Representative Colin W. Jack proposes the following substitute bill:


1     
MOTOR VEHICLE DEALER REQUIREMENTS

2     
2023 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Colin W. Jack

5     
Senate Sponsor: Don L. Ipson

6     

7     LONG TITLE
8     General Description:
9          This bill prohibits a motor vehicle dealer from charging a fee or charge in addition to
10     the negotiated purchase price as a condition of the sale.
11     Highlighted Provisions:
12          This bill:
13          ▸     prohibits a motor vehicle dealer from requiring a purchaser to pay, as a condition of
14     the sale, a fee or charge in addition to the negotiated purchase, other than:
15               •     certain fees required by state or federal law;
16               •     a dealer documentary service fee; and
17               •     certain increases in price imposed by a manufacturer for semi-tractors with a
18     gross vehicle weight rating over 14,000 pounds;
19          ▸     specifies the civil penalties for a violation;
20          ▸     requires a motor vehicle dealer to provide and execute a transaction disclosure
21     form;
22          ▸     requires the State Tax Commission to create the transaction disclosure form; and
23          ▸     makes technical changes.
24     Money Appropriated in this Bill:
25          None
26     Other Special Clauses:
27          This bill provides a special effective date.
28     Utah Code Sections Affected:
29     AMENDS:
30          41-3-102, as last amended by Laws of Utah 2022, Chapter 455
31          41-3-103, as last amended by Laws of Utah 2022, Chapter 455
32          41-3-211, as enacted by Laws of Utah 2010, Chapter 342
33          41-3-702, as last amended by Laws of Utah 2019, Chapter 424
34     ENACTS:
35          41-3-401.6, Utah Code Annotated 1953
36     

37     Be it enacted by the Legislature of the state of Utah:
38          Section 1. Section 41-3-102 is amended to read:
39          41-3-102. Definitions.
40          As used in this chapter:
41          (1) "Administrator" means the motor vehicle enforcement administrator.
42          (2) "Agent" means a person other than a holder of any dealer's or salesperson's license
43     issued under this chapter, who for salary, commission, or compensation of any kind, negotiates
44     in any way for the sale, purchase, order, or exchange of three or more motor vehicles for any
45     other person in any 12-month period.
46          (3) "Auction" means a dealer engaged in the business of auctioning motor vehicles,
47     either owned or consigned, to the general public.
48          (4) "Authorized service center" means an entity that:
49          (a) is in the business of repairing exclusively the motor vehicles of the same line-make
50     as the motor vehicles a single direct-sale manufacturer manufactures;
51          (b) the direct-sale manufacturer described in Subsection (4)(a) authorizes to complete
52     warranty repair work for motor vehicles that the direct-sale manufacturer sells, displays for
53     sale, or offers for sale or exchange; and
54          (c) conducts business primarily from an enclosed commercial repair facility that is
55     permanently located in the state.
56          (5) "Board" means the advisory board created in Section 41-3-106.
57          (6) "Body shop" means a person engaged in rebuilding, restoring, repairing, or painting
58     the body of motor vehicles for compensation.
59          (7) "Commission" means the State Tax Commission.
60          (8) "Crusher" means a person who crushes or shreds motor vehicles subject to
61     registration under Chapter 1a, Motor Vehicle Act, to reduce the useable materials and metals to
62     a more compact size for recycling.
63          (9) (a) "Dealer" means a person:
64          (i) whose business in whole or in part involves selling new, used, or new and used
65     motor vehicles or off-highway vehicles; and
66          (ii) who sells, displays for sale, or offers for sale or exchange three or more new or
67     used motor vehicles or off-highway vehicles in any 12-month period.
68          (b) "Dealer" includes a representative or consignee of any dealer.
69          (10) "Direct-sale manufacturer" means a person:
70          (a) that is both a manufacturer and a dealer;
71          (b) that is:
72          (i) an electric vehicle manufacturer; or
73          (ii) a low-volume manufacturer;
74          (c) that is not a franchise holder;
75          (d) that is domiciled in the United States; and
76          (e) whose chief officers direct, control, and coordinate the person's activities as a
77     direct-sale manufacturer from a physical location in the United States.
78          (11) "Direct-sale manufacturer salesperson" means an individual who for a salary,
79     commission, or compensation of any kind, is employed either directly, indirectly, regularly, or
80     occasionally by a direct-sale manufacturer to sell, purchase, or exchange or to negotiate for the
81     sale, purchase, or exchange of a motor vehicle manufactured by the direct-sale manufacturer
82     who employs the individual.
83          (12) (a) "Dismantler" means a person engaged in the business of dismantling motor
84     vehicles subject to registration under Chapter 1a, Motor Vehicle Act, for the resale of parts or
85     for salvage.
86          (b) "Dismantler" includes a person who dismantles three or more motor vehicles in any
87     12-month period.
88          (13) "Distributor" means a person who has a franchise from a manufacturer of motor
89     vehicles to distribute motor vehicles within this state and who in whole or in part sells or
90     distributes new motor vehicles to dealers or who maintains distributor representatives.
91          (14) "Distributor branch" means a branch office similarly maintained by a distributor
92     for the same purposes a factory branch is maintained.
93          (15) "Distributor representative" means a person and each officer and employee of the
94     person engaged as a representative of a distributor or distributor branch of motor vehicles to
95     make or promote the sale of the distributor or the distributor branch's motor vehicles, or for
96     supervising or contacting dealers or prospective dealers of the distributor or the distributor
97     branch.
98          (16) "Division" means the Motor Vehicle Enforcement Division created in Section
99     41-3-104.
100          (17) "Electric vehicle manufacturer" means a person that, in this state, sells, displays
101     for sale, or offers for sale or exchange only new motor vehicles of the person's own line-make
102     that are:
103          (a) exclusively propelled through the use of electricity, a hydrogen fuel cell, or another
104     non-fossil fuel source;
105          (b) (i) passenger vehicles with a gross vehicle weight rating of 14,000 pounds or less;
106     or
107          (ii) trucks with a gross vehicle weight rating of 14,000 pounds or less; and
108          (c) manufactured by the person.
109          (18) "Factory branch" means a branch office maintained by a person who manufactures
110     or assembles motor vehicles for sale to distributors, motor vehicle dealers, or who directs or
111     supervises the factory branch's representatives.
112          (19) "Factory representative" means a person and each officer and employee of the
113     person engaged as a representative of a manufacturer of motor vehicles or by a factory branch
114     to make or promote the sale of the manufacturer's or factory branch's motor vehicles, or for
115     supervising or contacting the dealers or prospective dealers of the manufacturer or the factory
116     branch.
117          (20) "Fleet transaction" means a licensee's sale of one or more motor vehicles to a
118     manufacturer-approved current fleet customer under the manufacturer's fleet program.
119          [(20)] (21) (a) "Franchise" means a contract or agreement between a dealer and a
120     manufacturer of new motor vehicles or a manufacturer's distributor or factory branch by which
121     the dealer is authorized to sell any specified make or makes of new motor vehicles.
122          (b) "Franchise" includes a contract or agreement described in Subsection [(20)(a)]
123     (21)(a) regardless of whether the contract or agreement is subject to Title 13, Chapter 14, New
124     Automobile Franchise Act, Title 13, Chapter 35, Powersport Vehicle Franchise Act, or neither.
125          [(21)] (22) (a) "Franchise holder" means a manufacturer who:
126          (i) previously had a franchised dealer in the United States;
127          (ii) currently has a franchised dealer in the United States;
128          (iii) is a successor to another manufacturer who previously had or currently has a
129     franchised dealer in the United States;
130          (iv) is a material owner of another manufacturer who previously had or currently has a
131     franchised dealer in the United States;
132          (v) is under legal or common ownership, or practical control, with another
133     manufacturer who previously had or currently has a franchised dealer in the United States; or
134          (vi) is in a partnership, joint venture, or similar arrangement for production of a
135     commonly owned line-make with another manufacturer who previously had or currently has a
136     franchised dealer in the United States.
137          (b) "Franchise holder" does not include a manufacturer described in Subsection
138     [(21)(a),] (22)(a), if at all times during the franchised dealer's existence, the manufacturer had
139     legal or practical common ownership or common control with the franchised dealer.
140          [(22)] (23) "Low-volume manufacturer" means a manufacturer who:
141          (a) in this state, sells, displays for sale, or offers for sale or exchange only new motor
142     vehicles of the person's own line make that are:
143          (i) (A) passenger vehicles with a gross vehicle weight rating of 14,000 pounds or less;
144     or
145          (B) trucks with a gross vehicle weight rating of 14,000 pounds or less; and
146          (ii) manufactured by the person; and
147          (b) constructs no more than 325 new motor vehicles in any 12-month period.
148          [(23)] (24) "Line-make" means motor vehicles that are offered for sale, lease, or
149     distribution under a common name, trademark, service mark, or brand name of the
150     manufacturer.
151          [(24)] (25) "Manufacturer" means a person engaged in the business of constructing or
152     assembling new motor vehicles, ownership of which is customarily transferred by a
153     manufacturer's statement or certificate of origin, or a person who constructs three or more new
154     motor vehicles in any 12-month period.
155          [(25)] (26) "Material owner" means a person who possesses, directly or indirectly, the
156     power to direct, or cause the direction of, the management, policies, or activities of another
157     person:
158          (a) through ownership of voting securities;
159          (b) by contract or credit arrangement; or
160          (c) in another way not described in Subsections [(25)(a)] (26)(a) and (b).
161          [(26)] (27) (a) "Motor vehicle" means a vehicle that is:
162          (i) self-propelled;
163          (ii) a trailer;
164          (iii) a travel trailer;
165          (iv) a semitrailer;
166          (v) an off-highway vehicle; or
167          (vi) a small trailer.
168          (b) "Motor vehicle" does not include:
169          (i) mobile homes as defined in Section 41-1a-102;
170          (ii) trailers of 750 pounds or less unladen weight;
171          (iii) a farm tractor or other machine or tool used in the production, harvesting, or care
172     of a farm product; and
173          (iv) park model recreational vehicles as defined in Section 41-1a-102.
174          [(27)] (28) "Motorcycle" means the same as that term is defined in Section 41-1a-102.
175          [(28)] (29) "New motor vehicle" means a motor vehicle that:
176          (a) has never been titled or registered; and
177          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
178     less than 7,500 miles.
179          [(29)] (30) "Off-highway vehicle" means the same as that term is defined in Section
180     41-22-2.
181          [(30)] (31) "Pawnbroker" means a person whose business is to lend money on security
182     of personal property deposited with him.
183          [(31)] (32) (a) "Principal place of business" means a site or location in this state:
184          (i) devoted exclusively to the business for which the dealer, manufacturer,
185     remanufacturer, transporter, dismantler, crusher, or body shop is licensed, and businesses
186     incidental to them;
187          (ii) sufficiently bounded by fence, chain, posts, or otherwise marked to definitely
188     indicate the boundary and to admit a definite description with space adequate to permit the
189     display of three or more new, or new and used, or used motor vehicles and sufficient parking
190     for the public; and
191          (iii) that includes a permanent enclosed building or structure large enough to
192     accommodate the office of the establishment and to provide a safe place to keep the books and
193     other records of the business, at which the principal portion of the business is conducted and
194     the books and records kept and maintained.
195          (b) "Principal place of business" means, with respect to a direct-sale manufacturer, the
196     direct-sale manufacturer's showroom, which shall comply with the requirements of Subsection
197     [(31)(a).] (32)(a).
198          [(32)] (33) "Remanufacturer" means a person who reconstructs used motor vehicles
199     subject to registration under Chapter 1a, Motor Vehicle Act, to change the body style and
200     appearance of the motor vehicle or who constructs or assembles motor vehicles from used or
201     new and used motor vehicle parts, or who reconstructs, constructs, or assembles three or more
202     motor vehicles in any 12-month period.
203          [(33)] (34) "Salesperson" means an individual who for a salary, commission, or
204     compensation of any kind, is employed either directly, indirectly, regularly, or occasionally by
205     any new motor vehicle dealer or used motor vehicle dealer to sell, purchase, or exchange or to
206     negotiate for the sale, purchase, or exchange of motor vehicles.
207          [(34)] (35) "Semitrailer" means the same as that term is defined in Section 41-1a-102.
208          [(35)] (36) "Showroom" means a site or location in the state that a direct-sale
209     manufacturer uses for the direct-sale manufacturer's business, including the display and
210     demonstration of new motor vehicles that are exclusively of the same line-make that the
211     direct-sale manufacturer manufactures.
212          [(36)] (37) "Small trailer" means a trailer that has an unladen weight of:
213          (a) more than 750 pounds; and
214          (b) less than 2,000 pounds.
215          [(37)] (38) "Special equipment" includes a truck mounted crane, cherry picker, material
216     lift, post hole digger, and a utility or service body.
217          [(38)] (39) "Special equipment dealer" means a new or new and used motor vehicle
218     dealer engaged in the business of buying new incomplete motor vehicles with a gross vehicle
219     weight of 12,000 or more pounds and installing special equipment on the incomplete motor
220     vehicle.
221          [(39)] (40) "Trailer" means the same as that term is defined in Section 41-1a-102.
222          [(40)] (41) "Transporter" means a person engaged in the business of transporting motor
223     vehicles as described in Section 41-3-202.
224          [(41)] (42) "Travel trailer" means the same as that term is defined in Section
225     41-1a-102.
226          [(42)] (43) "Used motor vehicle" means a vehicle that:
227          (a) has been titled and registered to a purchaser other than a dealer; or
228          (b) for a motor vehicle that is not a trailer, travel trailer, or semitrailer, has been driven
229     7,500 or more miles.
230          [(43)] (44) "Wholesale motor vehicle auction" means a dealer primarily engaged in the
231     business of auctioning consigned motor vehicles to dealers or dismantlers who are licensed by
232     this or any other jurisdiction.
233          Section 2. Section 41-3-103 is amended to read:
234          41-3-103. Exceptions to "dealer" definition -- Dealer licensed in other state --
235     Direct-sale manufacturer -- Direct-sale manufacturer salesperson.
236          Under this chapter:
237          (1) (a) An insurance company, bank, finance company, company registered as a title
238     lender under Title 7, Chapter 24, Title Lending Registration Act, company registered as a check
239     casher or deferred deposit lender under Title 7, Chapter 23, Check Cashing and Deferred
240     Deposit Lending Registration Act, public utility company, commission impound yard, federal
241     or state governmental agency, or any political subdivision of any of them or any other person
242     coming into possession of a motor vehicle as an incident to its regular business, that sells the
243     motor vehicle under contractual rights that it may have in the motor vehicle is not considered a
244     dealer.
245          (b) A person who sells or exchanges only those motor vehicles that the person has
246     owned for over 12 months is not considered a dealer.
247          (2) (a) A person engaged in leasing motor vehicles is not considered as coming into
248     possession of the motor vehicles incident to the person's regular business.
249          (b) A pawnbroker engaged in selling, exchanging, or pawning motor vehicles is
250     considered as coming into possession of the motor vehicles incident to the person's regular
251     business and must be licensed as a used motor vehicle dealer.
252          (3) A person currently licensed as a dealer or salesperson by another state or country
253     and not currently under license suspension or revocation by the administrator may only sell
254     motor vehicles in this state to licensed dealers, dismantlers, or manufacturers, and only at their
255     places of business.
256          (4) Except as otherwise expressly provided:
257          (a) a direct-sale manufacturer is subject to the same provisions under this chapter as a
258     new motor vehicle dealer; and
259          (b) a direct-sale manufacturer salesperson is subject to the same provisions under this
260     chapter as a salesperson.
261          (5) Notwithstanding any provision of this chapter to the contrary, a direct-sale
262     manufacturer:
263          (a) may, without a franchise, sell, display for sale, or offer for sale or exchange a motor
264     vehicle:
265          (i) [described in Subsection 41-3-102(17)] if the direct-sale manufacturer is an electric
266     vehicle manufacturer; or
267          (ii) [described in Subsection 41-3-102(23)] if the direct-sale manufacturer is a
268     low-volume manufacturer; and
269          (b) may not sell, display for sale, or offer for sale or exchange a new motor vehicle that
270     is not of the same line-make the direct-sale manufacturer manufactures.
271          Section 3. Section 41-3-211 is amended to read:
272          41-3-211. Unlawful acts or practices.
273          (1) A licensee may not knowingly or intentionally engage in any of the following
274     unlawful acts or practices:
275          (a) provide a financial institution or person being contacted to provide financing for the
276     purchase of a motor vehicle, a motor vehicle contract of sale, document of sale, contract,
277     request for proposal, or other document that does not accurately state:
278          (i) the terms of the motor vehicle purchase; or
279          (ii) if the vehicle is a rebuilt vehicle;
280          (b) sell a motor vehicle to a purchaser that is subject to financing that is not the motor
281     vehicle described in a motor vehicle contract of sale, document of sale, contract, request for
282     proposal, or other document as of the time the contract of sale, document of sale, contract,
283     request for proposal, or other document provided to the financial institution or person
284     providing financing; [or]
285          (c) make payments on any loan or lease on a motor vehicle subject to a loan or lease
286     that is subject to the payoff requirements of Subsection 41-3-402(1)[.]; or
287          (d) except as provided in Subsection (3), require a purchaser to pay as a condition of
288     the sale:
289          (i) an amount higher than the negotiated purchase price; or
290          (ii) any fee or charge in addition to the negotiated purchase price.
291          (2) The provisions of Subsection (1)(c) do not prohibit a dealer from making one or
292     more loan or lease payments for a motor vehicle if making the payments is:
293          (a) stated in writing in a motor vehicle contract of sale, document of sale, contract,
294     request for proposal, or other document; or
295          (b) stated in the notice to the lienholder of the trade-in of the vehicle as required by
296     Subsection 41-3-402(5).
297          (3) Subsection (1)(d) does not prohibit a licensee from charging any of the following in
298     addition to the negotiated purchase price detailed on the transaction disclosure form required
299     pursuant to Section 41-3-401.6:
300          (a) a temporary permit fee pursuant to Section 41-1a-211;
301          (b) a fee required in Chapter 1a, Part 5, Titling Requirement;
302          (c) motor vehicle registration fees required under this title;
303          (d) a dealer documentary service fee as described in rules made in accordance with
304     Sections 41-3-301 and 41-3-302;
305          (e) sales and use taxes as required by Title 59, Chapter 12, Sales and Use Tax Act;
306          (f) for the purchase of a semi-tractor with a gross vehicle weight rating of over 14,000
307     pounds, an increase to the negotiated purchase price paid by the licensee that is imposed by the
308     manufacturer after the negotiated purchase price is determined by the licensee and the
309     purchaser; or
310          (g) any other tax or fee required by federal or state law to be paid by the purchaser of a
311     motor vehicle.
312          [(3)] (4) (a) [A] Except as provided in Subsection (4)(b), a person who violates the
313     provisions of this section is subject to the penalties provided in Section 41-3-701 and
314     Subsection 41-3-702(1)(a).
315          (b) A person who violates Subsection (1)(d) is subject to the penalties provided in
316     Subsection 41-3-702(1)(c).
317          (5) (a) Subsection (1)(d) does not apply to a sale at auction and does not prohibit a
318     licensee who conducts an auction from charging the winning bidder fees related to the auction
319     or other vehicle-related services.
320          (b) Subsection (1)(d) does not apply to the sale of motor vehicles in a fleet transaction.
321          Section 4. Section 41-3-401.6 is enacted to read:
322          41-3-401.6. Transaction disclosure form.
323          (1) (a) Before a sale is finalized, a licensee shall provide the transaction disclosure
324     form described in Subsection (3).
325          (b) The licensee and the purchaser shall each execute the transaction disclosure form to
326     memorialize the negotiated terms and prices of the sale.
327          (c) The licensee shall provide the purchaser a copy of the transaction disclosure form.
328          (2) The commission shall create the transaction disclosure form as described in
329     Subsection (3).
330          (3) The transaction disclosure form shall include:
331          (a) the negotiated sale price of the vehicle;
332          (b) the negotiated value of the trade-in vehicle, if applicable;
333          (c) an itemized list of the following legally required taxes and fees:
334          (i) a temporary permit fee pursuant to Section 41-1a-211;
335          (ii) a fee required in Chapter 1a, Part 5, Titling Requirement;
336          (iii) motor vehicle registration fees required under this title;
337          (iv) a dealer documentary service fee as described in rules made in accordance with
338     Sections 41-3-301 and 41-3-302;
339          (v) sales and use taxes required by Title 59, Chapter 12, Sales and Use Tax Act; and
340          (vi) any other taxes or fees required by federal or state law to be paid by the purchaser
341     of a motor vehicle.
342          (d) the subtotal of the amounts described in Subsections (3)(a) through (c);
343          (e) any other optional charges as negotiated by the licensee and purchaser; and
344          (f) the total amount for which the licensee agrees to seek arrangements for financing, if
345     applicable.
346          (4) A transaction disclosure form described in this section is not required for a sale at
347     auction or a fleet transaction.
348          Section 5. Section 41-3-702 is amended to read:
349          41-3-702. Civil penalty for violation.
350          (1) The following are civil violations under this chapter and are in addition to criminal
351     violations under this chapter:
352          (a) Level I:
353          (i) failing to display business license;
354          (ii) failing to surrender license of salesperson because of termination, suspension, or
355     revocation;
356          (iii) failing to maintain a separation from nonrelated motor vehicle businesses at
357     licensed locations;
358          (iv) issuing a temporary permit improperly;
359          (v) failing to maintain records;
360          (vi) selling a new motor vehicle to a nonfranchised dealer or leasing company without
361     licensing the motor vehicle;
362          (vii) special plate violation;
363          (viii) failing to maintain a sign at a principal place of business; or
364          (ix) failing to store a salvage vehicle purchased at a motor vehicle auction in a secure
365     location until the purchaser or a transporter has provided the proper documentation to take
366     possession of the salvage vehicle.
367          (b) Level II:
368          (i) failing to report sale;
369          (ii) dismantling without a permit;
370          (iii) manufacturing without meeting construction or vehicle identification number
371     standards;
372          (iv) withholding customer license plates;
373          (v) selling a motor vehicle on consecutive days of Saturday and Sunday; or
374          (vi) failing to record and report the sale of a salvage vehicle at a motor vehicle auction
375     as described in Section 41-3-201.
376          (c) Level III:
377          (i) operating without a principal place of business;
378          (ii) selling a new motor vehicle as a dealer who is not a direct-sale manufacturer
379     without holding the franchise;
380          (iii) crushing a motor vehicle without proper evidence of ownership;
381          (iv) selling from an unlicensed location;
382          (v) altering a temporary permit;
383          (vi) refusal to furnish copies of records;
384          (vii) assisting an unlicensed dealer or salesperson in sales of motor vehicles;
385          (viii) advertising violation;
386          (ix) failing to separately identify the fees required by Title 41, Chapter 1a, Motor
387     Vehicle Act;
388          (x) encouraging or conspiring with unlicensed persons to solicit for prospective
389     purchasers; [or]
390          (xi) selling, offering for sale, or displaying for sale or exchange a vehicle, vessel, or
391     outboard motor in violation of Section 41-1a-705[.]; or
392          (xii) a violation of Subsection 41-3-211(1)(d).
393          (2) (a) The schedule of civil penalties for violations of Subsection (1) is:
394          (i) Level I: $25 for the first offense, $100 for the second offense, and $250 for the third
395     and subsequent offenses;
396          (ii) Level II: $100 for the first offense, $250 for the second offense, and $1,000 for the
397     third and subsequent offenses; and
398          (iii) Level III: $250 for the first offense, $1,000 for the second offense, and $5,000 for
399     the third and subsequent offenses.
400          (b) When determining under this section if an offense is a second or subsequent
401     offense, only prior offenses committed within the 12 months before the commission of the
402     current offense may be considered.
403          (3) Knowingly selling a salvage vehicle, as defined in Section 41-1a-1001, without
404     disclosing that the salvage vehicle has been repaired or rebuilt is a civil violation in addition to
405     a criminal violation under Section 41-1a-1008.
406          (4) The civil penalty for a violation under Subsection (3) is:
407          (a) not less than $1,000, or treble the actual damages caused by the person, whichever
408     is greater; and
409          (b) reasonable attorney fees and costs of the action.
410          (5) A civil action may be maintained by a purchaser or by the administrator.
411          Section 6. Effective date.
412          This bill takes effect on July 1, 2023.