JUSTIFICATION FOR ADOPTION OF ADMINISTRATIVE RULES
VEHICLE STORAGE FACILITIES
16 TAC, Chapter 85, amendments §85.722
The Texas Commission of Licensing and Regulation (Commission) adopts amendments to an existing rule at 16 Texas Administrative Code (TAC), Chapter 85, §85.722, regarding the Vehicle Storage Facilities Program, without changes to the proposed text as published in the August 16, 2019, issue of the Texas Register (44 TexReg 4281). The adopted changes are referred to herein as “adopted rules.”
EXPLANATION OF AND JUSTIFICATION FOR THE RULES
The adopted rules under 16 TAC, Chapter 85 implement Texas Occupations Code, Chapter 2303, relating to Vehicle Storage Facilities.
The adopted rules implement House Bill (HB) 1140 of the 86th Legislature (2019 Regular Session), which amends Occupations Code, Chapter 2303, by: (1) allowing the Commission to biennially adjust daily storage fees and impoundment fees at vehicle storage facilities (VSF) based on changes in the Consumer Price Index for All Urban Consumers (CPI-U); and (2) removing the authority of the Commission to set fees that VSF operators may charge for environmental hazards. The adopted rules are necessary to create consistency with the amended statutory language and to implement the biennial adjustment of fees for 2019.
SECTION-BY-SECTION SUMMARY
The adopted rules amend §85.722(d) by: (1) reflecting the amended statutory language setting the daily storage fee amount that VSF operators may charge; (2) adding new Subpart (d)(1) to include the daily storage fee amounts resulting from the 2019 biennial adjustment; and (3) renumbering the remaining subparts accordingly.
The adopted rules amend §85.722(e) by: (1) reflecting the amended statutory language setting the impoundment fee amount that VSF operators may charge; and (2) including the impoundment fee amount resulting from the 2019 biennial adjustment.
The adopted rules repeal §85.722(g) to remove the environmental hazard fee and renumber the remaining subsection accordingly.
PUBLIC COMMENTS
The Texas Department of Licensing and Regulation (Department) drafted and distributed the proposed rules to persons internal and external to the agency. The proposed rules were published in the August 16, 2019, issue of the Texas Register (44 TexReg 4281). The deadline for public comments was September 16, 2019. The Department received comments from one interested party on the proposed rules during the 30-day public comment period. The public comment is summarized below.
Comment: TDLR received one comment during the public comment period. The comment was authored by an insurance company which expressed its support of the proposed amendments. The comment further expressed concern that the insurance company often receives what it considers to be “inflated charges” relating to gate fees, admin fees, and tow bills.
Department Response: The Department thanks the commenter for submitting its support of the proposed amendments. It also notes that the commenter did not submit any suggested edits or propose any alternative language.
The Department also thanks the commenter for expressing its concerns about what it perceives to be “inflated charges” relating to various aspects of towing and storage fees. However, HB 1140 does not address towing fees and limits itself to storage fees relating to impound and daily storage rates at Vehicle Storage Facilities and to the elimination of an Environmental Fee. The Department, therefore, cannot provide a response to any portion of the comment that does not relate directly to HB 1140 or the fees which are subject to the proposed amendments.
The Department did not make any changes to the proposed rules in response to this comment.
ADVISORY BOARD RECOMMENDATIONS AND COMMISSION ACTION
The Towing and Storage Advisory Board (Advisory Board) met on September 23, 2019, to discuss the proposed rule and the comment received. The Advisory Board recommended adopting the proposed rule without changes. At its meeting on October 1, 2019, the Commission adopted the proposed rules without changes as recommended by the Advisory Board.
STATUTORY AUTHORITY
The amendments are adopted under Texas Occupations Code, Chapters 51 and Chapter 2303, which authorize the Texas Commission of Licensing and Regulation, the Department’s governing body, to adopt rules as necessary to implement these chapters and any other law establishing a program regulated by the Department.
The statutory provisions affected by the adopted rules are those set forth in Texas Occupations Code, Chapters 51 and Chapter 2303. No other statutes, articles, or codes are affected by the proposed rules.
§ 85.722. Responsibilities of Licensee--Storage Fees and Other Charges.
(a) For the purposes of this section, "VSF" includes a garage, parking lot, or other facility that is:
(1) owned by a governmental entity; and
(2) used to store or park at least 10 vehicles each year.
(b) The fees outlined in this section have precedence over any conflicting municipal ordinance or charter provision.
(c) Notification fee.
(1) A VSF may not charge a vehicle owner or authorized representative more than $50 for notification under these rules. If a notification must be published, and the actual cost of publication exceeds 50% of the notification fee, the VSF may recover the additional amount of the cost of publication. The publication fee is in addition to the notification fee.
(2) If a vehicle is removed by the vehicle owner or authorized representative within 24 hours after the date the VSF receives the vehicle, notification is not required by these rules.
(3) If a vehicle is removed by the vehicle owner or authorized representative before notification is sent or within 24 hours from the time VSF receives the vehicle, the VSF may not charge a notification fee to the vehicle owner.
(d) Daily storage fee. A VSF may charge $20 for each day or part of a day for storage of a vehicle that is 25 feet or less in length and may charge $35 for each day or part of a day for storage of a vehicle that exceeds 25 feet in length, subject to a biennial adjustment as set forth in Texas Occupations Code §2303.1552(b)(1).
(1) Per the 2019 biennial adjustment, the maximum amount that a VSF may charge for a daily storage fee is as follows:
(A) Vehicle that is 25 feet or less in length: $20.64.
(B) Vehicle that exceeds 25 feet in length: $36.11.
(2) A daily storage fee may be charged for any part of the day, except that a daily storage fee may not be charged for more than one day if the vehicle remains at the VSF less than 12 hours. In this paragraph a day is considered to begin and end at midnight.
(3) A VSF that has accepted into storage a vehicle registered in this state shall not charge for more than five days of storage fees until a notice, as prescribed in §85.703 of these rules, is mailed or published.
(4) A VSF that has accepted into storage a vehicle not registered in Texas shall not charge for more than five days of storage before the date the request for owner information is sent to the appropriate governmental entity or to the private entity authorized by that governmental entity to obtain title, registration, and lienholder information using a single vehicle identification inquiry.
(5) A VSF shall charge a daily storage fee after notice, as prescribed in §85.703, is mailed or published for each day or portion of a day the vehicle is in storage until the vehicle is removed and all accrued charges are paid.
(e) Impoundment fee. A VSF may charge a vehicle owner or authorized representative an impoundment fee of $20, subject to a biennial adjustment as set forth in Texas Occupations Code §2303.1552(b)(1). Per the 2019 biennial adjustment, the maximum amount that a VSF may charge for an impoundment fee is $20.64. If the VSF charges a fee for impoundment, the written bill for services must specify the exact services performed for that fee and the dates those services were performed.
(f) Governmental or law enforcement fees. A VSF may collect from a vehicle owner or authorized representative any fee that must be paid to a law enforcement agency, the agency's authorized agent, or a governmental entity.
(g) Additional fees. A VSF may not charge additional fees related to the storage of a vehicle other than fees authorized by these rules or a nonconsent-towing fee authorized by Texas Occupations Code, §2308.2065.
REVIEW BY AGENCY COUNSEL
The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency’s legal authority.
Filed with the Office of the Secretary of State, on October 8, 2019.
Brad Bowman
General Counsel
Texas Department of Licensing and Regulation
JUDICIAL FORECLOSURE OF VSF LIENS ON LOW-VALUE VEHICLES
THE METHOD OF LAST RESORT
By Brian Edward Walters, Attorney at Law
Sometimes it feels as though Texas Department of Motor Vehicles offices have different standards for when you can foreclose on a vehicle storage facility lien depending on who is in the office and what time it is. We have heard stories about requiring different levels of documentation, including things like the certified mail tag, certified mail tag with stamp from the post office, the return receipt, the return receipt signed by the former owner, and even requirements that the DMV send out a notice to the owner before a title will be issued.
These differing paperwork requirements can quickly create a situation where the VSF cannot foreclose on its lien and sell a stored vehicle even if the VSF has done everything that is legally required. Bureaucracy at its finest, folks! So, what options do you have when your VSF has a vehicle that is abandoned, ready for sale, but you cannot get title through the usual channels? The answer depends both on the value of the vehicle and on how much money you must invest in the process. This article discusses the process for vehicles that are valued at or less than ten thousand dollars.
The standard process for VSF lien foreclosure is what is known as a “non-judicial” foreclosure. Simply stated, that term means that you have avoided taking a trip to the courthouse in order to execute the VSF’s lien rights on the vehicle. It is similar in many respects to a foreclosure on real estate where the property is sold at the courthouse steps. In both cases, title to property transfers hands in a “lack of payment” situation without anyone going before a judge. There is, however, another method of foreclosing on the VSF lien known as the “judicial foreclosure.”
Judicial foreclosure involves filing a lawsuit with the appropriate court and asking that court for an order granting the foreclosure of the lien. Which court you file in will depend on many factors, each of which is very important to getting an enforceable court order. It should be noted that this is not the same process as suing for title to a vehicle (which is only appropriate in a district court or, in some cases, a county court-at-law). Also, as previously stated, this discussion is limited to low-value vehicles (less than $10,000 in value).
Justice courts (formerly known as “small claims courts”) are courts of very limited jurisdiction. Typically, they only hear claims involving $10,000 or less in controversy, whether in a lawsuit, eviction, or debt claims. However, justice courts are also allowed to hear cases where a person seeks foreclosure of a lien on personal property (i.e. not real estate) that is valued at $10,000 or less. In many cases involving damaged or abandoned vehicles, the vehicles will be within that range, giving justice courts the ability to grant the foreclosure request.
Despite justice courts being able to grant the foreclosure, the process is far from simple. Rules about where to file, who to include in the lawsuit, and how to get the judgment are complex. It is almost always necessary to hire a lawyer for a judicial foreclosure because if you fail to include a necessary party to the proceeding, the court order will not be worth the paper on which it is written. Additionally, the parties involved (whether the justice of the peace, state agencies, or their attorneys and paralegals) will have questions about the proceeding that you will probably not be able to answer. That being the case, it is strongly recommended that you lawyer up for this process.
Despite this being a bit of a law-intensive process, it is a good solution under many circumstances. First, if you have a vehicle that can’t be sold or junked without a title, it will simply waste away on your property forever. Second, if the DMV in your area is requiring paperwork you cannot get, you are stuck with that vehicle. Third, if there was someone left off the notice letters, you typically cannot go back and “re-notice” them because the delivery timelines have passed. In each of these situations, judicial foreclosure is a good last resort.
While judicial foreclosure costs more in time and money than non-judicial foreclosure, it can be a handy tool under the right circumstances. It will require an attorney who is familiar with towing and storage laws as well as one who can educate the judge and, likely, opposing counsel on the subject. Finally, like any lawsuit, it absolutely must be done the right way the first time or it will be a fruitless endeavor. If, however, you can get the right person on the job (and typically do this for a few vehicles to get a better price), you can end up with title to vehicles that were otherwise stuck in legal limbo.
On November 5th, voters will go to the polls to vote on proposed constitutional amendments that were passed by the Texas Legislature. In order to be the most informed on each proposal, you can access information at the following link.
https://lrl.texas.gov/scanned/Constitutional_Amendments/amendments86_tlc_2019-11-05.pdf
There are 10 propositions that contain the language that will be on the ballot, the easy to understand analyses, and then comments from supporters and opponents. Although this is a long document, it reads very quickly. We believe it is a very good tool to help you decide how you would like to vote.
We want to bring Proposition 4 to your immediate attention. The way the ballot language is written, is confusing. This proposal would amend the Texas Constitution to prohibit the Legislature from imposing a state income tax on individuals. If you are opposed to a state income tax, you will want to vote YES on this measure. Information regarding this ballot proposal is in page 19 of the document.
At Southwest Tow Operators, we believe it is important to keep you informed on what is upcoming. If you have any questions about any of the 10 propositions, please feel free to contact us.
Almost every incident management towing company knows that TDLR does not set incident management towing fees. While those fees can be regulated and capped by the county or a city, TDLR generally has deferred to either an “unregulated” view of incident management towing fees or deferred to the city or county to set those rates. However, lately there has been a substantial uptick in TDLR “back door” regulating the prices charged by incident management towing companies.
Written By Brian Edward Walters, Attorney at Law
TDLR complaints are a frequent hassle when operating a towing company or vehicle storage facility in Texas. All that is required for a complaint is for a disgruntled customer to log on and find one item to complain about. It could be something serious like an overcharge or an unlicensed operator or it could be as simple as not having the correct website for justices of the peace on your VSF invoice. Either way, one complaint can trigger a full TDLR investigation of your private property or incident management towing practices.
In private property tows, complaints typically arise from someone who (rightly or wrongly) believes that they had the right to leave their vehicle on property. When that happens, they will usually do some ad-hoc legal internet research and find the Texas Towing and Booting Act. Once they find the Texas Towing and Booting Act, they will try to point to every single problem that they believe exists on a parking facility and use that as the reason they should “never have been towed.”
The Texas Department of Licensing and Regulation (“TDLR”) is tasked with investigating consumer complaints. Investigators then reach out to your towing company or VSF and ask for a host of documents. Many times, the documents that are requested are just a boilerplate list of items that may or may not have anything to do with the tow that generated the complaint. Remember – investigators are not attorneys. They typically do not know Texas law. They also do not know that there are limits on what they can ask for and what goes too far. Given those facts, it is not surprising that you end up with a shotgun-style approach to what should be a simple and limited investigation. An investigator’s only job is to review the facts and see if they believe a violation occurred. However, a prosecutor (an attorney) is the person who determines whether formal charges will be brought against your license.
If an investigator determines that there is a likely violation (or feels you are not responsive and cooperative), he or she will forward that complaint to a prosecutor who will determine whether TDLR should bring an enforcement action against your company’s license. Typically, TDLR enforces against the towing company or vehicle storage facility rather than against one employee who made a mistake. Additionally, once TDLR issues a “Notice of Alleged Violation,” you have very limited time to respond to the allegations and work out any possible deal before the allegations are set for a hearing before an administrative law judge. Thus, time is of the essence at all phases of investigation and prosecution.
At this point, it is clear that a complaint can quickly snowball into a massive financial drain. Every moment that you spend working on or defending claims (whether good or bad) is time that you cannot spend making money and growing your business. The real cost of a complaint is not just the fine that you end up with, it is also the time and money you lose defending against those allegations. Given that most tows involve a relatively small amount of money, you will quickly burn through the profit margin of a tow defending a complaint and end up with a net loss that can be in the thousands of dollars.
The point of this article is not to intimidate folks in the industry. Rather, it is to make you aware of just how much money can be lost based on what one disgruntled customer can do with 10 minutes to spare and an internet connection. The best defense in this case is a good offense. That means that you need to be hyper-vigilant when performing private property tows.
Written By Brian Edward Walters, Attorney at Law
According to the folks at the Texas Department of Licensing and Regulation (“TDLR”), you cannot tow a vehicle that violates “parking rules” or “towing rules,” even if those rules are set out in a lease agreement with a tenant. This means, to answer a question that we get constantly, YOU CANNOT TOW FOR BACK-IN OR DOUBLE OR TRIPLE PARKING ACCORDING TO TDLR. Given that this is a strange position that TDLR has adopted, this article analyzes TDLR’s reasoning on the subject.
The ability to tow a vehicle from a private parking lot starts with the concept of an “unauthorized vehicle.” The Texas Towing and Booting Act defines an “unauthorized vehicle” as any vehicle parked, located, or placed on the parking facility without the consent of the parking facility owner. While this definition seems to imply that if you park in a manner that the parking facility owner doesn’t approve the vehicle could be towed, TDLR disagrees.
TDLR and, more specifically, the prosecutors (“Staff”) and the Texas Commission for Licensing and Regulation (the “Commission”) have adopted a very broad view of what constitutes an “authorized” vehicle. Their position is that if a vehicle is on… To read more, become a member with STO now and if you are a member you will receive the full article in your email.
