By: Reyna H.B. No. 2229
A BILL TO BE ENTITLED
relating to the automatic renewal of contracts for security
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 4, Business & Commerce Code, is amended by
adding Chapter 49 to read as follows:
CHAPTER 49. AUTOMATIC RENEWAL OF CONTRACTS
Sec. 49.001. APPLICABILITY. This chapter applies only to a
(1) is for a security service;
(2) specifies a term during which the service will be
(3) automatically renews for a period of more than one
Sec. 49.002. DEFINITIONS. In this chapter:
(1) "Automatic renewal clause" means a provision of a
contract that provides that the contract's term is considered
renewed for a specified additional period if the consumer does not
give notice of the consumer's intention to terminate the contract
at the expiration of the term.
(2) "Consumer" means a person to whom a security
service is provided.
(3) "Security service" means the service of providing,
monitoring, or maintaining an alarm system, as that term is defined
by Section 1702.002, Occupations Code.
Sec. 49.003. NOTICE OF AUTOMATIC RENEWAL. (a) If a
contract for a security service contains an automatic renewal
clause, the service provider shall give the consumer notice as
provided by this section during the initial and each renewal term.
(b) A service provider must give notice not earlier than the
30th day and not later than the 15th day before the date before
which the consumer must notify the service provider of the
consumer's intention to terminate the contract at the expiration of
(c) Notice given by a service provider under this section
(1) that the contract contains an automatic renewal
(2) the date on which the term of the contract expires;
(3) the date specified by the contract, before which
the consumer must notify the service provider of the consumer's
intention to terminate the contract at the expiration of the term;
(4) the consumer's right to prevent the automatic
renewal by notifying the service provider of the consumer's
intention to terminate the contract at the expiration of the term
before the date specified by the contract.
(d) A service provider may notify a consumer under this
section by certified mail or personal service. A notice that is
mailed is considered given on the date the notice is received.
Sec. 49.004. ENFORCEMENT OF CONTRACT AGAINST CONSUMER. If
a service provider does not notify a consumer as required by Section
49.003 and the contract is renewed under the automatic renewal
clause, the contract is unenforceable against the consumer during
that renewal term.
SECTION 2. The change in law made by Chapter 49, Business &
Commerce Code, as added by this Act, applies only to a contract
executed on or after September 1, 2005. A contract executed before
September 1, 2005, is governed by the law as it existed on the date
the contract was executed, and the former law is continued in effect
for that purpose.
SECTION 3. This Act takes effect September 1, 2005.