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S.B. 100

             1     

MOTOR VEHICLE DEALER DISCLOSURE

             2     
REQUIREMENTS AMENDMENTS

             3     
2008 GENERAL SESSION

             4     
STATE OF UTAH

             5     
Chief Sponsor: Dan R. Eastman

             6     
House Sponsor: Patrick Painter

             7     
             8      LONG TITLE
             9      General Description:
             10          This bill modifies the Motor Vehicle Business Regulation Act by amending provisions
             11      relating to motor vehicle dealer disclosure requirements.
             12      Highlighted Provisions:
             13          This bill:
             14          .    amends the disclosure language that a motor vehicle dealer is required to provide if
             15      the dealer has contracted to enter into a lease agreement with someone other than
             16      another dealer.
             17      Monies Appropriated in this Bill:
             18          None
             19      Other Special Clauses:
             20          None
             21      Utah Code Sections Affected:
             22      AMENDS:
             23          41-3-401.5, as enacted by Laws of Utah 2006, Chapter 59
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 41-3-401.5 is amended to read:
             27           41-3-401.5. Disclosure of financing arrangements relating to the lease of a motor


             28      vehicle.
             29          (1) (a) A dealer may not issue a temporary permit or release possession of a motor
             30      vehicle wherein the dealer has contracted to enter into a lease agreement to someone other than
             31      another dealer unless the contract to enter into a lease agreement contains the disclosure listed
             32      in Subsection (2).
             33          (b) The disclosure shall be set forth clearly and conspicuously on the first or front page
             34      of the contract to enter into a lease agreement, executed by the prospective lessee and the
             35      dealer.
             36          (2) The form to be used when the dealer contracts to enter into a lease agreement for
             37      the potential lease of a motor vehicle shall read as follows:
             38          "(1) THE PROSPECTIVE LESSEE OF THE MOTOR VEHICLE DESCRIBED IN
             39      THIS CONTRACT TO ENTER INTO A LEASE AGREEMENT HAS EXECUTED THE
             40      CONTRACT IN RELIANCE UPON THE DEALER'S REPRESENTATION THAT THE
             41      DEALER CAN SECURE FROM A FINANCIAL INSTITUTION FINANCING
             42      ARRANGEMENTS FOR THE LEASE OF THE MOTOR VEHICLE. THE PRIMARY
             43      TERMS OF THE FINANCING ARRANGEMENT ARE TO BE AS FOLLOWS:
             44          TERM BETWEEN _____ MONTHS AND ______ MONTHS. MONTHLY
             45      PAYMENTS BETWEEN $______ PER MONTH AND $ _____ PER MONTH BASED ON
             46      A DOWN PAYMENT AND/OR NET TRADE-IN ALLOWANCE OF $ _________.
             47          (2) (a) IF THE DEALER IS NOT ABLE TO SECURE FINANCING
             48      ARRANGEMENTS WITHIN THE TERMS DISCLOSED, THEN THE DEALER MUST
             49      WITHIN SEVEN CALENDAR DAYS OF THE DATE OF THE CONTRACT TO ENTER
             50      INTO A LEASE AGREEMENT MAIL NOTICE TO THE PROSPECTIVE LESSEE THAT
             51      THE DEALER HAS NOT BEEN ABLE TO SECURE FINANCING ARRANGEMENTS IN
             52      ACCORDANCE WITH THE DISCLOSED TERMS AND THE CONTRACT TO ENTER
             53      INTO A LEASE AGREEMENT IS THEREFORE RESCINDED.
             54          (b) IF THE DEALER IS NOT ABLE TO SECURE FINANCING ARRANGEMENTS
             55      WITHIN THE TERMS DISCLOSED, SUCH FAILURE DOES NOT UNDER ANY
             56      CIRCUMSTANCES REQUIRE THE DEALER TO PROVIDE THE FINANCING
             57      NECESSARY FOR THE PROSPECTIVE LESSEE TO LEASE THE VEHICLE.
             58          (c) IF THE CONTRACT TO ENTER INTO A LEASE AGREEMENT IS


             59      RESCINDED, THE PROSPECTIVE LESSEE HAS 48 HOURS FROM RECEIPT OF THE
             60      NOTICE TO:
             61          (i) RETURN TO THE DEALER THE MOTOR VEHICLE THE PROSPECTIVE
             62      LESSEE AGREED TO LEASE;
             63          (ii) PAY THE DEALER AN AMOUNT EQUAL TO THE CURRENT STANDARD
             64      MILEAGE RATE FOR THE COST OF OPERATING A MOTOR VEHICLE ESTABLISHED
             65      BY THE FEDERAL INTERNAL REVENUE SERVICE FOR EACH MILE THE MOTOR
             66      VEHICLE HAS BEEN DRIVEN WHILE IN THE PROSPECTIVE LESSEE'S POSSESSION;
             67      AND
             68          (iii) COMPENSATE THE DEALER FOR ANY PHYSICAL DAMAGE TO THE
             69      MOTOR VEHICLE WHILE THE VEHICLE WAS IN THE PROSPECTIVE LESSEE'S
             70      POSSESSION.
             71          (3) IN RETURN, UPON RECEIPT OF THE ITEMS SET FORTH IN (2)(c)(i), (ii),
             72      and (iii) THE DEALER SHALL RETURN TO THE PROSPECTIVE LESSEE ALL
             73      PAYMENTS OR OTHER CONSIDERATION PAID BY THE PROSPECTIVE LESSEE,
             74      INCLUDING ANY DOWN PAYMENT AND ANY MOTOR VEHICLE TRADED IN.
             75          (4) IF THE TRADE-IN HAS BEEN SOLD OR OTHERWISE DISPOSED OF
             76      BEFORE THE CONTRACT TO ENTER INTO A LEASE AGREEMENT IS RESCINDED,
             77      THEN THE DEALER SHALL RETURN TO THE PROSPECTIVE LESSEE A SUM
             78      EQUIVALENT TO THE ALLOWANCE TOWARD THE LEASE PRICE GIVEN BY THE
             79      DEALER FOR THE TRADE-IN, AS NOTED IN THE CONTRACT TO ENTER INTO A
             80      LEASE AGREEMENT.
             81                                  ______________________________
             82                                  (Signature of the Prospective Lessee)
             83                                  ______________________________
             84                                  (Signature of the Dealer)"
             85          (3) (a) (i) In addition to the penalties in this chapter, if the disclosure in Subsection (2)
             86      is not properly executed or if the dealer is unable to secure financing arrangements for the
             87      lessee as provided in Subsection (2) within seven calendar days immediately following the date
             88      disclosed on the contract to enter into a lease agreement, then in either case the prospective
             89      lessee may return the motor vehicle to the dealer and receive a complete refund of all money


             90      and other consideration given to the dealer for the contract to enter into a lease agreement,
             91      including any motor vehicle or property used as a trade-in.
             92          (ii) If the motor vehicle or property used as a trade-in has been sold or otherwise
             93      disposed of, the dealer shall return to the prospective lessee the amount of money equivalent to
             94      the allowance towards the lease price given by the dealer for the motor vehicle or property
             95      traded in, as noted in the contract to enter into a lease agreement.
             96          (b) If the dealer provides the notice as set forth in Subsection (2)(a) of the disclosure
             97      statement, the contract to enter into a lease agreement is rescinded.
             98          (c) If a contract to enter into a lease agreement is rescinded under Subsection (3)(b):
             99          (i) the prospective lessee shall return the leased vehicle within 48 hours of receiving a
             100      notice that the dealer is unable to secure financing arrangements for the lease; and
             101          (ii) the prospective lessee is liable to the dealer:
             102          (A) for all physical damage to the motor vehicle while in the possession of the
             103      prospective lessee; and
             104          (B) in an amount equal to the current standard mileage rate for the cost of operating a
             105      motor vehicle established by the federal Internal Revenue Service for each mile the motor
             106      vehicle was driven between the date the prospective lessee first acquired possession and the
             107      date when the prospective lessee returned the motor vehicle to the dealer.
             108          (4) (a) A dealer who has complied with Subsection (2), but who has not been able to
             109      secure financing arrangements as set forth in the disclosure, shall within seven days of the date
             110      of the contract to enter into a lease agreement mail written notice to the prospective lessee:
             111          (i) disclosing that the dealer has not been able to secure financing arrangements as set
             112      forth in the disclosure; and
             113          (ii) instructing the prospective lessee of the prospective lessee's responsibility to return
             114      the vehicle within 48 hours of receiving the notice, as provided for in Subsection (2).
             115          (b) (i) The dealer shall mail notification to the prospective lessee within seven calendar
             116      days following the date that the contract to enter into a lease agreement was executed.
             117          (ii) A notice complies with Subsection (4)(b)(i) if it is postmarked before the end of the
             118      seventh day following the date that the contract to enter into a lease agreement was executed
             119      and addressed to the prospective lessee at the address contained in the contract to enter into a
             120      lease agreement.


             121          (iii) If the prospective lessee's address is not contained on the contract to enter into a
             122      lease agreement, then proof of compliance with the notification provision of this Subsection
             123      (4)(b) shall be borne by the dealer.
             124          (iv) If a dealer gives notice in the manner prescribed, the prospective lessee has 48
             125      hours from receipt of the notice to return the vehicle to the dealer.
             126          (c) If a dealer executes the disclosure required by Subsection (2), but is not able to
             127      secure financing arrangements as set forth in the disclosure, and the dealer fails to give written
             128      notice to the prospective lessee within seven days, as provided for in Subsections (4)(a) and
             129      (b), then the prospective lessee shall return the vehicle within 48 hours of the date the
             130      prospective lessee first learns that the dealer has not been able to secure financing arrangements
             131      as set forth in the disclosure.
             132          (5) (a) Either the prospective lessee or a dealer may bring an action to enforce
             133      contractual or statutory rights under this section.
             134          (b) The prevailing party in an action under Subsection (5)(a) is entitled to reasonable
             135      [attorneys'] attorney fees as part of the costs of the action.
             136          (6) A motor vehicle returned by the prospective lessee to the dealer in accordance with
             137      the rescission provisions of this section is not considered leased for purposes of sales and use
             138      tax under Title 59, Chapter 12, Sales and Use Tax Act.




Legislative Review Note
    as of 11-20-07 7:26 AM


Office of Legislative Research and General Counsel


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