S.B. 143

1

MOTOR VEHICLE DISCLOSURE
2 REQUIREMENTS - PURCHASER'S RIGHTS
3 2003 GENERAL SESSION
4 STATE OF UTAH
5 Sponsor: Dan R. Eastman
6 This act modifies the Motor Vehicles Code by amending dealer financial arrangements
7 and disclosure provisions for dealer financed motor vehicle purchases. This act provides
8 that if a dealer was unable to arrange the financing terms made in the disclosure for the
9 purchase of a motor vehicle and has notified the purchaser, the purchaser has 14 days
10 from the date of sale to rescind the sale. If the purchaser fails to rescind the sale, the
11 dealer is not subject to financing the vehicle purchase pursuant to the terms made in the
12 disclosure and the purchaser is solely responsible for all financing arrangements. This
13 act requires the dealer to notify purchasers of these requirements in the disclosures. This
14 act changes the mileage rate a purchaser must pay for use of the vehicle if the contract is
15 rescinded. This act makes technical changes.
16 This act affects sections of Utah Code Annotated 1953 as follows:
17 AMENDS:
18 41-3-401, as last amended by Chapter 30 and renumbered and amended by Chapter
19 234, Laws of Utah 1992
20 Be it enacted by the Legislature of the state of Utah:
21 Section 1. Section 41-3-401 is amended to read:
22 41-3-401. Disclosure of financing arrangements relating to the sale of motor
23 vehicles.
24 (1) (a) A dealer may not issue a temporary permit or release possession of a motor
25 vehicle that [he] the dealer has sold to someone other than another dealer unless the document
26 of sale contains one of the disclosures listed in Subsection (2).
27 (b) The disclosures shall be set forth clearly and conspicuously on the first or front

28 page of the sale document at the time of sale, executed by the purchaser, and for Subsection
29 (2)(b), executed by the seller also.
30 (2) (a) The form to be used when financing is the purchaser's responsibility shall read
31 as follows:
32 "THE PURCHASER OF THE MOTOR VEHICLE DESCRIBED IN THIS
33 CONTRACT ACKNOWLEDGES THAT THE SELLER OF THE MOTOR VEHICLE HAS
34 MADE NO PROMISES, WARRANTIES, OR REPRESENTATIONS REGARDING
35 SELLER'S ABILITY TO OBTAIN FINANCING FOR THE PURCHASE OF THE MOTOR
36 VEHICLE. FURTHERMORE, PURCHASER UNDERSTANDS THAT IF FINANCING IS
37 NECESSARY IN ORDER FOR THE PURCHASER TO COMPLETE THE PAYMENT
38 TERMS OF THIS CONTRACT ALL THE FINANCING ARRANGEMENTS ARE THE
39 SOLE RESPONSIBILITY OF THE PURCHASER.
40

____________________________________________

41

(Signature of the purchaser)"

42 (b) The form to be used when the seller agrees to [provide] seek arrangements for
43 financing shall read as follows:
44 "(1) THE PURCHASER OF THE MOTOR VEHICLE DESCRIBED IN THIS
45 CONTRACT HAS EXECUTED THE CONTRACT IN RELIANCE UPON THE SELLER'S
46 REPRESENTATION THAT THE SELLER CAN PROVIDE FINANCING
47 ARRANGEMENTS FOR THE PURCHASE OF THE MOTOR VEHICLE[,]. THE
48 PRIMARY TERMS OF THE FINANCING ARE AS FOLLOWS:
49 INTEREST RATE BETWEEN ______ % AND ______ % PER ANNUM, TERM
50 BETWEEN _____________ MONTHS AND _____________ MONTHS. MONTHLY
51 PAYMENTS BETWEEN $ ____________ PER MONTH AND $ ____________ PER
52 MONTH BASED ON A DOWN PAYMENT OF $ ______________.
53 (2) (a) IF SELLER IS NOT ABLE TO ARRANGE FINANCING WITHIN THE
54 TERMS DISCLOSED, THEN SELLER MUST WITHIN SEVEN CALENDAR DAYS OF
55 THE DATE OF SALE MAIL NOTICE TO THE PURCHASER THAT HE HAS NOT BEEN
56 ABLE TO ARRANGE FINANCING.
57 (b) PURCHASER THEN HAS 14 DAYS FROM THE DATE OF SALE TO ELECT,
58 IF PURCHASER CHOOSES, TO RESCIND THE CONTRACT OF SALE PURSUANT TO

59 SECTION 41-3-401 .
60 (c) IN ORDER TO RESCIND THE CONTRACT OF SALE, THE PURCHASER
61 SHALL:
62 (i) RETURN TO SELLER THE MOTOR VEHICLE HE PURCHASED;
63 (ii) PAY THE SELLER [30 CENTS FOR] AN AMOUNT EQUAL TO THE
64 CURRENT STANDARD MILEAGE RATE FOR THE COST OF OPERATING A MOTOR
65 VEHICLE ESTABLISHED BY THE FEDERAL INTERNAL REVENUE SERVICE FOR
66 EACH MILE THE MOTOR VEHICLE HAS BEEN DRIVEN; AND
67 (iii) COMPENSATE SELLER FOR ANY PHYSICAL DAMAGE TO THE MOTOR
68 VEHICLE.
69 (3) IN RETURN, SELLER SHALL GIVE BACK TO THE PURCHASER ALL
70 PAYMENTS OR OTHER CONSIDERATION PAID BY THE PURCHASER, INCLUDING
71 ANY DOWN PAYMENT AND ANY MOTOR VEHICLE TRADED IN.
72 (4) IF THE TRADE-IN HAS BEEN SOLD OR OTHERWISE DISPOSED OF
73 BEFORE THE PURCHASER RESCINDS THE TRANSACTION, THEN THE SELLER
74 SHALL RETURN TO THE PURCHASER A SUM EQUIVALENT TO THE ALLOWANCE
75 TOWARD THE PURCHASE PRICE GIVEN BY THE SELLER FOR THE TRADE-IN, AS
76 NOTED IN THE DOCUMENT OF SALE.
77 (5) IF PURCHASER DOES NOT ELECT TO RESCIND THE CONTRACT OF
78 SALE AS PROVIDED IN SUBSECTION (2)(b) OF THIS FORM:
79 (a) THE PURCHASER IS RESPONSIBLE FOR ADHERENCE TO THE TERMS
80 AND CONDITIONS OF THE CONTRACT OR RISKS BEING FOUND IN DEFAULT OF
81 THE TERMS AND CONDITIONS;
82 (b) THE TERMS AND CONDITIONS OF THE DISCLOSURES SET FORTH IN
83 SECTION (1) OF THIS FORM ARE NOT BINDING ON THE SELLER; AND
84 (c) IF FINANCING IS NECESSARY FOR THE PURCHASER TO COMPLETE THE
85 PAYMENT TERMS OF THE CONTRACT OF SALE, THE PURCHASER IS SOLELY
86 RESPONSIBLE FOR MAKING ALL THE FINANCING ARRANGEMENTS.
87 [(5)] (6) SIGNING THIS DISCLOSURE DOES NOT PROHIBIT THE PURCHASER
88 FROM SEEKING HIS OWN FINANCING.
89

_______________________________________

90

(Signature of the purchaser)

91

_______________________________________

92

(Signature of the seller)"

93 (3) (a) (i) In addition to the penalties in this chapter, if the disclosures in Subsection (2)
94 are not properly executed or if the seller is unable to provide the financing arrangements for the
95 purchaser as provided in Subsection (2)(b) within seven calendar days immediately following
96 the sale[, the] date [to be] disclosed on the document of sale, then in either case the purchaser
97 may return the purchased motor vehicle to the dealer and receive a complete refund of all
98 money and other consideration given to the dealer for the purchase, including any motor
99 vehicle or property used as a trade-in.
100 (ii) If the motor vehicle or property used as a trade-in has been sold or otherwise
101 disposed of, the seller shall return to the purchaser the amount of money equivalent to the
102 allowance towards the purchase price given by the dealer for the motor vehicle or property
103 traded in, as noted in the document of sale.
104 (b) If the purchaser qualifies for the remedies set forth in Subsection (3)(a) and if the
105 purchaser elects to rescind by returning the purchased motor vehicle to the dealer within the
106 prescribed time frame, then the purchaser is liable to the dealer:
107 (i) for all physical damage to the motor vehicle while in the possession of the
108 purchaser; and
109 (ii) in an amount equal to [30 cents per mile] the current standard mileage rate for the
110 cost of operating a motor vehicle established by the federal Internal Revenue Service for each
111 mile the motor vehicle was driven between the date the purchaser first acquired possession and
112 the date when the purchaser returned the motor vehicle to the dealer.
113 (c) The purchaser is not entitled to the remedy set forth in Subsections (3)(a) and (b) if
114 the purchaser materially misrepresents in writing any information requested by the dealer in an
115 application for financing, financial statement, or similar document customarily used to elicit
116 personal and financial data upon which a credit decision is normally predicated.
117 (4) (a) A dealer who has complied with Subsection (2)(b), but who has not been able to
118 secure financing as set forth in the disclosure, shall within seven days of the date of sale mail
119 written notice to the purchaser:
120 (i) disclosing that the dealer has not been able to secure financing as set forth in the

121 disclosure; and
122 (ii) instructing the purchaser of his right to rescind the contract of sale within 14
123 calendar days of the date of sale, as provided for in Subsection [(3)] (2).
124 (b) (i) The dealer shall mail notification to the purchaser within seven calendar days
125 following the date of sale as set forth in the contract of sale.
126 (ii) This notice complies with Subsection (4)(b)(i) if it is postmarked before the end of
127 the seventh day following the date of sale and addressed to the purchaser at the address [set
128 forth] contained in the document of sale.
129 (iii) If the purchaser's address is not contained on the document of sale, then proof of
130 compliance with the notification provision of this Subsection (4)(b) shall be borne by the
131 dealer.
132 (iv) [Provided that] If a dealer gives notice in the manner prescribed, the purchaser has
133 14 calendar days from the date of sale to elect to rescind the contract of sale, in accordance
134 with Subsection [(3)] (2).
135 (c) (i) If a dealer executes the disclosure required by Subsection (2)(b), but is not able
136 to secure financing as set forth in the disclosure, and the dealer fails to give written notice to
137 the purchaser within seven days, as provided for in Subsections (4)(a) and (b), then the
138 purchaser may rescind within seven days of the date he first learns that the dealer has not been
139 able to secure financing as set forth in the disclosure.
140 (ii) [The] Except as provided in this Subsection (4)(c), the purchaser's option to rescind
141 [under this subsection] shall be exercised in the manner prescribed in [Subsections (3)(a) and
142 (b), except that the 14 day time limit is waived, and remains subject to] Subsection (3)[(c)].
143 (d) If the purchaser does not exercise the option to rescind within the specified time
144 limits in Subsections (3) and (4)(c):
145 (i) the purchaser is responsible for adherence to the terms and conditions of the
146 contract of sale;
147 (ii) the dealer is not subject to the financing terms set forth in the disclosure; and
148 (iii) if financing is necessary for the purchaser to complete the payment terms of the
149 contract of sale, the purchaser is solely responsible for making all the financing arrangements.
150 (5) A dealer's failure to execute the disclosure required by Subsection (2), or its failure
151 to provide written notice to the purchaser within the time frame specified in this section,

152 subject the dealer to the sanctions in Section 41-3-701 .
153 (6) Either the purchaser or a dealer may bring an action to enforce his rights under this
154 section. The prevailing party in the action is entitled to reasonable attorneys' fees as part of the
155 costs of suit.
156 (7) [Motor vehicles] A motor vehicle returned by the purchaser to the dealer in
157 accordance with the rescission provisions of this section [are] is not considered sold for
158 purposes of notice of sale under Section 41-3-301 and for purposes of sales tax under Title 59,
159 Chapter 12, Sales and Use Tax Act.




Legislative Review Note
as of 1-27-03 2:28 PM

A limited legal review of this legislation raises no obvious constitutional or statutory concerns.

Office of Legislative Research and General Counsel