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Texas House Bill Imposes New Lienholder Risks
Monday, May 8, 2017 7:00 AM

State and federal credit unions in Texas would be negatively affected by HB 2508 by Rep. John Kuempel (R-Seguin). HB 2508 is a comprehensive bill that proponents claim will streamline and modernize the statutes that govern towing, booting, and vehicle storage facilities (VSF).

As originally filed, the bill had improvements in lienholder notification. But there were significant differences between the "as filed" version and the committee substitute that was scheduled to be heard on the Texas House floor on Friday afternoon.

The Texas Credit Union Association organized an alliance of lienholders to oppose the changes in the substitute that would have weakened notice to lienholders. The committee substitute language set a date after which a second notice can be sent but did not provide a deadline for actually sending the second notice. That would have allowed them to accrue open-ended storage fees. Our amendment restored language in current law that requires the second notice be sent by the 15th day after the first notice. The substitute would also have permitted a VSF to sell off a vehicle without giving timely notice—in effect, improperly taking property from the owner. 

Rep. Kuempel added the amendments to his own bill after extensive negotiations and engagement Thursday that ensured the VSF could not sell off a vehicle without providing timely notice and set a firm deadline by which the second notice must be sent; it also removed language regarding the waiver of rights and consent by an owner and lienholder.

The TxCUA is still working to resolve other concerns with the bill as it goes to the Senate, which includes allowing VSF's to add fees for selling a stored vehicle, further reducing what lienholders may receive when collateral is stored and vehicles towed from an accident scene would no longer require notice to the lienholders.

For more information, please contact Texas Credit Union Association President Jeff Huffman at 469-385-6488 or jhuffman@txcua.coop.