HBA-TYH H.B. 3072 76(R)BILL ANALYSIS Office of House Bill AnalysisH.B. 3072 By: Averitt Financial Institutions 4/14/1999 Committee Report (Amended) 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 owed 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. EXPLANATION OF AMENDMENTS Committee Amendment #1 authorizes a retail seller, in connection with a retail installment transaction, to advance money to retire an amount owed against a motor vehicle used as a trade-in or a motor vehicle owned by the buyer that has been declared a total loss by the buyer's insurer, rather than a motor vehicle owned by the buyer.