| TEXAS BUSINESS & COMMERCE CODE SUBCHAPTER F. RENTAL-PURCHASE AGREEMENTS
§ 35.71. Definitions
In this subchapter:
(1) “Advertisement” means a commercial message in any medium that directly
or indirectly promotes or assists a rental-purchase agreement.
(2) “Cash price” means the price for which the merchant would have sold
the merchandise to the consumer for cash on the date of the rental-purchase
agreement.
(3) “Consumer” means an individual who leases personal property under a
rental-purchase agreement.
(3a) “Loss damage waiver” means a merchant’s agreement not to hold a
consumer liable for loss from all or part of any damage to merchandise.
(4) “Merchandise” means the personal property that is the subject of a
rental-purchase
agreement.
(5) “Merchant” means a person who, in the ordinary course of business,
regularly leases, offers to lease, or arranges for the leasing of
merchandise under a rental-purchase agreement, and includes a person who is
assigned an interest in a rental-purchase agreement.
(6) “Rental-purchase agreement” means an agreement for the use of
merchandise by a consumer for personal, family, or household purposes, for
an initial period of four months or less that is automatically renewable
with each payment after the initial period, and that permits the consumer to
become the owner of the merchandise.
Added by Acts 1985, 69th Leg., ch. 209, § 1, eff. Sept. 1, 1985. Amended
by Acts 2003, 78th Leg., ch. 816, § 24.001, eff. Sept. 1, 2003.
§ 35.72. Form
(a) A rental-purchase agreement must be written in plain English and in
any other language used by the merchant in an advertisement related to the
rental-purchase agreement. Numerical amounts must be stated in figures.
(b) Disclosures required by this subchapter must be printed or typed in
each rental-purchase agreement in a size equal to at least 10-point
bold-faced type. The attorney general shall provide a form agreement that
may be used to satisfy the requirements of an agreement under this
subchapter.
(c) A rental-purchase agreement may not contain a provision:
(1) requiring a confession of judgment;
(2) authorizing a merchant or an agent of the merchant to commit a
breach of the peace in the repossession of merchandise;
(3) waiving a defense, counterclaim, or right the consumer may have
against the merchant or an agent of the merchant;
(4) requiring the purchase of insurance or a loss damage waiver from
the merchant to cover the merchandise;
(5) requiring the payment of a late charge or reinstatement fee
unless a periodic payment is delinquent for more than seven days if the
payment is due monthly, or is delinquent for more than three days if the
payment is due more frequently than monthly, and the charge or fee is in
an amount equal to not more than the lesser of 10 percent of the
delinquent payment or $10, and not less than $5; or
(6) requiring a payment at the end of the scheduled rental-purchase
term in excess of or in addition to a regular periodic payment in order
to acquire ownership of the merchandise. In no event shall the consumer
be required to pay a sum greater than the total amount to be paid to
acquire ownership, as disclosed in Subsection (g)(3) of this section.
(d) Only one late charge or reinstatement fee may be collected on a
payment regardless of the period during which it remains in default.
(e) A rental-purchase agreement must provide that:
(1) a charge in addition to periodic payments, if any, must be
reasonably related to the service performed; and
(2) a consumer who fails to make a timely payment may reinstate an
agreement, without losing rights or options previously acquired, by
taking the required action before the later of one week or half of the
number of days in a regular payment period after the due date of the
payment.
(f) Notice of the right to reinstate an agreement must be disclosed in
the agreement. This subchapter does not prevent a merchant from attempting
repossession of merchandise during the reinstatement period, and the
consumer’s right to reinstate an agreement does not expire because of such a
repossession. If the merchandise is returned during the applicable
reinstatement period, other than through judicial process, the right to
reinstate the agreement shall be extended for a period of not less than 30
days after the date of the return of the merchandise. On reinstatement, the
merchant shall provide the consumer with the same merchandise or substitute
merchandise of comparable quality and condition. If substitute merchandise
is provided, the merchant shall provide the consumer with the disclosures
required in Subsection (g) of this section.
(g) A rental-purchase agreement must disclose:
(1) whether the merchandise is new or used;
(2) the amount and timing of payments;
(3) the total number of payments necessary and the total amount to be
paid to acquire ownership of the merchandise;
(4) the amount and purpose of any payment, charge, or fee in addition
to the regular periodic payments;
(5) whether the consumer is liable for loss or damage to the
merchandise, and if so the maximum amount for which the consumer may be
liable;
(6) that the consumer does not acquire ownership rights unless the
consumer has complied with the ownership terms of the agreement; and
(7) the cash price of the merchandise.
Added by Acts 1985, 69th Leg., ch. 209, § 1, eff. Sept. 1, 1985. Amended
by Acts 2003, 78th Leg., ch. 816, § 24.002, eff. Sept. 1, 2003; and June 18,
2005, eff. Sept. 1, 2005
§ 35.721. LOSS DAMAGE WAIVER.
(a) In addition to other charges permitted by this subchapter, a consumer
may contract for a loss damage waiver. A loss damage waiver is not
insurance.
(b) A merchant may not sell a loss damage waiver unless the consumer
agrees to the waiver in writing. A merchant may not impose or require the
purchase of a loss damage waiver as a mandatory charge.
(c) A loss damage waiver may exclude loss or damage to the merchandise
that is caused by an unexplained disappearance or abandonment of the
merchandise, or any other damage that is intentionally caused by the
consumer or that results from the consumer’s wilful or wanton misconduct.
(d) A loss damage waiver agreement must include a statement of the total
charge for the loss damage waiver.
(e) A merchant may charge a periodic fee for a loss damage waiver that
may not exceed 10 percent of the periodic rental payment.
(f) A contract that offers a loss damage waiver must include the
following notice:
“This contract offers an optional loss damage waiver for an
additional charge to cover your responsibility for loss of or damage to
the merchandise. You do not have to purchase this coverage. Before
deciding whether or not to purchase this loss damage waiver, you may
consider whether your homeowners’ or casualty insurance policy affords
you coverage for loss of or damage to rental merchandise and the amount
of the deductible you would pay under your policy.”
(g) A merchant may not sell a loss damage waiver unless the form of the
contract containing the waiver has been approved by the Texas Department
of Licensing and Regulation.
(h) The Texas Commission of Licensing and Regulation shall by rule:
(1) provide the method for annual submission of all contracts,
including amendments to a contract, that contain a loss damage waiver,
for review by the Texas Department of Licensing and Regulation; and
(2) set a reasonable fee to be paid by the merchant for the review of
contract forms under Subdivision (1) and for the administration of this
subchapter by the Texas Department of Licensing and Regulation.
Added by Acts 2003, 78th Leg., ch. 816, § 24.003, eff. Sept. 1, 2003.
§ 35.722.
ENFORCEMENT; INVESTIGATION;
HEARING.
(a) A consumer damaged by a violation of this subchapter by a merchant is
entitled to recover from the merchant:
(1) actual damages;
(2) 25 percent of an amount equal to the total amount of payments
required to obtain ownership of the merchandise involved, except that
the amount recovered under this subdivision may not be less than $250
nor more than $1,000; and
(3) reasonable attorney’s fees and court costs.
(b) A merchant is not liable under this section for a violation of this
subchapter caused by the merchant’s error if before the 31st day after the
date the merchant discovers the error, and before an action under this
section is filed or written notice of the error is received by the merchant
from the consumer, the merchant gives the consumer written notice of the
error and makes adjustments in the consumer’s account as necessary to assure
that the consumer will not be required to pay an amount in excess of the
amount disclosed and that the agreement otherwise complies with this
subchapter.
(c) A violation of this subchapter is a deceptive trade practice under
Subchapter E of Chapter 17, Business & Commerce Code.
Added by Acts 1985, 69th Leg., ch. 209, § 1, eff. Sept. 1, 1985.
§ 35.73. Advertisement
An advertisement for a rental-purchase agreement that refers to or states
the amount of a payment or the right to acquire ownership of any one
particular item under the agreement must clearly and conspicuously state:
(1) that the transaction advertised is a rental-purchase agreement;
(2) the total amount and number of payments necessary to acquire
ownership; and
(3) that the consumer does not acquire ownership rights unless the
merchandise is rented for a specified number of payment periods.
Added by Acts 1985, 69th Leg., ch. 209, § 1, eff. Sept. 1, 1985.
§ 35.74. Enforcement
(a) A consumer damaged by a
violation of this subchapter by a merchant is entitled to recover
from the merchant:
(1) actual damages;
(2) 25 percent of an amount equal to the total amount
of payments required to obtain ownership of the merchandise
involved, except that the amount recovered under this subdivision
may not be less than $250 nor more than $1,000; and
(3) reasonable attorney's fees and court costs.
(b) A merchant is not liable under this section for a
violation of this subchapter caused by the merchant's error if
before the 31st day after the date the merchant discovers the error,
and before an action under this section is filed or written notice
of the error is received by the merchant from the consumer, the
merchant gives the consumer written notice of the error and makes
adjustments in the consumer's account as necessary to assure that
the consumer will not be required to pay an amount in excess of the
amount disclosed and that the agreement otherwise complies with
this subchapter.
(c) A violation of this subchapter is a deceptive trade
practice under Subchapter E of Chapter 17, Business & Commerce
Code.
Added by Acts 1985, 69th Leg., ch. 209, § 1, eff. Sept. 1, 1985.
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