HBA-CMT H.B. 1535 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1535
By: Davis, Yvonne
Transportation
7/10/2001
Enrolled



BACKGROUND AND PURPOSE 

When a vehicle is purchased through a loan, the Texas Department of
Transportation (TxDOT) issues an original paper title to the lienholder and
a nonnegotiable copy of the title to the purchaser of the vehicle. The
lienholder is required to store the original title until the loan is paid
in full.  When a loan is paid in full, TxDOT is required to issue one
original paper title to the vehicle owner.  The establishment of an
electronic titling system for lienholders will remove the administrative
burden placed on a lienholder in the processing, filing, and storage of
paper titles.  House Bill 1535 requires TxDOT to establish a system to
issue electronic titles to lienholders.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking is
expressly delegated to the Texas Department of Transportation in SECTION 1
(Section 501.117, Transportation Code) of this bill. 

ANALYSIS

House Bill 1535 amends the Transportation Code to require the Texas
Department of Transportation (TxDOT) to develop, by rule, a system in which
a security interest in a motor vehicle may be perfected, assigned,
discharged, and canceled electronically instead of by record maintained on
a certificate of title. TxDOT is required to publish and distribute
procedures for using the system to county assessor-collectors, financial
institutions, and other potential motor vehicle lienholders.  Participation
by a lienholder in the system is voluntary.  The provisions of the
Certificate of Title Act that relate to perfecting, assigning, discharging,
and canceling a security interest in a motor  vehicle by record maintained
on a certificate of title do not apply to the extent the security interest
is governed by rules adopted under the bill. 

EFFECTIVE DATE

September 1, 2001.