Bill Text: TX HB2403 | 2019-2020 | 86th Legislature | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

---

Bill Title: Relating to the regulation of residential service companies and residential service contracts.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Engrossed - Dead) 2019-05-14 - Referred to Business & Commerce [HB2403 Detail]

Download: Texas-2019-HB2403-Introduced.html

---

86R15415 TYPED
By: Goldman H.B. No. 2403

A BILL TO BE ENTITLED
AN ACT
relating to the regulation of residential service companies and
residential service contracts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 1303.101(b), Occupations Code, is
amended to read as follows:
(b) Except for the license requirement in Subsection (a), a
person who administers, issues, makes, provides, sells, markets, or
offers to sell a residential service contract or is contractually
obligated to perform services under a residential service contract
is exempt from any other licensing requirements of this state with
respect to the administration, issuance, making, provision, sale,
marketing, or offering for sale or the performance of [A person may
not sell, offer to sell, arrange or solicit the sale of, or receive
an application for] a residential service contract [unless:
[(1) the person is:
[(A) employed by a residential service company
licensed under this chapter; or
[(B) licensed as a real estate salesperson, real
estate broker, mobile home dealer, or insurance agent in this
state; and
[(2) the contract is issued by a residential service
company licensed under this chapter].
SECTION 2. Section 1303.152(a), Occupations Code, is
amended to read as follows:
(a) The amount of the reserve required by Section 1303.151
is based on the amount of liability remaining under outstanding
residential service contracts written in this state by the
residential service company, as determined by multiplying the total
number of days [months] remaining on all of those contracts by the
pro rata daily [monthly] contract charge.
SECTION 3. Sections 1303.202(a) and (b), Occupations Code,
are amended to read as follows:
(a) The commission may adopt rules requiring each
residential service company to file with the commission an annual
[a] report that meets the requirements in Subsection (b).
(b) The report must:
(1) be on a form prescribed by the commission;
(2) be verified by at least two of the residential
service company's principal officers; and
(3) include:
(A) financial statements of the residential
service company, including its balance sheet and receipts and
disbursements for the preceding year, certified as accurate by:
(i) an independent public accountant; or
(ii) at least two of the residential
service company's principal officers[, if the residential service
company uses a reimbursement insurance policy to insure its
outstanding residential service contracts written in this state in
accordance with Section 1303.151(b)];
(B) any material change to the information
submitted under Section 1303.103, except an amendment to a
residential service contract filed with the commission under
Section 1303.251;
(C) if the residential service company maintains
a reserve required by Section 1303.151(a), the number of
residential service contracts entered into during the year, the
number of contract holders as of the end of the year, and the number
of contracts terminating during the year; [and]
(D) a schedule of contract charges filed for
informational purposes only which shall not be subject to approval
by the commission; and
(E) any other information that:
(i) relates to the performance and solvency
of the residential service company; and
(ii) is necessary for the commission to
perform its duties under this chapter.
SECTION 4. Section 1303.302(a), Occupations Code, is
amended to read as follows:
(a) A seller of a residential property or the buyer's or
seller's agent may not condition the sale of the property on the
buyer's purchase of a residential service contract. A seller of a
residential property or the buyer's or seller's agent who purchases
a residential service contract for the benefit of the buyer has the
right to choose the residential service contract provider.
SECTION 5. Section 1303.352, Occupations Code, is amended
to read as follows:
Sec. 1303.352. GROUNDS FOR DISCIPLINARY ACTION. (a) The
commission may discipline a residential service company under
Section 1303.351 if the continued operation of the company would be
hazardous to its contract holders or if the company:
(1) operates in conflict with its basic organizational
document or in a manner that is contrary to that described in and
reasonably inferred from information submitted under Section
1303.103, unless an amendment to the information has been filed
with and approved by the commission;
(2) issues a residential service contract that does
not comply with Sections 1303.251 and 1303.252;
(3) [uses a schedule of charges that does not comply
with Section 1303.253;
[(4)] is not financially responsible and may be
reasonably expected to be unable to meet the company's obligations
to contract holders;
(4) [(5)] did not comply with Subchapter D;
(5) [(6)] advertised or marketed the company's
services in a false, misrepresentative, misleading, deceptive, or
unfair manner; or
(6) [(7)] otherwise did not substantially comply with
this chapter or a rule adopted under this chapter.
(b) Subsection (a)(5) [(a)(6)] applies to any advertising
or marketing conducted on behalf of a residential service company
by another person.
SECTION 6. Sections 1303.101(c), 1303.253, and
1303.302(b), Occupations Code, are repealed.
SECTION 7. The changes in law made by this Act apply only to
a residential service contract entered into or renewed on or after
the effective date of this Act. A residential service contract
entered into or renewed before that date is governed by the law as
it existed immediately before the effective date of this Act, and
that law is continued in effect for that purpose.
SECTION 8. This Act takes effect September 1, 2019.