HBA-TYH H.B. 3072 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3072
By: Averitt
Financial Institutions
3/29/1999
Introduced



BACKGROUND AND PURPOSE 

Under current law, the only situation in which the seller of a motor
vehicle is allowed to pay off the outstanding debt against a vehicle owned
by the buyer is when the vehicle being paid off is to be used as a trade-in
on the vehicle being purchased.  When the vehicle a buyer intends to use as
a trade-in vehicle has been rendered a total loss, the law does not allow
the seller to pay off the amount owed against the total-loss vehicle and
incorporate that amount into the retail installment agreement in the sale.
This is because a total-loss vehicle cannot be used as a trade-in.  H.B.
3072 removes the phrase "used as a trade-in" and replaces the phrase with
"owned by the buyer."  This allows a seller to pay off the outstanding debt
against  a vehicle owned by the buyer whether or not the vehicle is
technically to be used as a trade-in.   

When both the seller and the retail buyer agree to a monthly installment
plan, the retail buyer uses a trade-in vehicle for a down payment, and the
net value of the trade-in vehicle exceeds the amount of the agreed down
payment, the retail buyer can choose to apply the excess amount to the
monthly payment.  While the buyer might wish to take the excess back in
cash, the seller is currently prohibited by law from tendering in cash to
the retail buyer any excess amount from the retail buyer's trade-in.  H.B.
3072 allows the retail buyer and seller of a motor vehicle to agree to
allow the seller to return to the retail buyer a portion of the net cash
value of a vehicle used as a trade-in for the cash down payment on a
vehicle being purchased. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Section 348.404, Finance Code, as follows:

Sec. 348.404. New title: SELLER'S ACTION FOR INCENTIVE PROGRAM OR TO PAY
FOR BUYER'S MOTOR VEHICLE.  Authorizes a retail seller, in connection with
a retail installment transaction, to advance money to retire an amount
owned against a motor vehicle owned by the buyer, rather than used as a
trade-in, and to finance repayment of that money in a retail installment
contract.  Authorizes a retail seller to pay in cash to the retail buyer
any portion of the net cash value of a motor vehicle owned by the buyer and
used as a  trade-in in a transaction involving the sale of another motor
vehicle. Defines "net cash value." 

SECTION 2.  Amends Section 152.002(b), Tax Code, to make a conforming
change. 

SECTION 3.  Emergency clause.
  Effective date: upon passage.