From: "Saved by Windows Internet Explorer 8" Subject: SB 95 Senate Bill - Bill Analysis Date: Fri, 28 Aug 2009 05:14:36 -0700 MIME-Version: 1.0 Content-Type: text/html; charset="Windows-1252" Content-Transfer-Encoding: quoted-printable Content-Location: http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0051-0100/sb_95_cfa_20090826_145248_sen_floor.html X-MimeOLE: Produced By Microsoft MimeOLE V6.0.6001.18049
= BILL ANALYSIS = = = =0C =20 ------------------------------------------------------------=20 |SENATE RULES COMMITTEE | SB 95| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------=20 =20 =20 UNFINISHED BUSINESS Bill No: SB 95 Author: Corbett (D) Amended: 7/1/09 Vote: 21 =20 SENATE JUDICIARY COMMITTEE : 3-2, 3/31/09 AYES: Corbett, Florez, Leno NOES: Harman, Walters SENATE APPROPRIATIONS COMMITTEE : 7-5, 5/28/09 AYES: Kehoe, Corbett, DeSaulnier, Hancock, Leno, Oropeza, =20 Yee NOES: Cox, Denham, Runner, Walters, Wyland NO VOTE RECORDED: Wolk SENATE FLOOR : 21-17, 6/3/09 AYES: Alquist, Cedillo, Corbett, DeSaulnier, Ducheny, =20 Florez, Hancock, Kehoe, Leno, Liu, Lowenthal, Negrete =20 McLeod, Oropeza, Padilla, Pavley, Romero, Simitian, =20 Steinberg, Wiggins, Wolk, Yee NOES: Aanestad, Ashburn, Benoit, Calderon, Cogdill, =20 Correa, Cox, Denham, Dutton, Harman, Hollingsworth, Huff, =20 Maldonado, Strickland, Walters, Wright, Wyland NO VOTE RECORDED: Runner, Vacancy ASSEMBLY FLOOR : 46-23, 8/20/09 - See last page for = vote SUBJECT : California Car Buyers Protection Act of = 2009 SOURCE : Consumer for Auto Reliability and Safety CONTINUED =0C SB = 95 Page = =20 2 DIGEST : This bill enacts the California Car = Buyers =20 Protection Act of 2009. The bill imposes certain =20 requirements when a dealer purchases or obtains a vehicle =20 in trade in a retail sale or lease transaction and the =20 vehicle is subject to a prior credit or lease balance, =20 relating to the discharge of the credit or balance. The =20 bill increases dealer's license and renewal fees to $175 =20 and $125, respectively. The bill increases auto broker's =20 endorsement and renewal fees to $100 and $75, respectively. Assembly Amendments narrowed the scope of the bill by = =20 deleting provisions that (1) increased the amount of a =20 dealers bond; (2) rights of action against a dealer by a =20 customer who suffers a loss by reason of fraud; (3) =20 specified service fees; (4) added provisions that increase =20 auto broker's endorsement and renewal fees, as specified. ANALYSIS : Existing law provides for the issuance = of =20 dealer's licenses, and sets the fees for an original =20 license at $150 and for an annual renewal at $100. =20 Existing law sets the fees for an original auto broker's =20 endorsement at $50 and for the annual renewal at $25. This bill enacts the California Car Buyer' Protection Act =20 of 2009. Specifically, this bill:=20 1. Increases the fee for a license issued to dealers and =20 lessor-retailers by $25 for the original license, or an =20 ownership change which requires a new application and =20 for the annual renewal of a license, and the fee for an =20 auto broker's endorsement to a dealer's license and =20 annual renewals by $50. 2. Provide that it is the intent of the Legislature by =20 increasing the fee for the annual renewal of the license =20 of a dealer and of a lessor-retailer by $25 that $40 of =20 the total fee shall, when appropriated, be utilized by =20 the Department of Motor Vehicles (DMV) for the =20 investigation of those dealers and lessor-retailers who =20 demonstrate the greatest potential for causing losses to =20 consumers as shown by repeated consumer complaints, =20 habitual violations of the requirements of their =20 licenses, the issuance of a probationary license by the =20 =0C SB = 95 Page = =20 3 department, or a violation of other standards and =20 criteria established by the department for these =20 purposes. 3. Provides that when a dealer purchases or obtains a =20 vehicle in trade in a retail sale or lease transaction =20 and the vehicle is subject to a prior credit or lease =20 balance, all of the following apply: A. If the dealer agreed to pay a specified amount =20 on the prior credit or lease balance owing on the =20 vehicle purchased or obtained in trade, and the =20 agreement to pay the specified amount is contained =20 in a written agreement documenting the transaction, =20 the dealer shall tender the agreed upon amount as =20 provided in the written agreement to the lessor =20 registered in accordance with Vehicle Code Section =20 4453.5, or to the legal owner reflected on the =20 ownership certificate, or to the designee of that =20 lessor or legal owner of the vehicle purchased or =20 obtained in trade within 21 calendar days of =20 purchasing or obtaining the vehicle in trade. This =20 time period may be shortened if the dealer and =20 consumer agree, in writing, to a shorter time =20 period. B. If the dealer did not set forth an agreement =20 regarding payment of a prior credit or lease =20 balance owed on the vehicle purchased or obtained =20 in trade, in a written agreement documenting the =20 transaction, the dealer shall tender to the lessor =20 registered in accordance with Vehicle Code Section =20 4453.5, or to the legal owner reflected on the =20 ownership certificate, or to the designee of that =20 lessor or legal owner of the vehicle purchased or =20 obtained in trade, an amount necessary to discharge =20 the prior credit or lease balance owing on the =20 vehicle purchased or obtained in trade within 21 =20 calendar days of purchasing or obtaining the =20 vehicle in trade. This time period may be =20 shortened if the dealer and consumer agree, in =20 writing, to a shorter time period. C. A dealer shall not sell, consign for sale, or =20 =0C SB = 95 Page = =20 4 transfer any ownership interest in the vehicle =20 purchased or obtained in trade until an amount =20 necessary to discharge the prior credit or lease =20 balance owing on the vehicle has been tendered to =20 the lessor registered in accordance with Section =20 4453.5, or to the legal owner reflected on the =20 ownership certificate, or to the designee of that =20 lessor or legal owner of the vehicle purchased or =20 obtained in trade. 4. Provides that a dealer does not violate the foregoing =20 section if the dealer reasonably and in good faith gives =20 notice of rescission of the contract promptly, but no =20 later than 21 days after the date on which the vehicle =20 was purchased or obtained in trade, and the contract is =20 thereafter rescinded on any of the grounds in Civil Code =20 Section 1689. Prior legislation =20 SB 729 (Padilla), Chapter 437, Statutes of 2007 Background =20 Senate Bill 729 (Padilla), Chapter 437, Statutes of 2007, =20 created the Consumer Motor Vehicle Recovery Corporation =20 (CMVRC), a nonprofit mutual benefit corporation, with a =20 board of directors with certain powers and duties, in order =20 to provide payments to consumers on eligible claims, =20 including a vehicle dealer or lessor-retailer's failure to =20 remit license or registration fees, failure to pay off a =20 trade-in's sale or lease balance owed, or failure to pay =20 proceeds of a consignment sale. A consumer may file an =20 application with the CMVRC for the payment of the =20 consumer's eligible claim if the dealer or lessor-retailer =20 against whom the claim is asserted has ceased selling and =20 leasing vehicles or is in bankruptcy. =20 The DMV is required to charge dealers and lessor-retailers =20 a fee of $1.00 for each vehicle sold by the dealers and =20 lessor-retailers, up to $2,500 per dealer per year. The =20 fees are continuously appropriated to the DMV for quarterly =20 payment to the CMVRC until the recovery fund has reached $5 =20 million. To date the DMV has collected approximately =20 =0C SB = 95 Page = =20 5 $720,000. Oversight and review of the CMVRC is done by the =20 Attorney General. Although the CMVRC was to be implemented by July 1, 2008, =20 information provided to Consumers for Auto Reliability and =20 Safety (CARS) indicates that the CMVRC is not yet fully =20 implemented. The information also indicates that all the =20 board members have been appointed; the board is in the =20 process of devising the claims forms and having them =20 translated; the CMVRC is close to the point where it may =20 start accepting claims; and it may be a matter of weeks =20 before it is ready to begin processing claims. FISCAL EFFECT : Appropriation: No Fiscal Com.: = Yes =20 Local: No According to the Assembly Appropriations analysis, annual =20 increased license fee revenue to the DMV of $475,000, and =20 one-time programming and administrative costs of $100,000 =20 to implement the fee increases. The additional revenues =20 will be available, upon appropriation, to the DMV's =20 Occupational Licensing and Investigative Services program. SUPPORT : (Verified 8/26/09) Consumers for Auto Reliability and Safety (source) American Federation of State, County and Municipal =20 Employees California Broker's Association California Public Interest Research Group California Statewide Law Enforcement Association Congress of California Seniors Consumer Attorneys of California; Teamsters Consumer Federation of California Consumer Watchdog Consumers Union ARGUMENTS IN SUPPORT : According to the author's = office, =20 this bill is intended to require dealers to pay-off car =20 liens before trading or selling the vehicles so consumers =20 are not stuck with two car payments. The bill requires a =20 dealer to payoff a lien before it sells or trades the =20 vehicle, and do so within 21 days. In addition, the bill =20 =0C SB = 95 Page = =20 6 increases funding for DMV investigators by a small increase =20 in the dealer license fee. The author's office explains the need for the bill as =20 follows: "Consumers are losing confidence in the =20 automotive marketplace. They are unable to tell in advance =20 whether a dealer is solvent or about to close its doors, =20 posing unacceptable risks and causing a ripple effect =20 throughout our economy. SB 95 is a comprehensive solution =20 that will require dealers to pay outstanding liens on =20 traded-in vehicles before they trade or sell the vehicle to =20 ensure the consumer is protected. As dealerships close =20 their doors, they are leaving consumers with unpaid liens =20 on vehicles they traded-in, as well as a second loan on the =20 newer vehicle they purchased at the dealership. Too often =20 the consequence is destruction of consumer credit, =20 repossession of the vehicles, job losses due to the lack of =20 transportation to get to work, and consumers being forced =20 into bankruptcy." According to supporters, the DMV reports that the number of =20 consumer complaints involving a dealer's failure to pay off =20 a trade-in has risen significantly from prior years. As of =20 the end of February 2009, the DMV states that it is =20 investigating 256 active cases where a dealer has failed to =20 pay off a consumer's trade-in and 564 additional consumer =20 complaints that the consumer had not yet received =20 verification that title to a vehicle bought from or sold to =20 a dealer had been transferred. ASSEMBLY FLOOR :=20 AYES: Ammiano, Arambula, Beall, Blumenfield, Brownley, =20 Buchanan, Caballero, Charles Calderon, Carter, Chesbro, =20 Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer, =20 Fong, Fuentes, Furutani, Hall, Hayashi, Hernandez, Hill, =20 Huber, Huffman, Jones, Krekorian, Lieu, Bonnie Lowenthal, =20 Ma, Mendoza, Monning, Nava, John A. Perez, Portantino, =20 Ruskin, Salas, Saldana, Solorio, Swanson, Torlakson, =20 Torres, Torrico, Yamada, Bass NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill, =20 Blakeslee, Conway, Cook, DeVore, Duvall, Fletcher, =20 Fuller, Gilmore, Hagman, Harkey, Knight, Logue, Nestande, =20 Niello, Nielsen, Smyth, Audra Strickland, Tran, Villines NO VOTE RECORDED: Block, Emmerson, Gaines, Galgiani, =20 =0C SB = 95 Page = =20 7 Garrick, Jeffries, Miller, V. Manuel Perez, Silva, =20 Skinner, Vacancy RJG:do 8/26/09 Senate Floor Analyses=20 SUPPORT/OPPOSITION: SEE ABOVE **** END ****