Texas Finance Code - Section 34.307. Right Of Set-Off
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§ 34.307. RIGHT OF SET-OFF. (a) Except as otherwise
provided by the Truth in Lending Act (15 U.S.C. Section 1601 et
seq.) or other federal law, a bank has a right of set-off, without
further agreement or action, against all accounts owned by a
depositor to whom or on whose behalf the bank has made an advance of
money by loan, overdraft, or otherwise if the bank has previously
disclosed this right to the depositor. If the depositor defaults in
the repayment or satisfaction of the obligation, the bank, without
notice to or consent of the depositor, may set off or cancel on its
books all or part of the accounts owned by the depositor and apply
the value of the accounts in payment of and to the extent of the
obligation.
(b) For purposes of this section, a default occurs when an
obligor has failed to make a payment as provided by the terms of the
loan or other credit obligation and a grace period provided for by
the agreement or law has expired. An obligation is not required to
be accelerated or matured for a default to authorize set-off of the
depositor's obligation against the defaulted payment.
(c) A bank may not exercise its right of set-off under this
section against an account unless the account is due the depositor
in the same capacity as the defaulted credit obligation. A trust
account for which a depositor is trustee, including a trustee under
a certificate of trust delivered under Section 34.306(b), is not
subject to the right of set-off under this section unless the trust
relationship is solely evidenced by the account card as provided by
Chapter XI, Probate Code.
(d) This section does not limit the exercise of another
right of set-off, including a right under contract or common law.
Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
Section: 34.204 34.301 34.302 34.303 34.304 34.305 34.306 34.307 35.001 35.002 35.003 35.004 35.005 35.006 35.007
Last modified: August 10, 2007
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