includes a premium
or rate of charge for the insurance that is not fixed or approved
by the commissioner of insurance, the holder shall deliver or
mail to the retail buyer a written statement that includes that
fact.
(c) A statement under Subsection (a) or (b) may be provided with
or as part of the retail installment contract or separately.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.205. STATEMENT IF LIABILITY INSURANCE NOT INCLUDED IN
CONTRACT. If liability insurance coverage for bodily injury and
property damage caused to others is not included in a retail
installment contract, the retail installment contract or a
separate writing must contain, in at least 10-point type that is
bold-faced, capitalized, underlined, or otherwise conspicuously
set out from the surrounding written material, a specific
statement that liability insurance coverage for bodily injury and
property damage caused to others is not included.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.206. INSURANCE MAY BE FURNISHED BY BUYER. (a) If
insurance is requested or required in connection with a retail
installment contract and the retail installment contract includes
a premium or rate of charge that is not fixed or approved by the
commissioner of insurance, the retail buyer is entitled to
furnish the insurance coverage not later than the 10th day after
the date of the contract or the delivery or mailing of the
written statement required under Section 348.204, as appropriate,
through:
(1) an existing insurance policy owned or controlled by the
buyer; or
(2) an insurance policy obtained from an insurance company
authorized to do business in this state.
(b) When a retail installment contract is executed, the retail
buyer is entitled to purchase the insurance described by Section
348.210 and select:
(1) the agent or broker; and
(2) an insurance company acceptable to the holder.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.207. BUYER'S FAILURE TO PROVIDE EVIDENCE OF INSURANCE.
(a) If a retail buyer fails to present to the holder reasonable
evidence that the buyer has obtained or maintained a coverage
required by the retail installment contract, the holder may:
(1) obtain substitute insurance coverage that is substantially
equal to or more limited than the coverage required; and
(2) add the amount of the premium advanced for the substitute
insurance to the unpaid balance of the contract.
(b) Substitute insurance coverage under Subsection (a)(1):
(1) may at the holder's option be limited to coverage only of
the interest of the holder or the interest of the holder and the
buyer; and
(2) must be written at lawful rates in accordance with the
Insurance Code by a company authorized to do business in this
state.
(c) If substitute insurance is obtained by the holder under
Subsection (a), the amendment adding the premium or rescheduling
the contract is not required to be signed by the retail buyer.
The holder shall deliver to the buyer or send to the buyer's most
recent address shown on the records of the holder specific
written notice that the holder has obtained substitute insurance.
Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.
Sec. 348.208. CHARGES FOR OTHER INSURANCE AND FORMS OF
PROTECTION INCLUDED IN RETAIL INSTALLMENT CONTRACT. (a) A
retail buyer and retail seller may agree in a retail installment
contract to include a charge for insurance coverage that is:
(1) for a risk of loss or liability reasonably related to:
(A) the motor vehicle;
(B) the use of the motor vehicle; or
(C) goods or services that:
(i) are related to the motor vehicle; and
(ii) may ordinarily be insured with a motor vehicle;
(2) written on policies or endorsement forms prescribed or
approved by the commissioner of insurance; and
(3) ordinarily available in policies or endorsements offered to
the public.
Text of subsection as amended by Acts 2009, 81st Leg., R.S., Ch.
36, Sec. 1
(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