Subject: SB 95 Senate Bill - Bill Analysis
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Date: Fri, 17 Jul 2009 11:43:29 -0700

BILL ANALYSIS

SB 95
Page 1

SENATE THIRD READING
SB 95 (Corbett)
As Amended July 1, 2009
Majority vote

SENATE VOTE :21-17

JUDICIARY 10-0 APPROPRIATIONS 11-3

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|Ayes:|Feuer, Tran, Brownley, |Ayes:|De Leon Ammiano, Charles |
| |Evans, Jones, Knight, | |Calderon, Coto, Davis, |
| |Krekorian, Lieu, Monning, | |Fuentes, Hall, |
| |Silva | |John A. Perez, Skinner, |
| | | |Solorio, Torlakson |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Nielsen, Harkey, Audra |
| | | |Strickland |
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SUMMARY : Enacts the California Car Buyer' Protection Act of
2009. Specifically, this bill :

1)Increases the fee for a license issued to dealers and
lessor-retailers by $25 for the original license, or an
ownership change which requires a new application and for the
annual renewal of a license, and the fee for an autobroker's
endorsement to a dealer's license and annual renewals by $50.

2)Provide that it is the intent of the Legislature by increasing
the fee for the annual renewal of the license of a dealer and
of a lessor-retailer by $25 that $40 of the total fee shall,
when appropriated, be utilized by the Department of Motor
Vehicles (DMV) for the investigation of those dealers and
lessor-retailers who demonstrate the greatest potential for
causing losses to consumers as shown by repeated consumer
complaints, habitual violations of the requirements of their
licenses, the issuance of a probationary license by the
department, or a violation of other standards and criteria
established by the department for these purposes.

3)Provides that when a dealer purchases or obtains a vehicle in
trade in a retail sale or lease transaction and the vehicle is
subject to a prior credit or lease balance, all of the

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following apply:

a) If the dealer agreed to pay a specified amount on the
prior credit or lease balance owing on the vehicle
purchased or obtained in trade, and the agreement to pay
the specified amount is contained in a written agreement
documenting the transaction, the dealer shall tender the
agreed upon amount as provided in the written agreement to
the lessor registered in accordance with Vehicle Code
Section 4453.5, or to the legal owner reflected on the
ownership certificate, or to the designee of that lessor or
legal owner of the vehicle purchased or obtained in trade
within 21 calendar days of purchasing or obtaining the
vehicle in trade. This time period may be shortened if the
dealer and consumer agree, in writing, to a shorter time
period;

b) If the dealer did not set forth an agreement regarding
payment of a prior credit or lease balance owed on the
vehicle purchased or obtained in trade, in a written
agreement documenting the transaction, the dealer shall
tender to the lessor registered in accordance with Vehicle
Code Section 4453.5, or to the legal owner reflected on the
ownership certificate, or to the designee of that lessor or
legal owner of the vehicle purchased or obtained in trade,
an amount necessary to discharge the prior credit or lease
balance owing on the vehicle purchased or obtained in trade
within 21 calendar days of purchasing or obtaining the
vehicle in trade. This time period may be shortened if the
dealer and consumer agree, in writing, to a shorter time
period; and,

c) A dealer shall not sell, consign for sale, or transfer
any ownership interest in the vehicle purchased or obtained
in trade until an amount necessary to discharge the prior
credit or lease balance owing on the vehicle has been
tendered to the lessor registered in accordance with
Section 4453.5, or to the legal owner reflected on the
ownership certificate, or to the designee of that lessor or
legal owner of the vehicle purchased or obtained in trade.

4)Provides that a dealer does not violate the foregoing section
if the dealer reasonably and in good faith gives notice of
rescission of the contract promptly, but no later than 21 days

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after the date on which the vehicle was purchased or obtained
in trade, and the contract is thereafter rescinded on any of
the grounds in Civil Code Section 1689.

FISCAL EFFECT : According to the Assembly Appropriations
analysis, annual increased license fee revenue to the DMV of
$475,000, and one-time programming and administrative costs of
$100,000 to implement the fee increases. The additional
revenues will be available, upon appropriation, to the DMV's
Occupational Licensing and Investigative Services program.
.
COMMENTS : According to the author, this bill is intended to
require dealers to pay-off car liens before trading or selling
the vehicles so consumers are not stuck with two car payments.
The bill would require a dealer to payoff a lien before it sells
or trades the vehicle, and do so within 21 days. In addition,
the bill increases funding for DMV investigators by a small
increase in the dealer license fee.

The author explains the need for the bill as follows:
"Consumers are losing confidence in the automotive marketplace.
They are unable to tell in advance whether a dealer is solvent
or about to close its doors, posing unacceptable risks and
causing a ripple effect throughout our economy. SB 95 is a
comprehensive solution that will require dealers to pay
outstanding liens on traded-in vehicles before they trade or
sell the vehicle to ensure the consumer is protected. As
dealerships close their doors, they are leaving consumers with
unpaid liens on vehicles they traded-in, as well as a second
loan on the newer vehicle they purchased at the dealership. Too
often the consequence is destruction of consumer credit,
repossession of the vehicles, job losses due to the lack of
transportation to get to work, and consumers being forced into
bankruptcy."

According to supporters, the DMV reports that the number of
consumer complaints involving a dealer's failure to pay off a
trade-in has risen significantly from prior years. As of the
end of February 2009, the DMV states that it is investigating
256 active cases where a dealer has failed to pay off a
consumer's trade-in and 564 additional consumer complaints that
the consumer had not yet received verification that title to a
vehicle bought from or sold to a dealer had been transferred.

SB 95
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Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334

FN: 0001947