regulation matters
Doc Fee Increases to $150, Notification Required
G
ood news! As you may have heard, the Texas Finance Commission has approved an administrative rule change which will allow dealers to charge up to $150 for the documentary fee as of June 1, 2016. Prior to that date, dealers were able to charge the “safe harbor” amount of $125, provided appropriate notifications were made to the Office of Consumer Credit Commissioner (OCCC); much more on that in a moment. First, a quick look at the process for increasing your doc fee: Prior to charging this amount, a notification filing must be made with the OCCC. At the time of this writing, the online portal known as ALECS, found at https://alecs.occc.texas.gov, was not yet able to process these notifications, and dealers were required to use the form found at http://occc.texas.gov/news/20160519/ new-documentary-fee-advisory-bulletin. We are told that, if you use the form to increase your doc fee, you will then need to “complete” the filing in the ALECS system once it becomes available. If you have not done so already, you will need to create an account within ALECS prior to completing your filing. You must file notice for EACH OF YOUR LOCATIONS that will be charging the new amount.
I can’t stress this enough: the four bullet points above MUST be followed if you intend to increase your doc fee. Several years ago, when the OCCC established a “safe harbor” amount of $125, many dealers failed to notify the OCCC of the increase altogether, or failed to provide notification for each location. These failures resulted in significant administrative fines and / or restitution payments to the affected customers. Why do I belabor the point? Because, in spite of our best (and ongoing) efforts at communicating the requirements, this happened a LOT. Reasonable people could certainly be excused for raising an obvious question: If the Finance Commission has officially approved $150 for the doc fee amount, and a dealer is charging that amount, why must a dealer provide notification to the OCCC? The short answer is simple: under Chapter 348 of the Texas Finance Code, such notification is currently required. However, TIADA’s Legislative Committee is studying this issue with an eye toward asking the Legislature to remove the notification requirement if a dealer charges the July/Special 2016
T e x a s
D e a l e r
by Danny
Langfield
TIADA DEPUTY DIRECTOR
“safe harbor” amount (or less). As the 2017 legislative session gets closer, we will provide you with more information on this potential initiative as well as TIADA’s other legislative priorities, as always. What if a dealer wants to charge more than $150? TIADA takes the position that if a dealer wishes to charge a doc fee in any amount exceeding the $150 safe harbor and contend that is a “reasonable amount,” s/he is certainly welcome to do so. However, it is clearly within the OCCC’s jurisdiction to establish rules and notification procedures for reviewing such an amount and determining its reasonableness. Such rules are in place, and many dealers (primarily franchised) have elected to undertake the onerous process of trying to justify a higher doc fee amount under these guidelines. But if a dealer will be charging the established “safe harbor” amount or less, as stated above, we do not believe a notification filing should be necessary. Let me close with a recap of general doc fee requirements: A dealer may charge a doc fee up to $50 without providing any notification to the OCCC. A dealer who charges a doc fee in excess of $50 but not greater than $150 must notify the OCCC of the amount s/he intends to charge. • Notification must be made for each retail sales location. If a doc fee is charged in ANY amount… The retail seller must charge the documentary fee to cash buyers and credit buyers. The following notice must be included in the Buyer’s Order and Retail Installment Contract, as well as posted on the wall of any area where sales are closed: “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.” 45