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.