In Texas, can a repossession agent do locksmith work without a Private Security Act license, or does the repo exemption only cover work tied to the repossession?

TX AG Opinion GA-0800: Does the repossession exemption let a repo agent skip locksmith licensing?

Plain-English summary

The director of the Texas Department of Public Safety asked how far an exemption in the Private Security Act reaches. The Act (Occupations Code chapter 1702) requires licensing for investigations companies and for security service providers, a category that includes locksmith companies. One exemption, section 1702.324(b)(3), says the chapter "does not apply to" a person "engaged exclusively in the business of repossessing property that is secured by a mortgage or other security interest." Historically that exemption had been understood to let repossession agents do certain investigative work, like locating secured property, that would otherwise need a license. The question was whether the exemption is actually broad enough to let a repossession agent perform any activity the Act regulates, including locksmith work, without a license.

The Attorney General gave a two-part answer. First, the exemption is not limited to investigative activities. Because the statute says the chapter "does not apply" to a repossession agent, the exemption reaches security services too, including locksmith activity, not just investigation. So the narrow, historical reading was too narrow.

Second, that breadth is capped by section 1702.324(c), added in 2007. Subsection (c) says the exemptions apply only while the person is performing services "directly related to and dependent on the provision of the exempted service that does not otherwise require licensing under this chapter," and they "do not apply to activities or services that are independent of the service or profession that is the basis for the exemption." Reading (b)(3) and (c) together, the Attorney General concluded the exemption lets a repossession agent perform ordinary repossession services that happen to also be locksmith services without a separate license, but it does not let the agent operate as a full locksmith company for locksmith work that is independent of repossession. Whether a given locksmith service is "directly related to and dependent on" a repossession is a fact question, which an attorney general opinion cannot decide. The opinion suggested the Private Security Board, with its rulemaking and enforcement authority, was the appropriate body to draw those lines.

Currency note

This opinion was issued in 2010. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Private Security Act in Occupations Code chapter 1702 has been amended since 2010, and the licensing structure, exemptions, and section numbers may have changed. Confirm the current statute and any Private Security Board rules before relying on anything below.

Who this opinion affected (as of 2010)

Repossession agents and companies: The opinion told them the chapter-1702 exemption covered security and locksmith work that was part of a repossession, but did not let them run an independent locksmith business without a license.

Locksmiths and locksmith companies: The opinion protected the licensing requirement for locksmith work done independently of repossession, so a repossession agent could not enter that market license-free.

The Texas Private Security Board and DPS: The opinion confirmed the Board's authority and recommended that it, rather than an AG opinion, decide case by case which locksmith or security services are closely enough tied to repossession to fall within the exemption.

Lenders and secured creditors: The opinion clarified that the agents they hire for non-judicial repossession could perform repossession-related security tasks under the exemption, within the limits of subsection (c).

Common questions

What does the repossession exemption actually cover?
It exempts a person engaged exclusively in repossessing secured property from chapter 1702 licensing, and the opinion held that exemption reaches security services (including some locksmith activity) as well as investigative services, not just investigation.

Can a repossession agent work as a locksmith without a license?
Only for locksmith services directly related to and dependent on a repossession that do not otherwise require a license. The agent cannot run a locksmith company or do locksmith work independent of repossession without the required license.

Who decides whether a particular service is "related to" repossession?
The opinion said that is a question of fact it could not resolve, and pointed to the Private Security Board, which has the authority to investigate violations and adopt rules, as the body that should make those determinations.

Did this opinion regulate the repossession itself?
No. It addressed only the Private Security Act licensing exemption. Repossession itself is governed mostly by the Business and Commerce Code's secured-transactions rules, which allow non-judicial repossession without a breach of the peace.

Background and statutory framework

The Private Security Act, Occupations Code chapter 1702, is administered by the Department of Public Safety through the Texas Private Security Board (Tex. Occ. Code Ann. § 1702.005). The Board licenses investigations companies and security service providers, and "security services contractor" status is required to act as a locksmith company, among others (Tex. Occ. Code Ann. § 1702.102(a)(1); § 1702.1056(a) describing locksmith activity). Individuals performing regulated activities must register and be employed by a licensed company (§ 1702.221(a)), and unlicensed violators face a civil penalty (§ 1702.381). Subchapter N lists exceptions to the chapter, including section 1702.324(b)(3) for a person "engaged exclusively in the business of repossessing property," subject to limits in section 1702.324(c).

There is no separate licensing requirement for repossession agents, but the repossession process is governed by the Business and Commerce Code's secured-transactions rules (Tex. Bus. & Comm. Code Ann. § 9.101, the Uniform Commercial Code—Secured Transactions). After default, a secured party may take possession of collateral through judicial process or without it if done without a breach of the peace (§ 9.609(b)(2)), and may contract with a repossession company to do so (Chapa v. Traciers & Assocs., 267 S.W.3d 386, 389 (Tex. App.—Houston [14th Dist.] 2008, no pet.)).

In construing the exemption, the Attorney General applied the rule that an amendment must be read in light of the original statute and harmonized with the rest of the act (Schlichting v. Tex. State Bd. of Med. Exam'rs, 310 S.W.2d 557, 563 (Tex. 1958)), and that legislative intent is drawn from the entire act, not isolated portions (City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003)). Because section 1702.324(b) says the chapter "does not apply," the exemption was not limited to investigation. But where statutory language is unambiguous its plain meaning controls (Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008)), and subsection (c) plainly limits the exemption to services directly related to and dependent on repossession that do not otherwise require licensing. The opinion concluded the exemption does not authorize a repossession agent to act as a locksmith company for independent locksmith services without a license, and that whether particular services qualify is a fact question for the Board.

Citations

Statutes:

• Tex. Occ. Code Ann. §§ 1702.001-.413, 1702.005, 1702.102(a)(1), 1702.1056(a), 1702.221(a), 1702.324(b)(3), 1702.324(c), 1702.381 (West 2004 & Supp. 2010)
• Tex. Bus. & Comm. Code Ann. §§ 9.101, 9.609(b)(2) (West 2002)

Cases:

• Chapa v. Traciers & Assocs., 267 S.W.3d 386 (Tex. App.—Houston [14th Dist.] 2008, no pet.)
• Schlichting v. Tex. State Bd. of Med. Exam'rs, 310 S.W.2d 557 (Tex. 1958)
• City of San Antonio v. City of Boerne, 111 S.W.3d 22 (Tex. 2003)
• Leland v. Brandal, 257 S.W.3d 204 (Tex. 2008)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0800
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2010/ga0800.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain — the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

September 24, 2010

Mr. Steven C. McCraw, Director
Texas Department of Public Safety
Post Office Box 4087
5805 North Lamar Boulevard
Austin, Texas 78773-0001

Opinion No. GA-0800

Re: Whether the exemption for a person engaged exclusively in the business of repossessing property, provided by section 1702.324(b)(3) of the Occupations Code, applies only to investigative services or to all services regulated under the Private Security Act (RQ-0862-GA)

Dear Mr. McCraw:

You ask whether Occupations Code section 1702.324 exempts repossession agents from regulation when they are engaged in any activities otherwise covered by the Private Security Act (the "Act"), Occupations Code chapter 1702, or only when they are engaged in investigative activities that are essential to their repossession efforts. [Footnote 1: Request Letter at 1 (available at http://www.texasattorneygeneral.gov). You identify a person within the exemption found in Occupations Code section 1702.324(b)(3) as a "repossession agent," and we will also use that term. Id.] TEX. OCC. CODE ANN. §§ 1702.001-.413 (West 2004 & Supp. 2010). The Texas Private Security Board (the "Board"), created under section 1702.021, is a part of the Department of Public Safety, and "[t]he department shall administer this chapter [1702] through the board." Id. § 1702.005 (West 2004); see also id. §§ 1702.002(1-b), (5-a) (West Supp. 2010) (defining "Board" and "Department"), 1702.021 (West Supp. 2010). The Board is responsible for licensing investigations companies and security service providers. See id. §§ 1702.004(a) (West Supp. 2010); 1702.102(a) (describing security services); 1702.104 (describing investigations company). To act as an investigations company or offer to perform the services of an investigations company, a person must hold a license as an investigations company. See id. § 1702.101 (West 2004). Similarly, a person must be licensed as a security services contractor to "act as an alarm systems company, armored car company, courier company, guard company, guard dog company, locksmith company, or private security consultant company." Id. § 1702.102(a)(1) (West Supp. 2010). "A person acts as a locksmith company" if he or she "sells, installs, services, or maintains, or offers to sell, install, service, or maintain, mechanical security devices, including deadbolts and locks; . . . advertises services offered by the company using the term 'locksmith,' or includes the term 'locksmith' in the company's name." Id. § 1702.1056(a); see id. § 1702.2227 (stating that an individual acts as a locksmith if the individual performs certain services); see also id. § 1702.221(a) (requiring individuals who perform activities regulated by chapter 1702 to register with the Board and be employed by a licensed company). Unlicensed persons who violate chapter 1702 are subject to a civil penalty. See id. § 1702.381.

Subchapter N, chapter 1702 provides numerous exceptions to the application of this chapter. See id. §§ 1702.321-.332 (West 2004 & Supp. 2010); see also id. §§ 1702.321(a) (West Supp. 2010) (excepting governmental officers or employees while performing official duties), 1702.322 (West Supp. 2010) (excepting peace officers). You inquire about section 1702.324(b)(3), which provides that "[t]his chapter does not apply to" various persons engaging in specified business activities, including "a person engaged exclusively in the business of repossessing property that is secured by a mortgage or other security interest." Id. § 1702.324(b)(3) (West Supp. 2010). You also raise section 1702.324(c), which places limits on the exemptions found in section 1702.324(b). See id. § 1702.324(c).

As a threshold matter, we will briefly describe "the business of repossessing property" that is exempted by Occupations Code section 1702.324(b)(3). There is no licensing requirement for repossession companies or repossession agents, but the Business and Commerce Code chapter 9, which regulates secured transactions, places certain limits on the repossession process. See TEX. BUS. & COMM. CODE ANN. § 9.101 (West 2002) (stating that chapter 9 may be cited as the "Uniform Commercial Code—Secured Transactions"). After a debtor's default on a secured transaction, section 9.609 authorizes the secured party to take possession of the collateral pursuant to judicial process or "without judicial process, if it proceeds without breach of the peace." [Footnote 2: See Mehan v. Wameo XXVIII, Ltd., 138 S.W.3d 415, 418-19 (Tex. App.—Fort Worth 2004, no pet.) (determining that breaking and entering fenced, gated, and locked property to repossess inventory would constitute a breach of the peace).] Id. § 9.609(b)(2). The secured party may contract with a repossession company to carry out a non-judicial repossession. See, e.g., Chapa v. Traciers & Assocs., 267 S.W.3d 386, 389 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (noting involvement of credit corporation, repossession company, and repossession agents in a non-judicial repossession).

With this background in mind, we turn to your question. You ask whether section 1702.324(b)(3) exempts repossession agents from regulation when they are engaged in any of the activities otherwise covered by the Act or only when they are engaged in investigative activities that are essential to their repossession efforts. Request Letter at 2. You state that "[h]istorically, this exemption has been viewed as permitting repossession agents to engage in certain investigative activities, such as locating individuals holding secured property, which are integral to the repossession of property but also within the ambit of the Private Security Act." Id. at 1. "It has now been suggested that section 1702.324(b)(3) is a broad exemption that permits repossession agents to engage in any of the activities covered by the Act, and in particular activities otherwise limited to locksmiths, without being subject to the Act's regulatory provisions." Id. at 1-2. The historical view you cite is based on the fact that the exemption "was originally enacted as part of a statute which was narrowly focused on private investigators and private security activities." Id. at 2; see also Act of May 27, 1969, 61st Leg., R.S., ch. 610, § 14(a)(6), 1969 Tex. Gen. Laws 1807, 1810. The Act did not regulate locksmiths until 2003. See Request Letter at 2 n.5; see also Act of May 30, 2003, 78th Leg., R.S., ch. 936, §§ 8, 13, 2003 Tex. Gen. Laws 2795, 2797-98.

We first note that an amendment to a statute must be construed in view of the original statute, and the amendment and other sections of the statute must be construed as a harmonious whole. See Schlichting v. Tex. State Bd. of Med. Exam'rs, 310 S.W.2d 557, 563 (Tex. 1958). Thus, we may not ignore the provisions of the Act relating to locksmiths, even though they were adopted after the section 1702.324(b)(3) exemption for repossession agents. See generally id.

We read section 1702.324(b)(3) in the context of the Act as a whole. See City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex. 2003) (stating that the Legislature's intent is determined from the entire act and not just isolated portions); see also Schlichting, 310 S.W.2d at 563 (stating that an amendment and other sections of the statute must be construed as a harmonious whole). Section 1702.324(b) provides that "[t]his chapter does not apply to" various persons engaging in specified business activities, thus making the chapter as a whole inapplicable to the identified persons, including repossession agents. TEX. OCC. CODE ANN. § 1702.324(b) (West Supp. 2010) (emphasis added). To determine and give effect to the Legislature's intent, a court "look[s] first to the statute's language," and "[i]f the statute's language is unambiguous, its plain meaning will prevail." Leland v. Brandal, 257 S.W.3d 204, 206 (Tex. 2008). The "chapter" regulates a number of security companies, including locksmith companies. See TEX. OCC. CODE ANN. §§ 1702.102(a)(1) (West Supp. 2010) (requiring locksmith company to be licensed), 1702.2865 (requiring customer authorization to perform certain locksmith services).

Thus, the section 1702.324(b)(3) exemption applies to repossession agents when they are engaged in any activities covered by the Act and not merely investigative activities, subject to the limits stated in section 1702.324(c). Section 1702.324(c) provides as follows:

The exemptions provided by Subsection (b) apply only to a person described in that subsection while the person is performing services directly related to and dependent on the provision of the exempted service that does not otherwise require licensing under this chapter. The exemptions do not apply to activities or services that are independent of the service or profession that is the basis for the exemption.

Id. § 1702.324(c). [Footnote 3: Subsection 1702.324(c) of the Occupations Code was adopted in 2007 and has not yet been construed by a judicial decision or attorney general opinion. See Act of May 28, 2007, 80th Leg., R.S., ch. 906, § 16, 2007 Tex. Gen. Laws 2261, 2267-68.]

When section 1702.324(c) is read together with the subsection 1702.324(b)(3) exemption, we see that the exemption applies to a repossession agent only when he or she is "performing services directly related to and dependent on the provision of [repossession] . . . that does not otherwise require licensing under this chapter." Id.; see Leland, 257 S.W.3d at 206 (stating that a court determines the Legislature's intent from the plain meaning of a statute). The section 1702.324(b)(3) exemption for repossession agents does not include locksmith services "that are independent of the service" of repossession. TEX. OCC. CODE ANN. § 1702.324(c) (West Supp. 2010). Thus, it does not authorize a repossession agent to serve as a locksmith company without holding the requisite license under chapter 1702. See id. It merely allows such person to continue to perform ordinary repossession services that are also locksmith services without having to secure a license or registration under the Act. Whether any locksmith services are "directly related to and dependent on the provision of" repossession services involves questions of fact, which cannot be addressed in an attorney general opinion. See Tex. Att'y Gen. Op. Nos. GA-0648 (2008) at 7, GA-0459 (2006) at 4.

The Board has the power and duty to determine the qualifications of license holders, to investigate alleged violations of chapter 1702 and of Board rules, and to adopt rules necessary to implement chapter 1702. See TEX. OCC. CODE ANN. § 1702.061(d) (West Supp. 2010); see also id. § 1702.0611(a) (providing that the Board may only adopt rules under chapter 1702 on the approval of the Public Safety Commission). Given the Board's regulatory authority, we suggest that it make appropriate determinations about the locksmith services or other security services that are "directly related to and dependent on the provision of" repossession services. Id. § 1702.324(c).

SUMMARY

The Private Security Act provides for licensing and regulating investigations companies and security service providers, which include locksmiths. Repossession agents are exempted from licensing under the Act for investigative and security services, but only while "performing services directly related to and dependent on the provision of the exempted service that does not otherwise require licensing under" the Act. TEX. OCC. CODE ANN. § 1702.324(c) (West Supp. 2010). This exemption applies to security services as well as investigative services. Whether any locksmith services are "directly related to and dependent on the provision of" repossession services involves questions of fact, which cannot be addressed in an attorney general opinion.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

DANIEL T. HODGE
First Assistant Attorney General

DAVID J. SCHENCK
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General, Opinion Committee