85R13971 EES-F     By: Thompson of Harris H.B. No. 2339     Substitute the following for H.B. No. 2339:     By:  Burrows C.S.H.B. No. 2339       A BILL TO BE ENTITLED   AN ACT   relating to trade-in credit agreements offered in connection with   certain motor vehicle retail installment contracts.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 348.001, Finance Code, is amended by   adding Subdivision (11) to read as follows:                (11)  "Trade-in credit agreement" means a contractual   arrangement under which a retail seller agrees to provide a   specified amount as a motor vehicle trade-in credit for the   diminished value of the motor vehicle that is the subject of the   retail installment contract in connection with which the trade-in   credit agreement is offered if the motor vehicle is damaged but not   rendered a total loss as a result of a collision accident, with the   credit to be applied toward the purchase or lease of a different   motor vehicle from the retail seller or an affiliate of the retail   seller. A trade-in credit agreement is a separate agreement from a   retail installment contract and is not a term of the retail   installment contract.           SECTION 2.  Section 348.005, Finance Code, is amended to   read as follows:          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 deputy as   authorized by rules adopted under Section 520.0071, 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, automobile club memberships, trade-in   credit agreements, or a debt cancellation agreement by Subchapter   C.          SECTION 3.  Subchapter B, Chapter 348, Finance Code, is   amended by adding Section 348.125 to read as follows:          Sec. 348.125.  TRADE-IN CREDIT AGREEMENTS OFFERED IN   CONNECTION WITH RETAIL INSTALLMENT CONTRACTS.  (a)  A retail seller   may, at the time a retail installment contract is executed, offer to   sell to a retail buyer a trade-in credit agreement or similarly   named agreement.           (b)  A trade-in credit agreement is not considered an   insurance product.          (c)  To ensure the faithful performance of a retail seller's   obligations to a retail buyer under a trade-in credit agreement,   the retail seller must be insured under a contractual liability   reimbursement policy approved by the commissioner of insurance and   issued for the benefit of Texas residents.          (d)  In addition to other disclosures required by state or   federal law, if a retail seller offers to a retail buyer a trade-in   credit agreement, the retail seller shall give the retail buyer at   the time the retail installment contract is executed a copy of the   written trade-in credit agreement and written notice that the   retail buyer:                (1)  is not required to purchase the trade-in credit   agreement as a condition for approval of the retail installment   contract;                 (2)  is entitled to cancel the trade-in credit   agreement before the 31st day after the date the retail installment   contract is executed and receive a full refund;                (3)  may terminate the trade-in credit agreement at any   time on or after the 31st day after the date the retail installment   contract is executed and receive a pro rata refund minus any   applicable cancellation fee which may not exceed $50; and                 (4)  has been provided a clear and concise disclosure   of the amount of the credit available during the term of the   trade-in credit agreement.          (e)  The amount charged for a trade-in credit agreement   offered in connection with a retail installment contract may not   exceed five percent of the cash price of the motor vehicle that is   the subject of the retail installment contract, including any   attached accessories and excluding the price of services related to   the sale, the price of service contracts, taxes, and fees for   license, title, and registration.           (f)  A trade-in credit agreement must require the retail   buyer to provide proof of insurance settlement documents in order   to obtain the credit. A trade-in credit agreement may not require   the retail buyer to provide any other documentation in order to   obtain the credit.          (g)  If a retail seller enters a trade-in credit agreement   with a retail buyer, the retail seller must comply with the terms of   the trade-in credit agreement in connection with the purchase or   lease of a subsequent motor vehicle.  A retail seller must provide   any credit required under a trade-in credit agreement at the time of   the purchase or lease of a subsequent motor vehicle.          (h)  The benefit to be provided in connection with a trade-in   credit agreement must bear a reasonable relationship to the amount   charged for the trade-in credit agreement and the amount, term, and   conditions of the retail installment contract.          SECTION 4.  Sections 348.208(b) and (c), Finance Code, are   amended to read as follows:          (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 on the   vehicle if the vehicle has been rendered a total loss;                (5)  a warranty or service contract relating to the   motor vehicle;                (6)  an identity recovery service contract; [or]                (7)  a debt cancellation agreement if the agreement is   included as a term of a retail installment contract under Section   348.124; or                (8)  a trade-in credit agreement.          (c)  Notwithstanding any other law, service contracts, [and]   debt cancellation agreements, and trade-in credit agreements sold   by a retail seller of a motor vehicle to a retail buyer are not   subject to Chapter 101 or 226, Insurance Code.          SECTION 5.  This Act takes effect September 1, 2017.