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NO. 31. AN ACT RELATING TO MOTOR VEHICLE DEALERS.

(S.17)

It is hereby enacted by the General Assembly of the State of Vermont:

Sec. 1. 23 V.S.A. § 4(8) is amended to read:

(8) *["Dealer" includes "new car dealer," "used car dealer," "finance car dealer" as well as other types of motor vehicle dealers;]* "Dealer" shall mean a person, partnership, or corporation who is engaged in the business of buying, selling or exchanging new or used motor vehicles, as well as other types of motor vehicle dealers, except finance and auction dealer and transporter:

(A) *["New car dealer" or "used car dealer" means a person whose primary activity is in the business of buying, selling or exchanging new or used motor vehicles and]* who may, as part of or incidental to such business, repair such vehicles, sell *[motor vehicle]* parts and accessories or lease or rent motor vehicles and who:

(i) Has had no previous record of willful violations of dealer laws or regulations in this or any other jurisdiction;

(ii) For initial applications only, has had no previous record of criminal convictions for extortion, forgery, fraud, larceny or embezzlement in this or any other jurisdiction;

*[(ii)]*(iii) Has no unsatisfied judgments against him or her arising out of violations of consumer protection laws in this or any other jurisdiction; *[(iii)]*(iv) Presents proof of compliance with the provisions of 23 V.S.A. § 800 at the time application for registration is made; *[(iv)]*(v) Is open for business at least 104 days during the calendar year. When the application for registration as a new car dealer or used car dealer is made, the applicant shall provide the commissioner with the hours of operation of the business which the person shall maintain during the registration period*[.]* ; *[(v)]*(vi) Owns real estate (as defined in section 132 of Title 1) as his or her place of business or has a lease with an expiration date not earlier than the last day of the registration year for which registration is sought under the provisions of subchapter 4 of chapter 7 of this title which *[has an appraised value (as defined in section 3481 of Title 32) of not less than ten thousand dollars and]* includes a building *[which has suitable and adequate facilities for the repair of motor vehicles, and has inside storage facilities for at least five standard sized pleasure cars]* of at least 1,200 square feet in size used primarily for the business of the dealership. The building shall have adequate facilities for the maintenance of the records required by law to be kept including, but not limited to, those required by section 466 of this title and for the transfer of motor vehicles.

(B) "New car dealer" shall mean a person who, in addition to satisfying all of the requirements set forth in subdivision (8)(A) of this section, has a valid sales and service agreement, franchise or contract with a manufacturer, assembler, importer or distributor of new motor vehicles for the retail sale of new motor vehicles.

(C) "Finance dealer" means a person who is authorized to do business in this state and is actively engaged in and devoting a principal portion of his or her time to the wholesale and retail financing of motor vehicle sales by and through direct wholesale loans to those who are registered motor vehicle dealers under *[subdivisions (A) or (B) above]* chapter 7 of this title or the purchase of retail conditional sales contracts from the dealers. A person entitled to dealer registration under this subdivision shall be deemed a dealer only to the extent of moving or operating under dealer registration a motor vehicle which he or she is repossessing in the regular course of his or her business. A person entitled to dealer registration under this subdivision shall also be entitled to demonstrate repossessed motor vehicles.

(D) "Auction dealer" means a person who is authorized to do business in this state and is engaged in the sale of motor vehicles at public auction subject to the provisions of sections 451, 458, 459, 463, 466, 467 and 468 of this title. A motor vehicle *[owned by the auction dealer and]* to be sold at public auction by the auction dealer may be transported to the place of auction for a period of up to 30 days prior to the date of auction on auction dealer plates and then only by the dealer or his or her employee. A motor vehicle sold by an auction dealer may only be operated on auction dealer plates on the date of sale and then only by the dealer or his or her employee or by the purchaser when accompanied by the dealer or employee within ten miles of the place of auction.

*[(E) A person shall not be considered to have as his or her primary activity the business of buying, selling or exchanging new or used motor vehicles so as to qualify him or her for new or used car dealer registration under the provisions of 23 V.S.A. § 451 unless, during the immediately preceding registration year, he or she has sold not less than 12 pleasure cars or trucks not owned and registered by him or her, or has sold not less than 12 pleasure cars or trucks owned or registered, or both, by him or her which have been used in lease or rental service. Any vehicle sold by a leasing or rental company to a registered new or used car dealer shall not count toward the 12 vehicles required for registration as a dealer. The requirements of this subdivision shall not prevent the registration of a person who has not previously been registered as a new car dealer or used car dealer in this state but who is otherwise qualified for registration provided, however, the requirements of this subdivision shall be applicable to that person in all years subsequent to the initial year of registration.]* *[(F)]*(E) As used in this subdivision, "person" shall include any individual or, in the case of partnerships, corporations or other entities, the directors, shareholders, officers or partners in these entities. The term "business use of the dealer" shall only mean the motor vehicle business of the motor vehicle dealer to which number plates have been issued pursuant to section 453 of this title.

(F) For new and used car dealers, "engaged in the business" means selling 12 or more pleasure cars or motor trucks owned but not registered by the seller except for vehicles that are to be scrapped, dismantled or destroyed. "Engaged in the business" shall also mean selling, during the immediately preceding registration year, 12 or more pleasure cars or motor trucks which have been in lease or rental services, and persons so engaged shall meet all obligations required of dealers.

Sec. 2. 23 V.S.A. § 4(42) is amended to read:

(42) "Transporter" shall mean *[every]* a person engaged in the business of delivering vehicles of a type required to be registered hereunder from a manufacturing, assembling, or distributing plant to dealers or sales agents of a manufacturer, and includes persons regularly engaged in the business of towing trailer coaches, owned by them or temporarily in their custody, on their own wheels over public highways, persons towing office trailers owned by them or temporarily in their custody, on their own wheels over public highways, persons regularly engaged and properly licensed for the short-term rental of "storage trailers" owned by them and who move these storage trailers on their own wheels over public highways, and persons regularly engaged in the business of moving modular homes over public highways and shall also include dealers and automobile repair shop owners when engaged in the transportation of motor vehicles to and from their place of business for repair purposes. "Transporter" shall include other persons, firms or corporations, provided the transportation and delivery of motor vehicles is a common and usual incident to the repossession of motor vehicles in connection with their business. For purposes of this subdivision, "short-term rental" shall mean a period of less than one year. Before a person may become licensed as a transporter, he or she shall present proof of compliance with section 800 of this title. He or she shall also either own or lease a permanent place of business located in this state where business shall be conducted during regularly established business hours and the required records stored and maintained.

Sec. 3. 23 V.S.A. § 451 is amended to read:

§ 451. DEALER'S CERTIFICATE

(a) Instead of registering each motor vehicle owned by him or her, a *[new car or used car dealer or a finance]* dealer may make application under oath to the commissioner, upon forms prescribed and furnished by the commissioner for that purpose, and accompanied by such additional information and certifications as the commissioner may reasonably require, for a general distinguishing number for such motor vehicles. If the commissioner is satisfied that the applicant meets all the requirements of section 4*[(8)]* and chapter 7 of this title and is qualified to engage in such business, the commissioner may issue to the applicant a certificate of registration containing the name, place of residence and address of such applicant, the general distinguishing number assigned, and such *[further]* additional information as the commissioner may determine. If a dealer has a place of business or agency in more than one city or town, he or she shall file an application and secure a certificate of registration for each place of business or agency. The place of business or agency shall mean a place in any town where motor vehicles owned by a dealer are regularly kept or exposed for sale in the custody or control of the dealer or a salesman, employee or agent of such dealer. In his or her discretion, the commissioner may assign the same distinguishing number with more than one certificate to any dealer who has separate places of business within the same or an adjacent city or town within Vermont. The commissioner may allow a dealer having one distinguishing number with more than one certificate to maintain only one central area for the maintenance of records required by law to be kept, including, but not limited to those required by section 466 of this title and for the transfer of motor vehicles. This location must be in Vermont and must be disclosed on the application prior to approval and may be changed only with the approval of the commissioner or his or her agent. Dealer registration plates shall contain letters indicating the type of dealer certificate issued before the distinguishing number.

(b) With the prior approval of the commissioner, a Vermont *[new or used car]* dealer may display vehicles on a temporary basis, but in no instance for more than 10 days, at fairs, shows, exhibitions and other *[similar]* off-site locations within the manufacturer's stated area of responsibility in the franchise agreement*[, or in the event there is no manufacturer's stated area of responsibility, within 25 air miles of the exact location of the dealership as authorized by the commissioner]*. No sales may be transacted at these off site locations. A dealer desiring to display vehicles temporarily at an off-site location shall *[apply for approval in writing to]* notify the commissioner *[on forms]* in a manner prescribed *[and furnished]* by the commissioner no less than *[30]* two days prior to the first day for which approval is requested.

(c) A new or used car dealer may temporarily transfer possession of a vehicle owned by the dealer on consignment to a registered auction dealer or Vermont licensed auctioneer to be sold at public or private wholesale auction by the auction dealer or Vermont licensed auctioneer.

Sec. 4. 23 V.S.A. § 452 is amended to read:

§ 452. EXPIRATION

*[Dealers']* Unless otherwise specifically provided or unless canceled, revoked or suspended, dealers' registrations and certificates shall *[expire on the last day of February next following the date]* become void one year from the first day of the month of issue. The commissioner may renew dealer registrations for two years and may stagger expiration dates.

Sec. 5. 23 V.S.A. § 459 is amended to read:

§ 459. NOTICE TO COMMISSIONER

(a) Upon issuing a *[set of]* number plate with temporary validation stickers, temporary number *[plates]* plate or decal to a purchaser for attachment to a motor vehicle, a dealer shall *[immediately]*, within three business days, forward to the commissioner the application and fee, deposited with him or her by the purchaser, together with notice of such issue and such other information as the commissioner may require.

(b) If a number plate with temporary validation stickers, temporary registration plate or decal is not issued by a dealer in connection with the sale or exchange of a motor vehicle, the dealer may accept, from the purchaser, a properly executed registration, tax and title application and the required fees for transmission to the commissioner. The dealer shall *[immediately]*, within three business days, forward to the commissioner the application and fee together with such other information as the commissioner may require.

Sec. 6. 23 V.S.A. § 462 is amended to read:

§ 462. CANCELLATION OF DEALER'S REGISTRATION

(a) The commissioner may cancel, revoke or suspend a registration certificate issued to a dealer under the provisions of this chapter, whenever, after the dealer has been afforded the opportunity of a hearing before the commissioner or upon conviction in any court *[in this state]* in any jurisdiction, it appears that the dealer has *[wilfully]* willfully violated any motor vehicle law of this state or any lawful regulation of the commissioner, applying to dealers or when it appears that the dealer has engaged in fraudulent or unlawful practices *[in]* related to the purchase, sale or exchange of motor vehicles. A dealer whose certificate has been canceled shall forthwith return to the commissioner the registration certificate and *[the]* any and all number plates, or numbers or decals furnished him or her by the commissioner; and the *[right]* privilege to operate, purchase, sell or exchange motor vehicles under his or her dealer's number shall cease. An application for a new dealer's license for that dealer will not be considered until the suspension period has been served.

(b) A fee of $30.00 shall be paid to the commissioner prior to the reinstatement of any dealer's license or registration certificate *[cancelled]* canceled, revoked or suspended for cause.

Sec. 7. 23 V.S.A. § 465 is amended to read:

§ 465. LOANING OF PLATES OR VEHICLES PROHIBITED

A dealer shall not loan or lease registration certificates, validation stickers, numbers, or decals or number plates which have been assigned to him or her under the provisions of this chapter, nor shall he or she loan or lease a motor vehicle to which his or her dealer's decals, numbers or number plates have been attached, nor loan or lease his or her dealer's decals, numbers or number plates to a subagent.

Sec. 8. 23 V.S.A. § 466 is amended to read:

§ 466. RECORDS

On a form prescribed or approved by the commissioner, every licensed *[motor vehicle]* dealer shall maintain and retain for six years a record containing the following information, which shall be open to inspection by any *[peace]* law enforcement officer or motor vehicle inspector or other agent of the commissioner during reasonable business hours:

(1) Every motor vehicle which is bought, sold or exchanged by the licensee or received or accepted by the licensee for sale or exchange;

(2) Every motor vehicle which is bought or otherwise acquired and dismantled by the licensee;

(3) The name and address of the person from whom such motor vehicle was purchased or acquired, the date thereof, name and address of the person to whom any such motor vehicle was sold or otherwise disposed of and the date thereof, a sufficient description of every such motor vehicle by name and identifying numbers thereon to identify the same.

Sec. 9. 23 V.S.A. § 467 is amended to read:

§ 467. FAILURE OF DEALER TO REPORT PURCHASE AND SALE OF

VEHICLES

*[A]* On a form prescribed by the commissioner, a dealer *[who fails to]* shall send the reports of sale to the commissioner *[of motor vehicles required by this title]* upon the sale and relative to his or her sale or exchange of new or secondhand motor vehicles *[or who fails to]*, return to *[such]* the commissioner number plates coming into his or her possession through the sale or exchange of a motor vehicle, the registration of which has expired under the provisions of section 321 of this title *[shall be fined not more than $25.00]*.

Sec. 10. 23 V.S.A. § 468 is amended to read:

§ 468. GENERAL PROHIBITION

A dealer shall not operate a motor vehicle nor permit the same to be operated under dealer's registration numbers, except as specifically permitted in this chapter. No charge shall be made for any permitted use.

Sec. 11. 23 V.S.A. § 473 is amended to read:

§ 473. PENALTIES

(a) No person shall engage in the business of buying, selling or offering for sale motor vehicles as defined in *[sections 451, 454, 462, 469, 470, 471 and 472 of this title]* this subchapter except for vehicles that are to be scrapped, dismantled or destroyed without a dealer registration and obtaining dealer plates in accordance with the provisions of *[sections 451 and 453 of this title]* this subchapter. A person who violates this section shall be *[fined not more than $500.00 for the first offense and not more than $5,000.00 for each subsequent offense]* subject to the penalties established pursuant to section 475 of this title. For the purpose of the subchapter "engaged in the business" means selling *[of]* 12 or more *[than 12]* pleasure cars or motor trucks *[not]* owned *[and]* but not registered by the seller except for vehicles that are to be scrapped, dismantled or destroyed. "Engaged in the business" shall also mean selling, during the immediately preceding registration year, 12 or more pleasure cars or trucks which have been in lease or rental service and persons so engaged shall meet all obligations required of dealers.

(b) A person who misrepresents himself or herself as a dealer in the purchase, sale or exchange of a motor vehicle without obtaining a license or after the cancellation, suspension or revocation of the dealer's license shall be subject to the penalties established pursuant to section 475 of this title.

Sec. 12. 23 V.S.A. § 475 is added to read:

§ 475. ADMINISTRATIVE PENALTIES

(a) The commissioner may impose an administrative penalty of not more than $500.00 for each violation against a dealer or a transporter who violates the provisions of this subchapter.

(b) Each violation is a separate and distinct offense and, in the case of a continuing violation, each day's continuance may be deemed a separate and distinct offense. In no event shall the maximum amount imposed for a continuing offense exceed $1,000.00.

(c) The commissioner shall adopt rules establishing a schedule of administrative penalties to be imposed under this section. Penalties shall be based on the severity and frequency of the violation.

(d) The alleged violator shall be given notice and opportunity for a hearing. Service of the notice shall be sufficient if sent by first class mail to the address stated on the dealer's certificate of registration. The notice shall include the following:

(1) A factual description of the alleged violation.

(2) A reference to the particular statute allegedly violated.

(3) The amount of the proposed administrative penalty.

(4) A warning that the person will be deemed to have waived his or her right to a hearing, that the penalty will be imposed if no hearing is requested within 15 days from date of notice and that failure to pay a penalty may result in suspension of his or her license.

(e) A person who receives notice under subsection (d) of this section shall be deemed to have waived the right to a hearing unless, within 15 days from the date of the notice, the person requests a hearing in writing. If the person waives the right to a hearing, the commissioner shall issue a final order finding the person in default and imposing the penalty.

(f) The provisions of sections 105, 106 and 107 of this title shall apply to hearings conducted under this section.

(g) The commissioner may collect an unpaid administrative penalty by filing a civil action in superior court, or through any other means available to state agencies.

(h) If a penalty is not paid within 60 days after it is imposed, the commissioner may suspend any license, certificate, registration or permit issued under this subchapter.

(i) The remedies authorized by this section shall be in addition to any other civil or criminal remedies provided by law for violation of this subchapter.

Sec. 13. 23 V.S.A. § 497 is added to read:

§ 497. RULEMAKING

The commissioner may adopt rules pursuant to chapter 25 of Title 3 consistent with this chapter as may be necessary to carry their provisions into effect. The rules may prescribe what shall be requisite to obtaining or retaining a dealer registration and may, by way of illustration and not limitation, include requirements regarding maintenance of knowledge of regulatory criteria, training standards, convictions, ownership or leasehold interests in real estate, facilities, hours and days of operation, proof of compliance with any other applicable laws or rules and any other matter or thing which, in the commissioner's judgment, will contribute to the registration and reasonable regulation of dealers in order to promote business, prevent fraud and encourage fair and honest competition.

Sec. 14. REPORT

The commissioner of motor vehicles shall review penalties assessed under this act and, on or before March 15, 2000, shall report to the house and senate committees on transportation. The commissioner's report shall be in writing and shall include, at a minimum, an assessment of the impact of administrative penalties on compliance with dealer registration laws and the number and categories of administrative penalties assessed since July 1, 1999.

Sec. 15. ADMINISTRATIVE RULES

After enactment but prior to July 1, 1999, the commissioner may commence the rulemaking process authorized by this act; provided that final proposed rules shall not be filed with the legislative committee on administrative rules prior to July 1, 1999.

Sec. 16. EFFECTIVE DATE

This act shall take effect on July 1, 1999, except for this section and Secs. 1 and 15 which shall take effect upon passage.

Approved: May 19, 1999