Documentary fees at or below $125 are considered reasonable by rule, after written notice has been provided. The agency will request additional financial information from a dealer to determine reasonableness for documentary fees above $125.
Posting Of The Documentary Fee Notice
For a documentary fee to be included in the principal balance of a retail installment contract, requisite posting requirements must be fulfilled. The dealer must post the prescribed documentary fee notice and ensure that it is clearly visible to consumers in the place where vehicle sales are finalized. The correct wording for the documentary fee notice is found in the Texas Finance Code §.006 (c)(3)(B) and reads as follows: “A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO BUYERS FOR HANDLING DOCUMENTS RELATING TO THE SALE. A DOCUMENTARY FEE MAY NOT EXCEED A REASONABLE AMOUNT AGREED TO BY THE PARTIES. THIS NOTICE IS REQUIRED BY LAW.”
A dealer should cease the assessment of the documentary fee if the proper documentary fee notice is not posted. Examiners continue to find that the above required compliant documentary fee notice is not posted at all or is not posted in the proper place where vehicle sales are finalized. A dealer should cease the assessment of the documentary fee if the proper documentary fee notice is not posted.
Disclosure Of Equity In Retail Buyer’s Trade-In Motor Vehicle
Examiners have found that dealers are not complying with providing the disclosure of equity to a retail buyer when a trade-in motor vehicle is accepted under a retail installment contract. A dealer (retail seller) must provide a standard form for the disclosure of equity to the retail buyer before accepting a trade-in motor vehicle for an ordinary motor vehicle sold under a retail installment sales contract (§348.0091, Texas Finance Code). The disclosure of equity form must be maintained in the retail installment transaction file of the customer. The form is not required for transactions where a single cash payment is made for the sale of the motor vehicle. The trade-in equity form has a specific purpose and required elements as prescribed in the Texas Administrative Code, and must fit on one standard-size 8 ½ X 11 sheet of paper as shown on the previous page (Figure 2).
Final Thoughts
As a dealer and a licensee, you are responsible for periodically reviewing your procedures and records to ensure that they are current and compliant with existing regulations. These proactive measures can limit your risk and exposure to private remedies from threatened litigation and may reduce the use of significant resources and monies to address examination or investigation issues.
22
T e x a s
D e a l e r
December 2013