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.