Bill Text: NJ S3656 | 2018-2019 | Regular Session | Introduced
Bill Title: Establishes new requirements for certain used motor vehicle dealers; creates "Used Car Buyer's Bill of Rights."
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2019-05-13 - Introduced in the Senate, Referred to Senate Commerce Committee [S3656 Detail]
Download: New_Jersey-2018-S3656-Introduced.html
Sponsored by:
Senator JOSEPH A. LAGANA
District 38 (Bergen and Passaic)
SYNOPSIS
Establishes new requirements for certain used motor vehicle dealers; creates "Used Car Buyer's Bill of Rights."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning used motor vehicle dealers and amending and supplementing various parts of the statutory law.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. R.S.39:10-2 is amended to read as follows:
39:10-2. As used in this chapter unless other meaning is clearly apparent from the language or context, or unless inconsistent with the manifest intention of the Legislature:
"New motor vehicle" means only a newly manufactured motor vehicle, except a nonconventional type motor vehicle, and includes all such vehicles propelled otherwise than by muscular power, and motorcycles, motorized bicycles, trailers and tractors, and manufactured homes not subject to real property taxation pursuant to P.L.1983, c.400 (C.54:4-1.2 et seq.), excepting such vehicles as run only upon rails or tracks and manufactured homes subject to real property taxation.
"Used motor vehicle" means every motor vehicle and motorized bicycle, except a nonconventional type motor vehicle, title to, or possession of, which has been transferred from the person who first acquired it from the manufacturer or dealer, and so used as to become what is commonly known as "secondhand" within the ordinary meaning thereof, and includes every motor vehicle and motorized bicycle other than a "new motor vehicle," a "nonconventional type motor vehicle" or a manufactured home subject to real property taxation.
"Any motor vehicle," "every motor vehicle," or similar term, means both new and used motor vehicles, except a "nonconventional type motor vehicle."
"Nonconventional type motor vehicle" means every vehicle not designed or used primarily for the transportation of persons or property and only incidentally operated or moved over a highway, including, but not limited to, ditch-digging apparatus, well-boring apparatus, road and general purpose construction and maintenance machinery, asphalt spreaders, bituminous mixers, bucket loaders, ditchers, leveling graders, finishing machines, motor graders, road rollers, scarifiers, earth-moving carryalls, scrapers, power shovels, drag lines, self-propelled cranes, earth-moving equipment, trailers and semitrailers which weigh less than 2,500 pounds, except that no mobile or manufactured home or travel trailer shall be classified as a nonconventional type motor vehicle, motorized wheelchairs, motorized lawn mowers, bogies, farm equipment having a factory shipping weight of less than 1,500 pounds, whether or not motorized, including farm tractors within said weight limitation, industrial tractors, scooters, go-carts, gas buggies and golf carts. The [Director of Motor Vehicles] chief administrator shall have power to make, amend and repeal regulations, not inconsistent with the provisions of this paragraph, prescribing what further vehicles or types of vehicles, not specified in this paragraph, shall be included in the category of nonconventional type motor vehicles.
"Motor vehicles which constitute inventory held for sale" means new motor vehicles and used motor vehicles held for the purpose of sale by dealers and used motor vehicles held for the purpose of sale by used motor vehicle dealers, and excludes motor vehicles held for the purpose of lease or rental by a person engaged in the motor vehicle leasing or rental business.
"Manufacturer's or importer's certificate of origin" means the original written instrument or document required to be executed and delivered by the manufacturer to his agent or a dealer, or a person purchasing direct from the manufacturer, certifying the origin of the vehicle.
"Certificate of ownership" means the document issued in conformance with this chapter, certifying ownership of a motor vehicle, other than manufacturer's or importer's certificate of origin.
"Assignment" means the execution of a prescribed form transferring ownership of a motor vehicle from the person named therein to the purchaser.
"Contract" means conditional sale agreement, bailment, lease, chattel mortgage, trust receipt or any other form of security or possession agreement executed prior to January 1, 1963, wherein and whereby possession of a motor vehicle is delivered to the buyer and title therein is to vest in the buyer at a subsequent time upon the payment of part or all of the price, or upon the performance of any other condition or happening of any contingency, or upon the payment of a sum substantially equivalent to the value of the motor vehicle, by which contract it is agreed that the buyer is bound to become, or has the option of becoming, the owner of the motor vehicle upon full compliance with the terms of the contract.
"Abstract" means the duplicate copy of the original certificate of ownership recording any encumbrance or upon which the existence of a security interest is noted.
"Title papers" means any instrument or document that is evidence of ownership of a vehicle.
["Director" means the Director of Motor Vehicles, his deputy or duly authorized agent.]
"Chief administrator" or "administrator" means the chief administrator of the New Jersey Motor Vehicle Commission.
"Manufacturer" means the person who originally manufactured the motor vehicle.
"Dealer" means the agent, distributor or authorized dealer of the manufacturer of the new motor vehicle, and who has an established place of business.
"Licensee" means a new and used motor vehicle dealer or a used motor vehicle dealer.
"New and used motor vehicle dealer" means the agent, distributor or authorized dealer of a manufacturer of a new motor vehicle who is authorized to sell new and used motor vehicles pursuant to a franchise agreement, and who has an established place of business.
"Used motor vehicle dealer" means a person engaged in the business of selling, buying or dealing in used motor vehicles to a buyer at retail or as a wholesale motor vehicle dealer who is not authorized to sell motor vehicles pursuant to a franchise agreement, and who has an established place of business.
"Wholesale motor vehicle dealer" means a used motor vehicle dealer who is engaged in the business of buying, dealing in or selling used motor vehicles exclusively to other dealers or wholesale auctions, and not to buyers at retail.
"Person" includes natural persons, firms or copartnerships, corporations, associations, or other artificial bodies, receivers, trustees, common law or statutory assignees, executors, administrators, sheriffs, constables, marshals, or other persons in representative or official capacity, and members, officers, agents, employees, or other representatives of those hereinbefore enumerated.
"Buyer" includes purchaser, debtor, lessee, bailee, transferee, and any person buying, attempting to buy, or receiving a motor vehicle subject to a security interest, lease, bailment or transfer agreement, and their legal successors in interest.
"Consumer" means an individual who buys, leases, borrows, or bails any money, property or service which is primarily for personal, family or household purposes.
"Fund" means the Consumer Used Car Dealer Protection Fund established pursuant to section 7 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Seller" means manufacturer, dealer, lessor, bailor, transferor with or without a security interest, and any other person selling, attempting to sell, or delivering a motor vehicle, and their legal successors in interest.
The terms "sell" or "sale" or "purchase" and any form thereof include absolute or voluntary sales and purchases, agreements to sell and purchase, bailments, leases, security agreements whereby any motor vehicles are sold and purchased, or agreed to be sold and purchased, involuntary, statutory and judicial sales, inheritance, devise, or bequest, gift or any other form or manner of sale or agreement of sale thereof, or the giving or transferring possession of a motor vehicle to a person for a permanent use; continued possession for 60 days or more is to be construed as permanent use.
"Manufacturer's number" means the original manufacturer's vehicle identification number die stamped upon the body, or frame, or either or both of them, of a motor vehicle or the original manufacturer's number die stamped upon the engine or motor of a motor vehicle.
"Purchaser" means a person who takes possession of a motor vehicle by transfer of ownership, either for use or resale, except when a dealer [when he] takes possession through a certificate of origin.
"Debtor" means the person who owes payment or other performance of the obligation secured by a security interest in a motor vehicle.
"Security interest" means an interest in a motor vehicle which secures payment or other performance of an obligation.
"Security agreement" means an agreement which creates or provides for a security interest in a motor vehicle.
"Secured party" means a lender, seller or other person in whose favor there is a security interest.
"Gross vehicle weight rating" means the value specified by the manufacturer as the loaded weight of the single or combination vehicle and, if the manufacturer has not specified a value for a towed vehicle, means the value specified for the towing vehicle plus the loaded weight of the towed unit.
(cf: P.L.1990, c.115, s.4)
2. R.S.39:10-19 is amended to read as follows:
39:10-19. No person shall engage in the business of buying, selling or dealing in motor vehicles in this State, nor shall a person engage in activity that would qualify the person as a leasing dealer, as defined in section 2 of P.L.1994, c.190 (C.56:12-61), unless: a. the person is a licensed real estate broker acting as an agent or broker in the sale of mobile homes without their own motor power other than recreation vehicles as defined in section 3 of P.L.1990, c.103 (C.39:3-10.11), or manufactured homes as defined in section 3 of P.L.1983, c.400 (C.54:4-1.4); or b. the person is authorized to do so under the provisions of this chapter and P.L.1985, c.361 (C.56:10-26 et seq.).
The chief administrator may, upon application in such form as the chief administrator prescribes, license any proper person as [such] a dealer or leasing dealer. A licensed real estate broker shall be entitled to act as an agent or broker in the sale of a mobile or manufactured home as defined in subsection a. of this section without obtaining a license from the chief administrator. For the purposes of this chapter, a "licensed real estate broker" means a real estate broker licensed by the New Jersey Real Estate Commission pursuant to the provisions of chapter 15 of Title 45 of the Revised Statutes. Any sale or transfer of a mobile or manufactured home, in which a licensed real estate broker acts as a broker or agent pursuant to this section, which sale or transfer is subject to any other requirements of R.S.39:10-1 et seq., shall comply with all of those requirements.
No person who has been convicted of a crime, arising out of fraud or misrepresentation in the sale, leasing or financing of a motor vehicle, shall be eligible to receive a license , provided that nothing in this section shall be deemed to supersede P.L.1968, c.282 (C.2A:168A-1 et seq.). For the purposes of this section, each applicant for a license shall submit to the chief administrator the applicant's name, address, fingerprints, and written consent for a criminal history record background check to be performed. The chief administrator is hereby authorized to exchange fingerprint data with and receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation consistent with applicable State and federal laws, rules, and regulations, for purposes of facilitating determinations concerning licensure eligibility. The applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check. The Division of State Police shall promptly notify the chief administrator in the event a current holder of a license or prospective applicant, who was the subject of a criminal history record background check pursuant to this section, is arrested for a crime or offense in this State after the date the background check was performed.
Each applicant for a new and used vehicle dealer license shall at the time [such] the license is issued have established and maintained, or by that application shall agree to establish and maintain, within 90 days after the issuance thereof, a place of business consisting of a permanent building not less than 1,000 square feet in floor space located in the State of New Jersey to be used principally for the servicing and display of motor vehicles with [such] any equipment installed therein as shall be requisite for the servicing of motor vehicles in such manner as to make them comply with the laws of this State and with any rules and regulations made by the board governing the equipment, use, and operation of motor vehicles within the State. However, a leasing dealer, who is not engaged in the business of buying, selling, or dealing in motor vehicles in the State, shall not be required to maintain a place of business with floor space available for the servicing or display of motor vehicles or to have an exterior sign at the lessor's place of business.
An applicant for a used motor vehicle dealer or wholesale motor vehicle dealer license shall, within 90 days after the issuance of the license, establish and maintain a place of business which is located in the State of New Jersey that conforms to all applicable ordinances of the municipality in which it is located, as evidenced by a certificate of occupancy issued to the dealer, and includes the following:
(1) office space with a minimum of 72 square feet within a permanent, enclosed building;
(2) a desk and chair;
(3) a secured, locking filing cabinet or safe for document storage; and
(4) a landline telephone, for which call forwarding or answering services are prohibited.
If the office space is within a facility with other licensees, each office shall be separated by interior walls, have its own separate entrance, include a display area identifying the dealer's name, and be sufficient in size to display two motor vehicles. Nothing in this section shall be construed to require:
(a) a licensee to maintain an office which is separated from any other dealer, or separated from any other office, by exterior walls or a firewall conforming to Chapter 7, Section 706 of the International Building Code, unless that requirement is imposed by ordinance from the municipality in which the business is located; or
(b) a licensee, or the licensee's authorized signatory, to be present at the established place of business during the business hours set forth in the application for licensure provided there is an agent present at the location.
A license fee of $200 shall be paid by an applicant upon the applicant's initial application for a license. The chief administrator may renew an applicant's license upon application for renewal on a form prescribed by the chief administrator and accompanied by a renewal fee of $200. Every license shall expire 24 months from the date on which it is issued. The chief administrator may, at the chief administrator's discretion and for good cause shown, extend an applicant's license for an additional period not to exceed 12 months from the date on which it is scheduled to expire. The chief administrator may, at the chief administrator's discretion and for good cause shown, issue a license which shall expire on a date fixed by the chief administrator. The fee for licenses with an expiration date fixed by the chief administrator shall be fixed by the chief administrator in an amount proportionately less or greater than the fee established herein.
For the purposes of this section, a leasing dealer or an assignee of a leasing dealer whose leasing activities are limited to buying motor vehicles for the purpose of leasing them and selling motor vehicles at the termination of a lease shall not be deemed to be engaged in the business of buying, selling, or dealing in motor vehicles in this State.
(cf: P.L.2015, c.24, s.1)
3. Section 1 of P.L.2005, c.351 (C.39:10-19.1) is amended to read as follows:
1. As used in [this act] P.L.2005, c.351 (C.39:10-19.1 et seq.):
"Off-site sale" means the display and sale of new or used recreational vehicles by a recreational vehicle dealer, or used motor vehicles registered in New Jersey by a used motor vehicle dealer, licensed under the provisions of R.S.39:10-19, at a location other than [the dealer's established place of business] a location authorized pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill). An "off-site sale" includes any off-site display of vehicles at which a recreational vehicle or used motor vehicle dealer has a sales person or employee present. For the purposes of this act, "off-site sale" does not include:
a. An off-site display of vehicles at which a recreational vehicle or used motor vehicle dealer has no sales personnel present;
b. The sale of a vehicle at an auction at which only wholesale purchases are permitted; [or]
c. The use of telephones, telephone call-forwarding, email, internet websites or other internet communications which allow a [licensed dealer] licensee or dealership employee to communicate with customers while either the customer or the [dealer] licensee or employee thereof is not present at the licensed physical location of the dealership [, provided the contract for the sale of a vehicle is finalized and the sale transaction completed at the licensed location]; or
d. The sale of a used motor vehicle at a location authorized pursuant to section 4 of P.L. , c. (C. ) (pending before the Legislature as this bill).
"Sponsoring organization" means:
a. a credit union, automobile club, or other such not for profit organization or entity that makes the opportunity to attend and purchase a motor vehicle at an off-site sale available to its members; or
b. a trade show coordinator, or other such organization, entity, or individual that makes the opportunity to attend and purchase a recreational vehicle at an off-site sale available to ticketed individuals.
(cf: P.L.2007, c.335, s.25)
4. (New section) a. Except as provided in subsection b. of this section, a licensee shall only buy, deal in, or sell used a motor vehicle at the following locations:
(1) the licensee's established place of business;
(2) the place of business or residence of a buyer;
(3) the place of business of a licensee; or
(4) a place of business authorized to conduct wholesale auctions of motor vehicles.
b. A licensee shall be permitted to arrange to buy, deal in or sell a motor vehicle over the internet or telephone provided that all documentation related to the transaction is executed at a location authorized pursuant to subsection a. of this section.
5. (New section) Each applicant for a license as a new and used motor vehicle dealer, used motor vehicle dealer, or wholesale motor vehicle dealer shall submit a certificate of insurance covering the period of the prospective license term to indicate liability insurance covers all vehicles to be owned by the licensee in the amount required by section 3 of P.L.1972, c.70 (C.39:6A-3).
6. R.S.39:10-20 is amended to read as follows:
39:10-20. a. The chief administrator may either impose a fine or suspend a license for a violation of any provision of this chapter. Unless otherwise stated in this chapter, the chief administrator may, after a hearing, impose a fine not to exceed $500 for a first offense and $1,000 for any subsequent offense upon [the holder of a license for a violation of] a licensee who violates any provision of this chapter. The board is authorized to adopt rules and regulations, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), implementing the provisions of this chapter and authorizing the chief administrator to impose fines for the violation of these rules and regulations. Any fine imposed and collected pursuant to this section shall be remitted to the commission and used to defray its costs.
[The] b. Whenever a fine is not imposed pursuant to subsection a. of this section, the chief administrator may, after a hearing, suspend a license for a period [less than the unexpired term of a license] not to exceed five concurrent days for a first offense or for a period not to exceed 10 concurrent days for any subsequent offense, or revoke a license [, after hearing,] for a violation of any provision of this chapter, or for a violation of the rules and regulations promulgated pursuant thereto, or upon the final conviction of the licensee of a crime, arising out of fraud or misrepresentation in the sale, leasing or financing of a motor vehicle, or upon proof of the failure of a licensee to make payment of the amount of any final judgment, rendered by a court of competent jurisdiction against [such] the licensee and founded upon a claim arising out of fraud or misrepresentation in the sale or leasing of a motor vehicle, within 90 days after the same is finally entered[, or for final conviction of the licensee for violating any provision of chapter 171 of Title 2A or of any supplement thereof (Observance of Sabbath Days)]. The clerk of the court in which any conviction is rendered, or the court where it has no clerk, shall forward to the chief administrator, immediately upon the entry thereof, a certified copy of the conviction or a transcript thereof. The clerk of the court in which any judgment founded upon fraud or misrepresentation is rendered, or the court where it has no clerk, shall forward to the chief administrator, immediately after the expiration of the 90 days, a certified copy of the judgment, or a transcript thereof, showing it to have been unsatisfied more than 90 days after it became final. The chief administrator shall, before suspending or revoking the license, and at least 10 days prior to the date set for the hearing, notify the [holder of the license] licensee, in writing, of any charges made, and shall afford [him] the licensee an opportunity to be heard in person or by counsel. The written notice may be served either personally or by registered mail addressed to the last-known address of the licensee. The chief administrator may subpoena and bring before the chief administrator any person in this State, or take testimony by deposition, in the same manner as prescribed by law in judicial proceedings in the courts of this State, and shall also issue and deliver to the [dealer such] licensee any subpoenas as are requested by the chief administrator. The Appellate Division of the Superior Court shall have power to review, by an appeal in lieu of prerogative writ taken by an aggrieved person, a final determination of the chief administrator.
[Any fine imposed and collected pursuant to this section shall be remitted to the commission and used to defray the costs of the commission.]
c. Except as provided in paragraph (1) of this subsection, prior to the chief administrator denying an application for licensure, refusing to renew a license, imposing any fine, suspending or revoking any license, there shall be a hearing, as a contested case, in accordance with the provisions of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.). The chief administrator may place responsibility for requesting the hearing on the licensee provided the chief administrator gives the licensee proper notice of the right to a hearing in accordance with the provisions of this chapter and of the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).
(1) In the event of an emergent situation involving on-going fraud, an inability of the chief administrator to obtain access to the records which a licensee is required to maintain, or other circumstance that could jeopardize the integrity of the chief administrator's ability to prevent traffic in stolen or fraudulently titled motor vehicles, the chief administrator may immediately issue a preliminary suspension of a license.
(2) Together with the notice of preliminary suspension, the chief administrator shall issue a notice of a preliminary hearing to be held by the chief administrator no later than the third day after personal service of the notice.
(3) At the preliminary hearing, the chief administrator shall consider whether there exists probable cause to determine whether the alleged conduct that served as a basis for the preliminary suspension occurred and whether that conduct constituted a sufficient basis to find an emergent situation justifying the imposition of a preliminary suspension.
(4) Together with the notice of preliminary suspension, the chief administrator may issue a notice of proposed final suspension, revocation or other agency action. Any final action shall be subject to the hearing requirements of this section.
d. (1) Except as provided in paragraph (2) of this subsection, any notice required by this section shall be served personally upon the licensee at the established place of business, or, in the case of a new applicant, at the residence listed on the application.
(2) Personal service shall not be required for a preliminary suspension in the event of an emergent circumstance, pursuant to paragraph (1) of subsection c. of this section, that renders that form of service impractical so long as the chief administrator gives notice as is reasonable under the circumstances.
e. The chief administrator may subpoena and cause any person in this State to appear, or take testimony by deposition, in the same manner as prescribed by law in judicial proceedings in the courts of this State, and shall also issue and deliver to the licensee any subpoenas as are requested.
f. The Appellate Division of the Superior Court shall have power to review, by an appeal in lieu of prerogative writ taken by an aggrieved person, a final determination of the chief administrator.
(cf: P.L.2007, c.335, s.26)
7. (New section) a. There is established the Consumer Used Car Dealer Protection Fund. All fees collected pursuant to this section shall be deposited into the fund. The fund shall be a special dedicated, non-lapsing fund in the State Treasury to pay claims against the fund and for no other purpose. The fund shall be used to satisfy unpaid judgments of consumers of used motor vehicle dealers. The chief administrator shall maintain an accurate record of all transactions involving the fund.
b. The chief administrator shall not issue a used motor vehicle dealer license to an applicant unless the applicant pays a fee of $250. Except as provided in subsections c. and d. of this section, a used motor vehicle dealer shall pay an annual fee of $250.
c. A used motor vehicle dealer who has not been subject to a claim against the dealer's bond or against the fund for three consecutive years shall pay an annual fee of $100, and shall not be required to pay an annual fee of $250 or hold the $50,000 bond pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill).
d. Any used motor vehicle dealer that has not been the subject of a claim against the dealer's bond or against the fund for three years may elect to maintain continuous bonding pursuant to section 14 of P.L. , c. (C. ) (pending before the Legislature as this bill). A used motor vehicle dealer that elects to maintain continuous bonding pursuant to section 14 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall not be required to hold a bond pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill) or participate in the fund, and shall be exempt from the payment of any fund fees.
e. The chief administrator may suspend or reinstate the collection of fees.
8. (New section) a. Before the chief administrator issues a used motor vehicle license, an applicant shall obtain and file with the chief administrator a bond in the amount of $50,000. This bond is in addition to the requirement set forth in section 11 of P.L.1995, c.373 (C.56:8-77). The bond shall come from a corporate surety licensed to do business in the State and approved by the Attorney General. The bond shall be conditioned on a statement by the applicant that the applicant will not practice fraud or make any fraudulent representation in connection with the sale or lease of a used motor vehicle, or violate any provision of chapter 10 of Title 39 of the Revised Statutes in the conduct of the applicant's business. The chief administrator may, without a hearing, suspend the dealer's license during the period that the dealer does not have a sufficient bond on file.
b. A consumer shall have a claim against the used motor vehicle dealer's bond, and may recover damages awarded to the consumer by a court of competent jurisdiction if the consumer suffers any of the following:
(1) loss or damage in connection with the purchase or lease of a used motor vehicle by reason of fraud or fraudulent representation by a dealer or a dealer's salesperson acting within the scope of employment;
(2) loss or damage resulting from a violation by a dealer or a dealer's salesperson or employee of any provision of chapter 10 of Title 39 of the Revised Statutes in connection with the purchase or lease of a used motor vehicle; or
(3) loss or damage resulting from a dealer's breach of an extended service contract.
c. Damages awarded pursuant to this section shall not exceed the amount of the bond, from the surety, who shall be subrogated to the rights of the consumer against the dealer or salesperson. The liability of the surety shall be limited to actual damages, and shall not include any punitive damages or attorney's fees assessed against the dealer or the dealer's salesperson or employee.
d. In those cases in which a used motor vehicle dealer's surety is liable pursuant to this section, the surety shall be liable only for the first $50,000 in claims against the dealer. Thereafter, the fund shall be liable for the next $75,000 in those cases in which the fund itself may be liable. The aggregate liability of the dealer's surety, regardless of the number of claims made against the bond or the number of years the bond remains in force, shall not exceed $50,000.
e. The used motor vehicle dealer's surety shall notify the chief administrator: when a claim is made against a dealer's bond; the circumstances surrounding the claim; the amount of the claim and when it is paid; and when a bond is cancelled, including the effective date and reason for cancellation. The bond may be cancelled as to future liability by the dealer's surety upon 30 days' notice to the dealer and chief administrator.
9. (New section) a. Except as otherwise provided in P.L. , c. (C. ) (pending before the Legislature as this bill), a consumer who has been awarded a final judgment in a court of competent jurisdiction in the State may file a verified claim with the chief administrator, requesting payment from the fund of any unpaid amount of that judgment for:
(1) any loss or damage in connection with the purchase or lease of a used motor vehicle by reason of fraud or fraudulent representation by a dealer participating in the fund; or
(2) any loss or damage by reason of a violation by a dealer participating in the fund of any of the provisions of chapter 10 of Title 39 of the Revised Statutes in connection with the purchase or lease of a used motor vehicle.
b. Any claim filed pursuant to this section shall be filed with the chief administrator no sooner than 30 days and no later than 12 months after the judgment becomes final.
c. A consumer shall serve any pleadings or documents related to any action against a used motor vehicle dealer on the chief administrator by certified mail or any other form as determined by the chief administrator. The service shall include an affidavit setting forth any acts alleged to constitute fraud or violations of chapter 10 of Title 39 of the Revised Statutes. Upon service of process, the chief administrator shall have the right to request leave of court to intervene.
10. (New section) a. The maximum amount of a claim involving a single unpaid final judgement against the fund shall be limited to $25,000, regardless of the amount of the unpaid final judgment.
b. The maximum amount of claims involving multiple unpaid final judgements against the fund shall be limited to $75,000 regardless of the total amounts of the unpaid final judgments, and shall be paid only after the dealer's $50,000 bond has been exhausted.
c. If a claim has been made against the fund and the chief administrator has reason to believe that there may be additional claims against the fund from other judgements involving the same dealer, the chief administrator may withhold any payment from the fund involving that dealer for a period not to exceed the end of the relevant license period. After this period, if the aggregate of claims against the dealer will exceed $75,000, a total of $75,000 shall be prorated among the claimants and paid from the fund in proportion to the amounts of their unpaid final judgments against the dealer. These claims shall be prorated only after the dealer's $50,000 bond has been exhausted.
d. The chief administrator shall notify a used motor vehicle dealer who is the subject of the unpaid judgment that a verified claim has been filed and that the dealer shall satisfy the judgment debt. If the judgment debt is not fully satisfied within 30 days following the date of the notification by the chief administrator, the chief administrator shall make payment from the fund subject to the other limitations set forth in this section.
e. Any sums representing interest, or punitive or exemplary damages shall be excluded from the amount of any unpaid final judgment on which a claim against the fund is based.
f. If at any time the fund is insufficient to fully satisfy any claim or a portion thereof, the chief administrator shall pay that claim or a portion of it to the claimants in the order that the claims were filed with the chief administrator, provided that any claim by a consumer shall take precedence over any other claim.
11. (New section) On the claimant's execution and delivery to the chief administrator of an assignment to the chief administrator of the claimant's rights against the used motor vehicle dealer the chief administrator shall pay the claimant the amount the claimant may recover from the fund.
12. (New section) The chief administrator shall immediately notify a used motor vehicle dealer in writing of any payment to a claimant from the fund and request full reimbursement. The chief administrator shall suspend the license of any used motor vehicle dealer who fails to reimburse or make specific arrangements to reimburse the chief administrator within 30 days of the notification. Any used motor vehicle dealer whose license is suspended shall not be eligible for reinstatement until the amount paid from the fund to the claimant, plus interest, is repaid in full.
13. (New section) Nothing contained in P.L. , c. (C. ) (pending before the Legislature as this bill) shall limit the authority of the chief administrator to take disciplinary action against any used motor vehicle dealer for any violation of chapter 10 of Title 39 of the Revised Statutes. The full repayment of any amount paid from the fund on a dealer's account shall not nullify or modify the effect of any disciplinary action assessed against that dealer for any violation.
14. (New section) a. An applicant for renewal of a used motor vehicle dealer's license may elect to obtain and continuously maintain a bond in the amount of $100,000 in lieu of participation in the fund, if the applicant has not been the subject of a claim against a bond issued pursuant to section 8 of P.L. , c. (C. ) (pending before the Legislature as this bill), section 11 of P.L.1995, c.373 (C:56:8-77), or against the fund for three consecutive years. The bond shall come from a corporate surety licensed to do business in the State and approved by the Attorney General and shall be filed with the chief administrator. The bond shall be conditioned on a statement by the applicant that the applicant will not practice fraud, make any fraudulent representation, or violate any provision of chapter 10 of Title 39 of the Revised Statutes in the conduct to the applicant's business.
b. In those cases in which the surety of a dealer electing the continuous bonding shall be liable pursuant to section 15 of P.L. , c. (C. ) (pending before the Legislature as this bill), the maximum liability to one claimant against the surety by reason of a case involving a single transaction shall be limited to $20,000 regardless of the amount of the claim by one claimant, and the aggregate liability of the dealer's surety to any person, regardless of the number of claims made against the bond or the number of years the bond remains in effect shall not exceed $100,000.
c. The chief administrator may, without holding a hearing, suspend the license of a used motor vehicle dealer during the period that the dealer does not have a sufficient bond on file. A used motor vehicle dealer bonded under this section shall be exempt from the fund fees and bonding requirements set forth in sections 7 and 8 of P.L. , c. (C. and C. ) (pending before the Legislature as this bill).
15. (New section) a. A consumer shall have a claim against a used motor vehicle dealer electing continuous bonding pursuant to section 14 of P.L. , c. (C. ) (pending before the Legislature as this bill), and may recover damages awarded to the consumer by a court of competent jurisdiction, if the consumer suffers any of the following:
(1) any loss or damage in connection with the retail purchase or lease of a used motor vehicle by reason of fraud or fraudulent representation by the dealer or the dealer's salesperson or employee acting within the scope of employment;
(2) loss or damage resulting from a violation by a dealer or a dealer's salesperson or employee of any provision of chapter 10 of Title 39 of the Revised Statutes in connection with the purchase or lease of a used motor vehicle; or
(3) loss or damage resulting from a dealer's breach of an extended service contract entered into on or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. Damages awarded pursuant to this section shall not exceed the amount of the bond, from the surety, who shall be subrogated to the rights of the consumer against the dealer or salesperson. The liability of the surety shall be limited to the actual damages and attorneys' fees assessed against the dealer or the dealer's salesperson or employee as part of the underlying judgment. The liability of the surety shall not include any sums representing interest or punitive or exemplary damaged assessed against the dealer or the dealer's salesperson or employee.
c. The dealer's surety shall notify the chief administrator: when a claim is made against a dealer's bond; the circumstances surrounding the claim; the amount of the claim and when it is paid; and when a bond is cancelled, including the effective date and reason for cancellation. The bond may be cancelled as to future liability by the dealer's surety upon 30 days' notice to the dealer and chief administrator.
16. (New section) a. Any used motor vehicle dealer and any salesperson or employee of a used motor vehicle dealer shall register with the commission.
b. A salesperson or employee of a used motor vehicle dealer shall not engage in the sale, leasing or financing of a used motor vehicles unless the employee is registered with the commission.
c. A salesperson or employee required to be registered pursuant to this section shall register with the commission by submitting the following on a form provided by the chief administrator:
(1) The name and street address of the salesperson or employee;
(2) The name and street address of the employer;
(3) The name, residence and business street address of each officer, director, principal and person with an ownership interest of 10 percent or more in the employer, including the percentage of ownership held; and
(4) Whether the employee has been adjudged liable of fraud or misrepresentation in connection with the sale or lease of a motor vehicle. For the purposes of this paragraph, a judgment of liability in an administrative or civil action shall include, but not be limited to, any finding or admission that the employee engaged in an unlawful practice.
d. Each salesperson or employee shall file a disclosure statement with the chief administrator stating whether the employee has been convicted of any violation of the following provisions, or their equivalent under the laws of any other jurisdiction: N.J.S.2C:11-2; N.J.S.2C:11-3; N.J.S.2C:11-4; N.J.S.2C:12-1; N.J.S.2C:12-3; N.J.S.2C:13-1; N.J.S.2C:14-2; subsection a. or b. of N.J.S.2C:17-1; subsection a. or b. of N.J.S.2C:17-2; N.J.S.2C:15-1; N.J.S.2C:18-2; N.J.S.2C:20-4; N.J.S.2C:20-5; N.J.S.2C:20-7; N.J.S.2C:20-9; N.J.S.2C:21-2; section 1 of P.L.1983, c.565, (C.2C:21-2.1); section 2 of P.L.1997, c.385 (C.2C:21-2.3); N.J.S.2C:21-3; N.J.S.2C:21-4; N.J.S.2C:21-6; N.J.S.2C:21-7; N.J.S.2C:21-12; N.J.S.2C:21-14; N.J.S.2C:21-15; N.J.S.2C:21-19; N.J.S.2C:27-2; N.J.S.2C:27-3; N.J.S.2C:27-5; section 100 of P.L.1999, c.440 (C.2C:27-9); section 5 of P.L.2003, c.255 (C.2C:27-10); section 6 of P.L.2003, c.255 (C.2C:27-11); N.J.S.2C:28-1; N.J.S.2C:28-2; N.J.S.2C:28-3; N.J.S.2C:28-4; N.J.S.2C:28-5; N.J.S.2C:28-6; N.J.S.2C:28-7; N.J.S.2C:28-8; N.J.S.2C:30-2; N.J.S.2C:30-3; N.J.S.2C:35-5; N.J.S.2C:35-10; N.J.S.2C:37-2; N.J.S.2C:37-3; or N.J.S.2C:37-4.
e. Whenever any information required to be included in the registration application changes, or if additional information becomes available after the application, the salesperson or employee shall provide that information to the chief administrator, in writing, within 20 calendar days of the change or addition. Whenever any other information filed with the chief administrator pursuant to this section has changed, the salesperson or employee shall provide that information to the chief administrator, in writing, within 20 calendar days of the change or addition.
f. A salesperson or employee who is registered or seeking to register with the commission shall have the continuing duty to provide any assistance or information; to produce any records requested by the chief administrator; and to cooperate in any inquiry, investigation or hearing conducted by the chief administrator.
g. The chief administrator may refuse to issue or renew, or may suspend or revoke, any registration issued by the commission upon proof that a salesperson or employee engaged in the use or employment of dishonesty, fraud, deception, misrepresentation, false promise or false pretense or is convicted of a crime relating adversely to the sale, leasing or financing of a used motor vehicle.
h. A registration that is suspended by the chief administrator may be reinstated upon the salesperson or employee satisfying the conditions for reinstatement as determined by the chief administrator, including the payment of the reinstatement fee.
17. R.S.39:10-22 is amended to read as follows:
39:10-22. a. The chief administrator may prepare and prescribe any or all forms necessary for the proper administration of this chapter. The chief administrator or [his] the chief administrator's agent may seize and take possession of any certificate of ownership or other title papers to which the chief administrator may be entitled under chapter 10 of Title 39 of the Revised Statutes, for which a person is under duty to return to the chief administrator, from any person or place in this State, with all the rights, privileges and immunities conferred by law on an officer executing a writ of replevin.
b. A licensee shall not be required to maintain any office hours provided there is an agent present at the established place of business.
c. The chief administrator may audit, inspect or investigate a licensee to determine whether there exists any violation of the laws, rules, or regulations governing the conduct of licensees. A licensee, or its agent, shall be present at the established place of business on the date and time of any audit, inspection or investigation which is scheduled at least five business days in advance, in writing, by the chief administrator. Nothing in this section shall be interpreted to require a licensee, including the licensee's authorized signatory, to be present at the established place of business except on the date and time of an audit, inspection or investigation, as set forth in section b. of this section.
d. A [licensed dealer] licensee shall keep and store all required forms, papers, and records as the New Jersey Motor Vehicle Commission may [by regulation] require at the licensed premises, provided, however, that the required forms, papers, and records may be temporarily removed from the premises of the licensee for any business purpose, including, but not limited to, acquiring a motor vehicle, certificate of origin, or certificate of ownership, by the licensee. In the event a licensee operates multiple licensed dealerships under common ownership or control, [such] the required forms, papers, and records may be stored at a centralized record-keeping facility.
e. In the event an unannounced audit, inspection or investigation by the chief administrator of a licensee's established place of business results in the finding of a violation of subsection c. of this section, the chief administrator shall permit the licensee three business days, from the time the notice of the proposed violation is received by the licensee, to provide proof that the licensee was in compliance with the provisions of subsection b. of this section at the time of the unannounced audit or unannounced inspection. The licensee shall not be subject to the imposition of a fine, suspension of license, or revocation of license if the proof provided by the license is determined to be sufficient by the chief administrator.
(cf: P.L.2007, c.335, s.27)
18. Section 1 of P.L.1973, c. 308 (C.56:8-2.5) is amended to read as follows:
1. a. It shall be an unlawful practice for any person to sell, attempt to sell or offer for sale any merchandise at retail unless the total selling price of [such] the merchandise is plainly marked by a stamp, tag, label or sign either affixed to the merchandise or located at the point where the merchandise is offered for sale.
b. A motor vehicle dealer shall not be in violation of subsection a. of this section if the dealer maintains on any motor vehicle offered for sale, the stamp, tag, label or sign originally affixed to the motor vehicle by the dealer which sets forth the total selling price of the motor vehicle as of the date it was first offered for sale to the public and, thereafter, the dealer alters the total selling price of the motor vehicle, provided:
(1) the altered total selling price for the motor vehicle is advertised on the dealer's internet website; and
(2) at the time of sale, the dealer obtains a written and signed confirmation from the consumer that the consumer was given access to the dealer's website, was apprised of the advertised total selling price on the dealer's website at the time of the sale, and the consumer was apprised of the total selling price as of the date the motor vehicle was first offered for sale to the public. A dealer shall not sell any motor vehicle advertised on its website unless it is sold at or below the advertised total selling price as of the date of its sale, regardless of whether the consumer has knowledge of the advertised total selling price.
As used in this subsection:
"Dealer" means a person who is actively engaged and licensed in the business of buying, selling or exchanging new or used motor vehicles at retail.
"Retail" means a sale that is not a wholesale sale, sale between dealers, or sale to an owner or operator of a motor vehicle junk business or motor vehicle junk yard, as defined in R.S.39:11-2, or any other person or entity engaged in the business of dismantling, destroying or recycling motor vehicles.
"Total selling price" includes all costs of a motor vehicle, including documentary service fees, and all other fees, whether optional or not, which are pre-printed on the Motor Vehicle Retail Order, which are to be paid by the consumer, except State licensing costs, registration fees, taxes and finance charges, provided the dealer's advertisements include a statement that "prices include all costs to be paid by a consumer, except for State licensing costs, registration fees and taxes."
(cf: P.L.1973, c.308, s.1)
19. (New section) Sections 19 through 24 of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be known and may be cited as the "Used Car Buyers' Bill of Rights."
20. (New section) It shall be an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.) for a used motor vehicle dealer, as defined in R.S.39:10-2, to sell or offer for sale a used motor vehicle as "certified" or any other similar descriptive term that implies the motor vehicle complies with the terms of a used motor vehicle certification program. Nothing herein shall be construed as prohibiting the advertisement and sale of used motor vehicles as "certified" by a program established by a motor vehicle manufacturer for its franchised dealers.
21. (New section) a. It shall be an unlawful practice pursuant to P.L.1960, c.39 (C.56:8-1 et seq.) for a used motor vehicle dealer to sell a used motor vehicle without providing the consumer, at a price equal to the dealer's cost, a motor vehicle history report which is dated the same date as the sale and signed by the consumer prior to signing any contract of sale; provided, however, that the dealer shall provide the motor vehicle history report free of charge to a consumer buying a used motor vehicle "as is."
b. There shall be a conclusive presumption that a dealer had no knowledge of the existence of any fact not disclosed in the motor vehicle history report if the dealer obtains a motor vehicle history report signed by the consumer which is dated the same date as the sale. This subsection shall not:
(1) create any legal duty upon a dealer related to the accuracy, errors, or omissions of the motor vehicle history report;
(2) require a dealer to provide a consumer with any fact that may be added to a motor vehicle history report after the dealer has provided the report which is dated the same date as the sale and signed by the consumer.
This section shall not abrogate or limit any disclosure obligation imposed pursuant to any other law.
22. (New section) a. A dealer shall not sell or offer for sale a used motor vehicle to any consumer without offering the consumer a contract cancellation option agreement that allows the consumer to cancel the contract within two business days and return the used motor vehicle without cause; provided, however, the provisions of this section shall not apply to a used motor vehicle having a purchase price of $40,000 or more. A consumer may elect to waive the contract cancellation option provided that:
(1) the waiver is in writing; and
(2) the waiver is signed separate and apart from the buyer's order or other purchase agreement.
b. The fee for a contract cancellation option agreement for a period of two business days shall not exceed the following:
(1) $75 for a used motor vehicle with a cash price of $5,000 or less;
(2) $150 for a used motor vehicle with a cash price of more than $5,000, but not more than $10,000;
(3) $250 for a used motor vehicle with a cash price of more than $10,000, but not more than $30,000; or
(4) One percent of the purchase price for a used motor vehicle with a cash price of more than $30,000, but not more than $40,000.
A consumer, as a result of a price negotiation, may purchase a contract cancellation option agreement for a period greater than two business days provided that the dealer complies with sections c. through h. of this section.
c. A contract cancellation option agreement shall be contained in a document separate from the buyer's order or other purchase agreement for a used motor vehicle and shall contain, at a minimum, the following:
(1) The name of the dealer and the consumer;
(2) A description and the Vehicle Identification Number of the used motor vehicle purchased, the Vehicle Identification Number of any motor vehicle the consumer conveyed to the dealer as a down payment or trade-in, and the actual cash value assigned by dealer of any motor vehicle the consumer conveyed to the dealer as a down payment or trade-in which actual cash value is acknowledged and agreed to by the consumer;
(3) A statement specifying the time within which the consumer shall exercise the contract cancellation option and return the used motor vehicle to the dealer. The dealer shall not specify a time that is earlier than the dealer's close of business on the second business day following the day on which the vehicle was originally delivered to the consumer by the dealer;
(4) A statement that clearly and conspicuously specifies the dollar amount of any restocking fee the consumer is required to pay to the dealer to exercise the contract cancellation option.
The restocking fee shall not exceed: $175 if the used motor vehicle cash price is $5,000 or less; $350 if the used motor vehicle cash price is more than $5,000 and less than $10,000; and $500 if the used motor vehicle cash price is $10,000 or more. The dealer shall apply the fee paid by the consumer for the contract cancellation option agreement toward the restocking fee. The fee for purchasing the contract cancellation option agreement shall not otherwise be subject to setoff or refund;
(5) A statement specifying the maximum number of miles that the used motor vehicle may be driven after its original delivery by the dealer to the consumer to remain eligible for the contract cancellation option. A dealer shall allow for the used motor vehicle to be driven a minimum of 250 miles under the contract cancellation option agreement;
(6) A statement that the contract cancellation option agreement gives the consumer the right to cancel the contract and obtain a full refund, minus the fee for exercising the contract cancellation option; and that the right to cancel will apply only if, within the time specified in the contract cancellation option agreement, the following are personally delivered to the selling dealer by the consumer:
(a) a written notice exercising the right to cancel the contract signed by the consumer;
(b) any restocking fee specified in the contract cancellation option agreement minus the fee for the contract cancellation option agreement;
(c) the original contract cancellation option agreement, contract for the used motor vehicle, and related documents, if the dealer gave those original documents to the consumer;
(d) all original titling and registration documents for the used motor vehicle, if the dealer gave those original documents to the consumer; and
(e) the used motor vehicle, free of all liens and encumbrances, other than any lien or encumbrance created by or incident to the contract, any loan arranged by the dealer, or any purchase money loan obtained by the consumer from a third party, and in the same condition as when it was delivered by the dealer to the consumer, except for reasonable wear and tear and any defect or mechanical problem that manifests or becomes evident after delivery that was not caused by the consumer, and which shall not have been driven beyond the mileage limit specified in the contract cancellation option agreement.
The contract cancellation option agreement may also provide that the consumer will execute documents reasonably necessary to effectuate the cancellation and refund and as reasonably required to comply with this section; and
(7) At the bottom of the contract cancellation option agreement, a statement that may be signed by the consumer to indicate the consumer's election to exercise the right to cancel the contract under the terms of the contract cancellation option agreement, and the last date and time by which the option to cancel may be exercised, followed by a line for the consumer's signature. A particular form of statement is not required, but the following statement is sufficient: "By signing below, I elect to exercise my right to cancel the contract for the used motor vehicle described in this agreement." The consumer's delivery of the contract cancellation agreement to the dealer with the consumer's signature following this statement shall constitute sufficient written notice that the consumer is exercising the right to cancel a contract pursuant to paragraph (6) of this subsection. The dealer shall provide the consumer with the statement required by this paragraph in duplicate to enable the consumer to return the signed cancellation notice and retain a copy of the cancellation agreement.
d. (1) No later than 48 hours after which the consumer exercises the right to cancel a contract under the contract cancellation option agreement, the dealer shall cancel the contract and provide the consumer with a full refund, including the appropriate portion of the sales tax or other fees paid.
(2) If the consumer was not charged for the contract cancellation option agreement, the dealer shall return to the consumer, no later than 24 hours after the consumer exercises the right to cancel the contract, any used motor vehicle the consumer conveyed to the dealer as a down payment or trade-in. If the dealer sold or otherwise transferred title to the used motor vehicle that was conveyed as a down payment or trade-in, the full refund described in paragraph (1) of this subsection shall include the actual cash value of the used motor vehicle left as a down payment or trade-in.
(3) If the consumer was charged for the contract cancellation option agreement, the dealer shall retain any motor vehicle the consumer conveyed to the dealer as a down payment or trade-in until the consumer exercises the right to cancel or the right to cancel expires. If the consumer exercises the right to cancel the contract, the dealer shall return to the consumer, no later than 48 hours after which the consumer exercises the right to cancel the contract, any motor vehicle the consumer conveyed to the dealer as a down payment or trade-in. If the dealer has inadvertently sold or otherwise transferred title to the motor vehicle as the result of a bona fide error, despite taking reasonable procedures to avoid that error, the inadvertent sale or transfer of title shall not be deemed a violation of this paragraph, and the full refund described in paragraph (1) of this subsection shall include the actual cash value of the motor vehicle conveyed as a down payment or trade-in.
e. If the dealer received a portion of the purchase price by credit card, or other third-party payer on the consumer's account, the dealer may refund that portion of the purchase price to the credit card issuer or third-party payer for credit to the consumer's account.
f. Notwithstanding subsection a. of this section, a dealer is not required to offer a contract cancellation option agreement if the consumer has exercised this right with the dealer during the immediately preceding 30 days. A dealer shall not be required to give notice to a subsequent consumer that a used motor vehicle has been returned pursuant to this section. This subsection shall not abrogate or limit any disclosure obligation imposed pursuant to any other law.
g. This section does not affect or alter the legal rights, duties, obligations, or liabilities of the consumer, the dealer, or the dealer's representatives, that would exist in the absence of a contract cancellation option agreement. The consumer is the owner of a used motor vehicle upon receipt of the vehicle from the dealer until it is returned to the dealer pursuant to a contract cancellation option agreement.
h. Nothing in this section is intended to affect the ability of a consumer to rescind the contract or revoke acceptance under any other law.
i. As used in this
section, "cash price" excludes registration, transfer, titling, license, and
any optional business partnership automation fees.
23. (New section) A dealer shall include with any contract to lease or purchase a used motor vehicle a notice with a heading in at least 12-point bold type and the text in at least 10-point bold type, circumscribed by a line, immediately above the contract signature line, that reads as follows:
THE LAW REQUIRES THE DEALER TO OFFER YOU A CONTRACT CANCELLATION OPTION
New Jersey law requires a used motor vehicle dealer to offer you a two-day contract cancellation option on used vehicles with a purchase price of less than $40,000, subject to certain statutory conditions. This contract cancellation option is not available to the purchaser of a motorcycle or an off-road vehicle. New Jersey law does not provide for a cancellation period for the sale of a vehicle with a purchase price of $40,000 or more. Therefore, you cannot later cancel this contract simply because you change your mind, decide the vehicle costs too much, or wish you acquired a different vehicle. After you sign below, you may only cancel this contract with the agreement of the seller or for legal cause, such as fraud. See the vehicle contract cancellation option agreement for details.
24. (New section) A dealer shall conspicuously display a notice, not less than eight inches high and 10 inches wide, in each sales office and /or cubicle of the dealer's established place of business where written terms of specific sale or lease transactions are provided to consumers, and in each room of the dealer's established place of business where sale and lease contracts are regularly executed, stating the following:
THE LAW REQUIRES THE DEALER TO OFFER YOU A CONTRACT CANCELLATION OPTION
New Jersey law requires a used motor vehicle dealer to offer a two-day contract cancellation option on used vehicles with a purchase price of less than $40,000, subject to certain statutory conditions. This contract cancellation option requirement does not apply to the sale of a motorcycle or an off-road vehicle. New Jersey law does not provide for a cancellation period for vehicle lease contracts or purchase contracts for vehicles with a purchase price of $40,000 or more. Therefore, you cannot later cancel a contract simply because you change your mind, decide the vehicle costs too much, or wish you acquired a different vehicle. After you sign a motor vehicle purchase or lease contract, it may only be canceled with the agreement of the seller or lessor or for legal cause, such as fraud. See the vehicle contract cancellation option agreement for details.
25. This act shall take
effect on the first day of the seventh month next following the date of
enactment.
STATEMENT
This bill creates new requirements for motor vehicle dealers and establishes new consumer protections.
Under the bill, a licensed new and used motor dealer or a licensed used motor vehicle dealer is permitted to buy, deal in, or sell used motor vehicles at the following locations:
(1) the licensee's established place of business;
(2) the place of business or residence of a buyer;
(3) the place of business of a licensee; or
(4) a place of business authorized to conduct wholesale auctions of motor vehicles.
The bill defines a "new and used motor vehicle dealer" as the agent, distributor or authorized dealer of a manufacturer of a new motor vehicle who is authorized to sell new and used motor vehicles pursuant to a franchise agreement, and who has an established place of business. A "used motor vehicle dealer" means a person engaged in the business of selling, buying or dealing in used motor vehicles to a buyer at retail or as a wholesale motor vehicle dealer, and who has an established place of business and is not authorized to sell motor vehicles pursuant to a franchise agreement.
The bill allows licensees to arrange to buy, deal in or sell motor vehicles over the internet or telephone provided that all documentation related to the transaction is executed at one of the locations provided above.
The bill requires applicants for a license to submit a certificate of insurance covering the period of the prospective license term demonstrating liability insurance covering all vehicles owned by the licensee.
The bill revises the procedures the Chief Administrator of the New Jersey Motor Vehicle Commission (MVC) is required to follow to impose any fine or suspend a dealer's license.
The bill requires certain used motor vehicle dealers to pay into the Consumer Used Car Dealer Protection Fund, which is designed to reimburse purchasers who have suffered a loss due to fraudulent conduct of a used motor vehicle dealer. The fund is to be used to satisfy unpaid judgments of consumers of used motor vehicle dealers.
The bill requires applicants for licensure and used motor vehicle dealers to pay an annual fee of $250, which would be deposited into the fund.
The bill requires applicants for a used motor vehicle license to obtain and file with the chief administrator a bond in the amount of $50,000. The bond is required to come from a corporate surety licensed to do business in the State and approved by the Attorney General. The bond is required to be conditioned on a statement by the applicant that the applicant will not practice fraud or make any fraudulent representation in connection with the sale or lease of a used motor vehicle, or violate any provision of chapter 10 of Title 39 of the Revised Statutes in the conduct of the applicant's business.
A used motor vehicle dealer who is not subject to a claim against the dealer's bond or against the fund for three consecutive years is required to pay an annual $100 fee and would not be required to pay an annual $250 annual fee or hold the $50,000 bond.
The bill provides that consumers that have a claim against the dealer and the dealer's bond may recover damages awarded to the consumer by a court of competent jurisdiction against the dealer if a consumer suffers any of the following:
(1) loss or damage in connection with the purchase or lease of a used motor vehicle by reason of fraud or fraudulent representation by a dealer or a dealer's salespersons acting within the scope of their employment;
(2) loss or damage by reason of the violation by a dealer or the dealer's salesperson of any provision of chapter 10 of Title 39 of the Revised Statutes in connection with the purchase or lease of a used motor vehicle; and
(3) loss or damage resulting from a dealer's breach of an extended service contract.
The bill provides that a judgment creditor may file a verified claim with the chief administrator, requesting payment from the fund of the amount unpaid on a judgment whenever any person is awarded a final judgment in a court of competent jurisdiction in the State for:
(1) any loss or damage in connection with the purchase or lease of a used motor vehicle by reason of any fraud or fraudulent representation by a dealer participating in the fund; or
(2) any loss or damage by reason of a violation by a dealer participating in the fund of any of the provisions of chapter 10 of Title 39 of the Revised Statutes in connection with the purchase or lease of a used motor vehicle.
The bill sets limits on the maximum amounts of damages that may be recovered from the fund by judgement creditors in various circumstances.
The bill provides that the chief administrator is required to immediately notify a used motor vehicle dealer in writing of any payment to a claimant and request full reimbursement. The chief administrator is required to suspend the license of any dealer who fails to reimburse or make specific arrangements to reimburse the chief administrator within 30 days of the notification. Any dealer whose license is suspended is not be eligible for reinstatement until the amount paid from the fund, plus interest, is repaid in full.
The bill provides that an applicant for renewal of a used motor vehicle dealer's license may elect to obtain and continuously maintain a bond in the amount of $100,000 in lieu of participation in the fund, if the applicant has not been the subject of a certain claims for a three year period. The bill establishes procedures for consumers to follow in filing claims and recovering damages against a dealer's continuous bond.
The bill requires any used motor vehicle dealer and any sales person or financing employee of a used motor vehicle dealer to register with the MVC. These employees are required to register by submitting certain information on forms provided by the chief administrator, and submit a disclosure statement to the chief administrator stating whether the employee has been convicted of certain crimes.
The bill provides that in the event of an unannounced audit, inspection or investigation by the MVC of the established place of business of the dealer which results in the finding of a record-keeping violation, the chief administrator must permit the dealer three business days, from the time the notice of violation is received, to provide proof that the dealer was in compliance with the law at the time of the unannounced audit, inspection or investigation. The dealer will not be subject to the imposition of a fine, suspension of license, or revocation of license if the dealer provides proof which is determined to be sufficient by the chief administrator.
The bill establishes a "Used Car Buyers' Bill of Rights," which requires dealers to offer contract cancellation option agreements for certain used vehicles, and establishes additional requirements for dealers selling used vehicles.
This bill makes it an unlawful practice under the consumer fraud act for a dealer to sell a consumer a used vehicle deemed to be "certified" or any other similar descriptive term that implies the vehicle complies with the terms of a used vehicle certification program under certain circumstances.
The bill requires that a dealer offer a consumer a contract cancellation option agreement that allows the consumer to return the used vehicle without cause, if the used motor vehicle has a purchase price of less than $40,000. The contract cancellation option agreement gives the consumer the right to cancel the contract and obtain a refund. The bill sets forth the information to be contained in any contract cancellation option agreement.
Under the bill, a dealer would be required to apply toward the restocking fee the price paid by the consumer for the contract cancellation option agreement. A dealer is also required to give notice at its business location and in the contract for the used vehicle that there is no cancellation period, sometimes referred to as a "cooling-off" period, unless a consumer obtains a contract cancellation option.
The bill provides that the fee for the contract cancellation option agreement is not to exceed the following: (1) $75 for a used motor vehicle with a cash price of $5,000 or less; (2) $150 for a used motor vehicle with a cash price of between $5,000.01 and $10,000; (3) $250 for a used motor vehicle with a cash price of between $10,000.01 and $30,000; or (4) one percent of the purchase price for a used motor vehicle with a cash price of $30,000.01 to $40,000.
No later than 48 hours after a consumer exercises the right to cancel a contract under the agreement, the dealer is required to cancel the contract and provide the consumer with a refund, including the appropriate portion of the sales tax or other fees paid. Within this same time frame, the dealer would be required to return to the consumer any used vehicle the consumer conveyed to the dealer as a down payment or trade-in. If the dealer sold or otherwise transferred title to that used vehicle, the refund would include the fair market value of that used vehicle or its value as stated in the contract, whichever is greater.
