86R30521 GRM-F
 
  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 is exempt from any
  other licensing requirements of this state with respect to the
  administration, issuance, making, provision, sale, marketing, or
  offering for sale 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.  Section 1303.202(b), Occupations Code, is
  amended to read as follows:
         (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)  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 1303.253, Occupations Code, is amended
  by amending Subsections (c), (e), and (f) and adding Subsection (k)
  to read as follows:
         (c)  A filing made under Subsection (a) by a residential
  service company that maintains a reserve required by Section
  1303.151(a) may [not] be implemented beginning on the later of the
  date:
               (1)  the filing is made; or 
               (2)  the commission receives any associated filing fee
  [until approved by the commission].
         (e)  If the commission determines that a filing made under
  Subsection (a) is not reasonably related to the amount, term, and
  conditions of the contract to which the filing applies [as
  described by Subsection (d)], the commission may disapprove the
  filing. If the commission disapproves the filing, the commission
  shall notify the company of the disapproval and shall specify in
  detail the reason for the disapproval.
         (f)  For a filing made under Subsection (a) by a residential
  service company described by Subsection (c) after the residential
  service company is licensed, the commission shall have 30 days to
  disapprove [consider] the filing from the date of the filing or the
  date that the commission receives any associated filing fee,
  whichever is later. On the 31st day after that date[,] the filing
  is considered approved [unless the commission disapproves the
  filing or notifies the residential service company in writing that
  the filing is not reasonably related to the amount, term, and
  conditions of the contract to which the filing applies].
         (k)  If a filing is disapproved under Subsection (f), the
  commission may order the residential service company to pay a
  refund as provided by Section 1101.659.
         SECTION 5.  Section 1303.302(b), Occupations Code, is
  amended to read as follows:
         (b)  A sales contract must state [A seller of a residential
  property or the buyer's or seller's agent shall provide to the buyer
  a statement that clearly and conspicuously states] that:
               (1)  the purchase of a residential service contract is
  optional; and
               (2)  the buyer and seller of a residential property may
  negotiate the amount paid toward, the coverage provided by, and the
  provider of a [purchase similar coverage through another]
  residential service contract [company or insurance company
  authorized to engage in business in this state].
         SECTION 6.  Section 1303.352(a), Occupations Code, is
  amended to read as follows:
         (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;
               (5)  did not comply with Subchapter D;
               (6)  advertised or marketed the company's services in a
  false, misrepresentative, misleading, deceptive, or unfair manner;
  [or]
               (7)  fails to pay the fee for filing the report under
  Section 1303.202;
               (8)  provides false or misleading information to the
  commission on a report required by Subchapter E or on a filing
  required by Subchapter F;
               (9)  fails to provide, within a reasonable time,
  information requested by the commission that relates to a formal or
  informal complaint to the commission; or 
               (10)  otherwise did not substantially comply with this
  chapter or a rule adopted under this chapter.
         SECTION 7.  Sections 1303.101(c) and 1303.253(d),
  Occupations Code, are repealed.
         SECTION 8.  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 9.  This Act takes effect September 1, 2019.