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CURRENT BILL STATUS

MEASURE : S.B. No. 95
AUTHOR(S) : Corbett.
TOPIC : California Car Buyers’ Protection Act of 2009.
+LAST AMENDED DATE : 07/01/2009

TYPE OF BILL :
Active
Non-Urgency
Non-Appropriations
Majority Vote Required
Non-State-Mandated Local Program
Fiscal
Non-Tax Levy

LAST HIST. ACT. DATE: 09/11/2009
LAST HIST. ACTION : Enrolled. To Governor at 9 p.m.
COMM. LOCATION : ASM APPROPRIATIONS
COMM. ACTION DATE : 07/15/2009
COMM. ACTION : Do pass.
COMM. VOTE SUMMARY : Ayes: 11 Noes: 03 PASS

TITLE : An act to amend Sections 9262 and 9262.5 of, and to add
Section 11709.4 to, the Vehicle Code, relating to vehicles.

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by Michael Royce

There are two good ways to buy your new car or truck at a reasonable low price and avoid all of the negotiating games and hassles:

1. Buy through the Internet.

Buying your new or used car or truck through the Internet is the easiest and most hassle-free way to make the purchase.

All you have to do is choose the vehicle brand and model you wish to purchase as well as provide some basic contact information such as your name and e-mail address. In return, you’ll receive – via e-mail – low bottom-line selling prices from dealerships in your area for the exact vehicle you want to buy. Compare the various selling prices and find the lowest one. Then, simply go direct to that dealership’s Internet Department, sign the papers and drive your new car home – no negotiating, no hassles.

To begin the process, get your free price quotes from AOL Autos. It only takes a few minutes. This service is totally free and you are under no obligation or pressure to buy.

Within 24 hours, you’ll receive your bottom-line selling prices from dealerships in your area. Once you’ve compared the various prices and found the lowest one, you then have four good options:

• You can go to the dealership that gave you the lowest price, sign the papers and drive your new car home — no hassles, no negotiating.

• You can try to negotiate the lowest price with the dealership in order to get the price even lower. There’s nothing that says you can’t.

• You can shop the lowest price around to other dealerships to see if any of them are willing to beat it.

• You can do nothing. If you feel unsure or uncertain, then set it aside for a while. You are not obligated to buy anything you don’t want.

By getting these low bottom-line selling prices via the Internet, you’re avoiding the car salesman’s entire negotiating game altogether. And you’re buying your car at about the same price you would expect after lengthy negotiations. It’s certainly the fastest and easiest way to beat the car salesman.

2. Buy through the dealership’s Fleet Department.

Almost every dealership has a division called the “Fleet Department.” It usually consists of only a handful of salespeople who specialize in selling fleets of cars — large orders of several vehicles direct to businesses.

This department is authorized by the dealership to sell their cars at bottom-line non-negotiable prices.

The prices they offer are about the same as you would expect from an online price quote or after lengthy negotiations.

A secret of the car business is that many dealerships’ Fleet Departments also sell direct to the public.

By the rules of the game, however, they can’t advertise to the public since they don’t want to compete with the dealership’s retail sales team.

So to buy from the Fleet Department, you have to specifically ask.

To buy your vehicle direct from the dealership’s Fleet Department, simply call the dealership and ask to speak with the Fleet Manager.

When you get him on the line, explain to him that you’re ready to buy a car and you’d like to buy it from him.

If he asks you what business you are associated with, tell him where you work. He’ll probably be happy to set up an appointment with you.

When you arrive at the dealership, the Fleet Manager will show you the vehicle, allow you to test drive it, and then bring you to the office to discuss price.

With absolutely no negotiations, he’ll offer you a reasonable bottom-line non-negotiable selling price for the vehicle.

If the price he gives you falls within the pre-set limits of your buying goal and you’re satisfied with the deal, then you can buy the car. No pressure, no games, no hassles. If for some reason, you don’t want to buy the vehicle, you are under no obligation.

Simply thank the salesman for his time and leave on good terms. Then, if you’d like, you can visit (or call) the Fleet Departments of other dealerships to compare prices.

The selling prices offered by the various Fleet Departments can vary depending upon their inventories.

Getting a Surety Bond is Harder Than it Should Be

I found this article and thought it brought great insight about how getting bonds has become harder to get.

Sometimes getting a bond is harder than it should be.

You search for days sometimes months trying to find a bonding agency that can help you.

If you have less than A credit many bonding companies will not be willing to extend surety credit.

Most Surety Company requirements require a minimum of a 660 credit score to extend credit.

Since surety companies have a no loss philosophy.

What I meant by that is if you get a claim on you bond you have to pay the surety back. So surety companies are weary on write bonds for clients at a financial disadvantage.

The surety most of the time wants to see businesses with a high credit rating as well as stable and strong financial. With the way the economy currently is it is harder for a business to obtain their license bond, when a surety does not want to bond a company that is showing a loss.

Surety companies have been reluctant on writing larger performance bonds since these bonds pose the biggest risk. With contractors not having the ability to borrow against their home. It has made it harder to increase their working capital to fund larger projects.

Contractors have been suffering the most. Now the SBA has expanded its bonding programs to help accommodate contractors with their growing needs. The SBA is now bonding contractors with higher limits. Contracts that need Performance and payment bonds are now able to perform larger federal jobs. This has brought relief to many contractors because surety bonding companies have not been willing to write larger bonds.

What are Surety Bonds? Can you get bonding if you have bad credit? If you want to know these questions and learn the Surety Bond process visit our blog.

Article Source: http://EzineArticles.com/?expert=Robert_Jake

Surety Bonds are for consumer protection that coincides with professional services and licenses. Surety bonds are one of the oldest forms of insurance dating back thousands of years. Surety bonds are more of a reverse insurance policy protecting the consumer not the principal of the surety bond.

Commercial Insurance protects your business from being sued. Most common Commercial Insurance such as general liability protects your business for injury or property damage such as a fire or a customer that slips on a wet floor. There are many different forms of commercial insurance that can protect your company; also there are many endorsements you can purchase to give you and your business peace of mind. With Surety bonds there are no special endorsements that you can buy to protect your business. The surety bond does not protect you or your company but the consumer or the obligee in case of fraud or whatever underlining statue referenced in the surety bond form.

Insurance indemnifies the policy holder and protects your business in the event of insurance claim. A good example of this is D & O Insurance. D & O Insurance protects the personal assets as well as your spouse’s assets from lawsuits steaming from wrongful termination, sexual harassment, discrimination based on sex, age race or age. There are no Surety bonds that would cover this.

Surety Bonds indemnify the surety company and protects the consumer or oblige in the event of a claim. In Insurance you pay an deductible and the insurance company covers the rest of the claim up to the policy limits. Also you usually have the option to obtain a higher deducible to obtain a lower premium for your policy. With Surety bonds you do not have any option to have a lower or higher deductible to lower or raise the premium; there are no deductibles. You must also pay the Surety Company back for any claim that was spent by the surety company.

Surety bonds a required by law to obtain a license or to perform government contracts. The government requires performance bond to guarantee that the money for a project will be completed and tax payers will protected. While some Commercial insurance products are required by law such as general liability or workmen’s comp, they are not usually required to obtain a license.

Insurance policies limits can be lowered or raised where surety bond amounts are predetermined by the State or Federal Government and the principal cannot change them. Bonds are underwritten similar to a loan where insurance policies are not. Indemnification for insurance policies restore the principal to the financial condition they where in before the time of the loss. Indemnification for the insured in surety bonds restore the surety company to the financial position it was once in before the loss occurred.

I hope this has clarified the vast differences of these two different forms of insurance.

Surety Bond information is hard to come by I hope this has help you with the Surety Bond Process. You can learn more about Insurance and Surety Bond news with future articles

Article Source: http://EzineArticles.com/?expert=Robert_Jake

Upcoming Surety bonding requirements this year. This year we will see a lot more new surety bonding requirements from a variety of obligee’s. The reason why this will occur is because of the influx of claims from business defrauding the public. As businesses are facing closure desperate companies are violating the laws to stay open.

More restrictions as well as new bonds have been on the rise. Not to mention higher bond amounts as well as changing of the bond form languages for certain bonds. This has caused many businesses to close their doors do to bonds that were once considered a soft bond form to a hard to place bond.

New bonds as well as higher bond amounts
California last month tried to increase the bond amount required for car dealers from $50,000 to $100,000 the law was struck down but motion to reevaluate the new bill was granted.

So far this year a $50,000 Medicaid bond has been required for DMEPOS suppliers. The Surety bond is being required to hopefully combat fraud performed by DMEPOS suppliers. Even Suppliers of durable medical equipment such as prosthetics, orthodontist must obtain the bond.

Also this year a $25,000 MVD bond has been required for Indiana dealers. I have not seen a surety bond form as of yet but I will keep you posted.

Texas MVD bonds have increased from $25,000 to $50,000 as well; the bond will still remain a two year term.

Tennessee has also followed the trend by raising there bonds for auto dealers from $25,000 to $50,000 it is also a two year bond.

Currently there are talks of increasing contractor license bonds for California as well.

Article Source: http://EzineArticles.com/?expert=John_Bows

Many times when you need a surety bond you need it fast. A few years ago before technology changed the industry it could take weeks to get a bond. Now with automated bond forms and applications getting surety bonds have never been faster or easier. With the ability of typing surety bonds on a computer via pdf instead of a typewriter has made getting a bond issued done in minutes instead of hours.

Underwriting is now preformed with in minutes with certain types of bonds of course. We understand that the surety bond may be your last step in obtaining your license and we want to help get into business. The majority of license and permit bonds we underwrite, can be approved with in the same day.

Tips on How to Obtain a Surety Bond

Over the course of the last two years the surety Bond Industry has under gone dramatic changes. Due to increasing claims caused from suffering industries such as the car industry and the mortgage industry Surety Bonding Companies have to tighten their belts. Bonding companies are now enforcing tougher requirements and are increasing rates to compensate for their losses. Due to underwriting changes many teetering clients that had preferred rates will now be placed in the subprime market. Many established companies that had a preferred rate last year cannot qualify this year for same price or their rate has gone up.

New businesses are suffering the most because preferred rates are now only for established companies. Collateral is also coming to play with many surety companies requiring it for the majority of the surety bonds they write for new business. With that said here are a few tips to help you obtain a surety bond without collateral and at a reasonable rate.

Tip one: if you are a new business and you do not have a business financial prepared create a start up business financial and create a business plan as well. A start up business financial or a business plan with some companies may help you with the rate by one or two points.

Tip two: send a resume Surety companies what to see experience. Showing experience may help you get out of subprime pricing.

Tip three: If your credit is a little shaky or your financial s are not up to pair apply with a co-signer. When applying with a co-signer make sure that the cosigner can qualify. Here are a few qualifications for co-signers.

Clean credit with no collections or delinquencies a 650 credit score or higher owning property and real estate. The real estate does not need to be owned free in clear. Keep in mind if you have a co-signer you will not be able to obtain preferred pricing but it may help you get a price break.

Tip four: Use a surety bond broker your local insurance agent may not have the markets to help you since surety bonding is a specialty field. Many surety bond agents have programs that can obtain surety bonds for new business with no collateral.

Surety Bond types can be confusing you can learn more I have been writing Surety Bonds for over 10 years

Article Source: http://EzineArticles.com/?expert=John_Bows

To obtain a used car dealer’s license you must present a used car dealer’s bond when you submit your application to the dmv inspector.

Obtaining a permanent license can take more than 120 days to be issued.

How the bond works

The used car dealer bond is also known as the auto dealer bond, the motor vehicle dealer bond and the DMV bond.

Under its many aliases the used car dealer bond ensures auto dealers will act in conjunction with the guidelines set by the california dmv.

If the auto dealer fails to do so, the bond company will pay for the expenses incurred. The used car dealer bond provides security to consumers.

The used car dealer bond is a type of license surety bond between three parties:

* the principal—performs the actions outlined in the contract (the dealer)
* the obligee—receives the principal’s actions (the customer)
* the surety—guarantees the principal will perform the actions set out in the contract (the bond company)

The principal pays an annual amount to the surety company in exchange for financial reassurance.

If the principal defaults on the obligee then the obligee can make a claim against the bond.

If the surety determines the claim is valid then the surety reimburses the obligee, and the principal will have to repay the surety.

Rates

Bonding companies consider used car dealer bonds to be moderate risks.

The specific rate depends on the principal’s potential ability to pay back the full amount of the claim.

If the principal’s credit score and financial statements do not suggest that he or she could pay back the full amount, then the bond will not be granted.

Reply: becomeacardealer@gmail.com

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INTRODUCTION:
The current insurance and financial marketplace has greatly increased the scrutiny by Surety Bond Companies as they consider your application for a dealer’s bond.

This article should assist you in understanding what a bond company is seeking from you before you make
application for this required coverage.

Requirements do vary somewhat between bond companies. This is a general overview.

Q. What are the basic underwriting or selection criteria for a dealer’s surety bond?
A. Properly completed application and good credit! They also prefer that you have experience in the business.

Q. What kind of credit issues would prevent me from getting a bond?
A. Most bond companies require a 680 or better Experian score for their “standard” bonds. Specifically, you will have trouble getting a bond if you
have liens, judgements, or a bankruptcy; you have high revolving debt or high overall debt; you have collections; you have habitual or excessive
delinquencies; you have a large number of inquiries. You will probably be declined if you have had an automobile repossessed or are in arrears
on child support.

Q. Are there requirements other than the good credit score?
A. Yes! Ideally, the applicant will have assets equal to 5 times the amount of the bond AND own real estate.

Q. What if I have no credit history?
A. You may be asked to complete a financial statement. Your real estate, cash, investments and other assets will be considered.

Q. If an applicant for a bond does not have good credit or assets, are there companies that will accept a co-signer?
A. There are very few bond companies that will accept co-signers and those “co-sign” programs are rapidly disappearing from the marketplace. If you
find a company that does, you should expect to pay approximately $2000.00 per year for a bond AND the co-signer MUST have near-spotless
credit and have assets equal to 7 to 10 times the amount of the bond. Generally only family members are accepted as co-signers. Also, remember that in the event of a claim, the co-signer will be responsible for reimbursing the bond company for any claims paid.

Q. What if I don’t have a co-signer and my personal credit is unacceptable?
A. The only options are to either post a cash bond with the state equal to the bond requirements, or the “instant issue market” for bonds. With “instant
issue”, the applicant must post collateral in an amount equal to 10% of the bond (example: $5,000.00 for a $50,000.00 bond) and expect to pay at
least $5,000.00 per year for 3 years. Some bond companies may require payment of the collateral and the 3 years bond payment in advance of
issuing the bond! Some will allow payments one year at a time. Keep in mind that if you are required to post collateral on your bond, the bonding
company holds that collateral until your credit has improved or for at least 6 months after the bond period has expired.

Q. If I am considering a partnership, what if one partner’s credit is good and one partner’s is bad?
A. The rates will be based upon the credit history and assets of the partner with BAD CREDIT. It will still be considered as high risk though the 10%
collateral “instant issue market” bond may not become necessary. Bond amounts in this case might run from $1000.00 to $1500.00 per year or
more!

Q. What if I’m incorporated or a LLC? If one officer has bad credit and the other 2 or 3 have good credit? How will that be treated?
A. Usually, if two or three of the officers have clean credit and assets, the bonding company will treat the application as “standard” and you should
expect to pay somewhere around $500.00 or so per year for the surety bond. The bond company will require personal financial statements and
an indemnity (guarantee of payment for a bond claim) from all owners of 10% or more of the dealership.

Q. If I have a good credit score and assets, what should I expect to pay for a bond?
A. In North Carolina, for a $50,000.00 bond, you should expect to pay somewhere between $500.00 and $800.00 for a 3-year bond or approximately
$200.00 per year. For a $15,000.00 bond (South Carolina) you should pay approximately $375.00 to $400.00 for a 3-year bond or about $125.00
per year. As a general rule of thumb, a dealer with an acceptable credit history should expect to pay from 3% to 7% of the bond amount annually.
As an example, on a $50,000.00 bond the dealer might pay from $150.00 (3%) per year up to $350.00 (7%) per year.

Dealer Surety Bonds
Information for Independent Dealers

Q. Why are motor vehicle dealer bonds more expensive than other types of bonds?
A. Bonds for motor vehicle dealers are considered to be one the higher risk classes of bonds. They are a “financial guarantee” class of bond and the
claims frequency is high. This makes it hard for new, inexperienced or poorly funded dealerships to qualify for the “standard” bond market.
Basically, the bond company wants to know if the applicant, if necessary, could walk into a bank and obtain a $50,000.00 unsecured loan to repay
the bond company after a claim. If their credit or personal assets would not allow them to do so, they will not qualify for the “standard” bond market.

Q. What are the bond companies seeing from bond applicants that creates difficulties?
A. For some reason, the applicants will report “clean credit” on their application when in many cases they’ve had bankruptcies, foreclosures and
“write-offs” on unsecured credit card debt. In short, applicants for dealer bonds are not making accurate representations on their bond applications.
This causes the bond company to be wary of issuing a bond under any program to the applicant.

Q. So? Any advice if I suspect that my personal credit will be a barrier to obtaining a bond?
A. Check your own personal credit history before you apply.
Consider a corporation or LLC as the method to organize your dealership and ensure that those officers and partners have “clean credit”.
Complete the application accurately, honestly and legibly – no abbreviations. Don’t apply for a bond with multiple bond companies at once.
Each application will trigger a credit check that will further lower your credit score. If you are declined, do not resubmit your application with a different
business name, address, etc. As a general rule of thumb, most bond underwriters would rather have good credit with no experience than
experience with bad credit!

Q. Once I’ve got my bond, do I need to be concerned about renewing it?
A. Yes! If you have a claim against your bond, it will not be renewed. When your bond comes up for renewal, the Bond company may look at your
credit again, so keep your credit current and “clean”. Most importantly, operate your business in compliance with all local, state, and federal laws.

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California New Car Dealers Association
_________________________________________________________________________________________________________________________________
1415 L Street, Suite 700 ◦ Sacramento, California 95814 ◦ Office: 916.441.2599 ◦ Fax: 916.441.5612 ◦ www.cncda.org

April 17, 2009

The Honorable Christine Kehoe Chairperson, Senate Appropriations Committee State Capitol, Room 5050 Sacramento, California 95814

Re: SB 95 (Corbett),
As Amended April 14, 2009 –
Dealer Bonds & Trade-in Vehicles Position: OPPOSE Hearing: Senate Appropriations Committee, April 27, 2009

Dear Senator Kehoe:

The California New Car Dealers Association (CNCDA) is a statewide trade association that represents the interests of over 1200 franchised new car and truck dealer members.

CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles, but also engage in automotive service, repair and part sales. We are writing in opposition to SB 95 because it interferes with the implementation of the Consumer Motor Vehicle Recovery Fund which will provide financial relief to consumers harmed by insolvent dealers.

In addition, we oppose the bill because it would inhibit the free flow of commerce through excessive restrictions on the sale of trade-in vehicles, and cause many dealerships to close because of unnecessary changes to dealer bond requirements.

With respect to the bill’s fiscal impact, the Department of Motor Vehicles (DMV) is likely to incur significant costs in implementing and monitoring the provisions of SB 95.

Our opposition to the measure is more fully explained below.

SB 95 is the Wrong Solution Due to the current severe recession, our dealer members sold fewer new and used vehicles than at any time since 1994.

Nevertheless, California’s new car dealers sold over 2.5 million new and used vehicles in 2008 (1,447,460 new and 1,067,068 used) with around 60% of those transactions involving trade-ins. (1.5 million trades-ins).

According to the DMV, 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, DMV advises us that it was investigating 256 active cases where a dealer failed to pay off a consumer’s trade-in and 564 additional complaints from consumers that, for one reason or another, had not yet received verification that title to a vehicle bought or sold had been transferred.

CNCDA cannot condone any case in which a dealer fails to honor a legitimate obligation to pay off a vehicle taken in trade.

However, as the above-numbers illustrate, 99.9% or more of trade-in transactions take place without incident.

We must oppose any measure that would slow the trade of commerce for legitimate trade-in transactions and/or unnecessarily tie up valuable dealer working capital.

Moreover, there are legitimate reasons why a dealer may not payoff a trade-in vehicle, e.g., the trade-in customer bounces a down payment check; intentionally or unintentionally misrepresents the amount of the pay off balance at the time the vehicle is traded; switches out equipment or accessories on the trade-in vehicle in between the time it is appraised and traded-in, etc.

Two years ago CNCDA actively supported legislation authored by Senator Padilla to create the Consumer Motor Vehicle Consumer Recovery Fund (the “Recovery Fund”) [SB 729, Chap. 437, Stat. of 2007].

Under the provisions of SB 729, if an insolvent dealer fails to pay off a trade-in, an injured trade-in consumer can apply to the Recovery Fund for payment of up to $35,000.

Commencing July 1, 2008, every dealer in the state started paying $1 per vehicle sold into the Recovery Fund which now has a balance over $720,000.

Although political appointments to the Recovery Fund’s board took longer than anticipated, each vacancy has been filled, the Recovery Fund is now up and running and consumers can file claim forms to seek relief (http://www.dmv.ca.gov/pubs/olin/09_olin/09olin06.pdf).

Despite any past delays, no consumer has been prejudiced since any claim incurred on and after July 1, 2008 will accrue until paid.

Creating cumbersome restrictions on all trade-in transactions and imposing disproportionate penalties on all dealers because of the insolvency of a minority of dealers is the wrong solution for the trade-in problem.

The Recovery Fund should first be given an opportunity to succeed and, if necessary, be modified to ensure its success.

Trade-In Vehicles
Proposed Vehicle Code Section 4456.5.

Proposed Vehicle Code Section 4456.5 is supposedly designed to protect consumers in the event that a dealer breaches its contractual obligation to pay off a prior balance owing on a vehicle taken in trade.

However, the breadth and vagueness of the provision would lead to innumerable unintended and harsh consequences.

The proposed statute is triggered and takes control in every possible situation when a dealer “purchases” a used vehicle “with a balance due to a secured party.”

This goes well beyond acceptance of a trade-in with a prior credit or lease balance, and would extend, for example, to the following situations:

1. Purchase of a used vehicle with a clean title from another dealer but where the selling dealer’s used vehicle flooring lender has not been paid for the vehicle (Note: the statute does not require that the security interest of the “secured party” be perfected on the title, or otherwise, such as by a UCC-1 filing).

2. Purchase of a used vehicle with a clean title from another dealer but where the selling dealer’s landlord claims its lease with the dealer gives it a security interest in personal property located on the premises.

3. Taking a trade-in vehicle with a clean title but the customer failed to disclose that his uncle was given a promissory note secured by the vehicle to document a loan the proceeds of which were used to originally purchase the vehicle.

4. Purchase of a used vehicle from a major auction and with the warranty and representation of the auction and vehicle seller that the vehicle is free and clear of security interests, but the selling dealer’s used vehicle flooring lender later claims a security interest in the vehicle.

5. Purchase of a vehicle via lien sale under a mechanic’s lien for parts and labor furnished to repair a vehicle, where some form of security interest, unknown to the dealer, is claimed on the vehicle, and notwithstanding existing law intended to set appropriate priority between mechanic’s lien holders and other secured parties. See, e.g., Civil Code § 3068.

Once triggered, the statute obligates the dealer to pay off “the entire balance” before the earlier of (a) “transferring the vehicle” or (b) “when payment is due.”

Again, the breadth of this aspect of the statute creates harsh and unnecessary consequences.

A dealer would be required to make payment by the time “payment is due,” even though the dealer was never a party to the payment obligation and most likely never was informed of payment due dates, let alone being provided with a copy of the security agreement.

This would be true in almost all forms of vehicle acquisition, whether by trade-in or any other scenario where a third party claims to be a secured party with an interest in the vehicle.

In practical terms, requiring a dealer to pay off a vehicle by the “due date” would place dealers in violation of the statute the instant they accepted a trade-in vehicle, as most retail installment contracts are accelerated by their terms the moment the owner transfers ownership of the vehicle.

Unless the secured party was paid the moment the customer turned over the keys of the trade-in to the dealer, the dealer would be in violation of the statute.

It is unreasonable to impose satisfaction of a contractual commitment upon a dealer who never had an opportunity to negotiate or even read the commitment.

Nevertheless, by this unknown and perhaps unknowable due date, the dealer would be obligated to make “payment in full.”

Again, the dealer would be saddled with the full burden of a contractual commitment that was not of the dealer’s making.

As a result, the dealer is entirely at the mercy of the secured party, and in practical terms would be obligated to pay whatever the secured party claimed is owed.

The requirements that the dealer make “payment in full” by the “due date” also allow the statute to be used as a means of trickery and fraud.

For example, an unscrupulous dealer could defraud a purchasing dealer into believing that there was only a nominal payoff owing on a used vehicle.

But once the vehicle is “purchased,” the purchasing dealer becomes obligated to make payment in full of the actual amount owing to the secured party by the due date.

That payment – and the ability to tell the secured party that a new obligor is on the hook – may be just what the unscrupulous dealer needed to keep its doors open another day, or make payroll.

Any later claim or lawsuit by the purchasing dealer complaining of fraud against the selling dealer would be ineffective if the seller were insolvent or the debt otherwise uncollectable.

The example in the preceding paragraph demonstrates that the statute as drafted constitutes a wholesale shift of risk to otherwise innocent purchasing dealers and away from secured parties and vehicle sellers – businesses who are in much better positions to protect against such risk.

The statute is not reasonably limited to protecting used vehicle purchasers or trade-in customers.

By imposing strict liability on a dealer for an undefined amount of money by virtue of the dealer’s merely engaging in a lawful act, the statute strains if not violates constitutional due process protections.
See Gibbs v Tally
(1901) 133 Cal 373, 65 P 970
(statute imposing personal liability on property owners violates §1, Article 1, of the California Constitution).

Finally, the proposed statute requires a “notarized receipt” to evidence payment in full having been made to the secured party, and that the receipt be submitted to DMV prior to selling or transferring the vehicle.

The bill leaves to the imagination the form of such a receipt, the time frame within which it would be returned (keeping in mind that the secured party has the right to “payment in full” of all charges up until the time the receipt is returned to the dealer), the manner DMV would want it submitted, and how DMV would provide evidence of submission back to the dealer.

While waiting for these steps to take place, the dealer would need to not only refrain from transferring the vehicle – which might also be interpreted to prevent the dealer from transferring even a security interest in the vehicle to the dealer’s used car flooring lender.

Moreover, it would drain dealers of much needed working capital while they waited around for the lienholder bank or financing company to forward it a notarized receipt.

Used vehicle inventory is a wasting asset that rapidly depreciates in value.

Dealers need the ability to sell trade-in vehicles as soon as they tender the pay off to a lienholder.

The fiscal effect of these provisions on the operations of the DMV cannot be underestimated.

Since dealers would be prohibited from selling or transferring vehicles until notarized receipts have been received by the DMV (and presumably communicated back to the dealer in some fashion) this will mean DMV will have to create a mechanism to track and monitor the disposition of hundreds of thousands of transactions to ensure liens have been paid and the proof received.

In light of DMV’s efforts to comply with federal REAL-ID requirements and other regulatory and statutory responsibilities, the Department is ill-equipped to take on this new, expensive, and poorly defined, responsibility.

Proposed Amendment of Civil Code

Section 1770. SB 95 would amend the Consumers Legal Remedies Act (CLRA) to make a violation of proposed Vehicle Code Section 4456.5 a violation of the CLRA.

CNCDA opposes an expansion of the CLRA, especially to incorporate a provision that is as defective as proposed Vehicle Code Section 4456.6.

Dealer Bond Provisions Vehicle Code Section 11710 currently sets the dealer bond at $50,000
(it was increased from $10,000 to $50,000 in 2002),
$10,000 for motorcycle dealers and $10,000 for wholesale dealers that sell fewer than 25 vehicles per year.

Vehicle Code Section 11711 currently permits any person that suffers loss or damage with a cause of action against the dealer, salesperson involved, and surety under the bond for amounts up to the value of the vehicle purchased or sold by the dealer arising from
(1) violations of the dealer’s written stipulation or guarantees that have been violated in the context of fraud or a fraudulent representation;
(2) violation of Division 3 of the Vehicle Code (Registration of Vehicles and Certificates of Title), or
(3) non-payment for a vehicle sold to a licensee.

Vehicle Code Section 11710 also gives statutory preference to claims filed by DMV over all claimants and preference to claims filed by consumers over those filed by other licensees.

Vehicle Code Section 11722 gives statutory preference to claims filed by DMV, consumers and licensees over claims file by a finance agency, unless the finance agency was defrauded by the licensee.

SB 95 would amended Vehicle Code Section 11710 to double the amount of an of the current dealer bond from $50,000 to $100,000.

Raising the bond to $100,000 would force many honest dealers out of business simply because no surety company would issue them a bond.

Last year Rhode Island increased its dealer bond from $15,000 to $100,000 and by emergency order issued
February 13, 2009
was forced to lower it to $50,000 because many dealers found it impossible to obtain a $100,000 bond.

http://www.sec.state.ri.us/rules/index.php?page=details&erlid=5595.

Unfortunately, SB 95 goes well beyond an increase in the dealer bond.

The bill would also amend Vehicle Code Section 11711 to eliminate its current limitation on liability (the value of the vehicle) and replace that limit with a provision imposing liability for “actual damages plus any incidental and consequential damages.”

Moreover, the grounds for liability would be greatly expanded to cover not only fraud, but any contract or statutory violation related to the retail purchase or lease of a vehicle, or any violation related to vehicle registration or titling.

These expansive new causes of action against a dealer bond would result in the following:

1. Private Right of Action for Every Statute.
SB 95 would create a private right of action for every single federal and state statute to which a dealer is subject during the sale of a vehicle – not only consumer protection statutes, but all others as well. This amounts to a wholesale repeal of California limiting certain private rights of action under California statutes.
See Moradi-Shalal v. Fireman’s Fund Ins. Companies (1988) 46 Cal.3d 287, 305, and federal law with respect to federal statutes.
Gonzaga Univ. v. Doe (2002), 536 U.S. 273, 284 n. 3, absent clear legislative intent to create a private right of action.

2. Expanded Damages Recoverable for Every Statutory Violation.
Even as to statutes that make limited damages and/or injunctive relief available for private rights of action, this overly broad statute would strip away those limitations by allowing recovery in every case of actual, consequential, and incidential damages.
For example, the Song-Beverly Consumer Warranty Act (commencing with Civil Code Section 1790) provides in Civil Code Section 1792 that the retail seller (and manufacturer) impliedly warrant that goods sold are merchantable. Song-Beverly also provides a comprehensive statutory scheme relating to procedures for obtaining warranty repair and, ultimately, if repair is not appropriately completed, careful defined monetary relief.
Under SB 95, a bond claim could bypass Song-Beverly entirely by alleging the vehicle sold was not merchantable and that therefore the consumer is entitled to immediate payment of actual, consequential, and incidental damages.

Moreover, under the provisions of SB 95, if a statutory cause of action is asserted by a consumer against both a dealer and an auto manufacturer for an alleged warranty violation, the consumer could file a bond claim against the dealer’s surety company, but since auto manufacturers are not required to file bonds, no bond claim could be asserted against the auto manufacturer.

Such a scenario would put a dealer in the untenable position of defending a bond claim without the warrantor of the vehicle being a party to the claim.

3. Expanded Damages Recoverable for Every Contractual Violation.

The statute would dispense with the rule relating to available damages under both contract law and the actual terms and provisions of the contract itself and in every case require damages be available for any “violation” of contract (whether or not cured) equal to actual damages plus any incidental and consequential damages. In this respect, the bill readily supports absurd results, such as damage claims for contract violations that are not material or that result from mistake or are otherwise made in good faith.

4. Expanded Strict Liability For Actions of Rogue Employees.
While the existing statute also makes the dealer (and surety under the bond) liable for certain acts of salespeople, the proposed statute does so under the auspices of its incredibly wide scope of coverage and available damages.

5. No Upper Limit on Claims.

Under existing law, bond claims are not to exceed the value of the vehicle. This limitation establishes a level playing field among bond claimants. Removing this check on the maximum claim will permit bond resources to be exhausted in satisfaction of claims exceeding the value of the vehicle for items such as lost income, lost profits, value of the bargain,replacement transportation, etc. It is easy to see how some claimants may receive zero while others receive windfalls worth much more than the value of the vehicle.

6. Private Adjudication of Disputes Would Predominate.

It was never the purpose of a dealer bond to replace the court system for the adjudication of claims against a dealer. However, SB 95 would channel most disputes with dealers toward the bonding company and away from courts and administrative agencies. With the prospect of universal private rights of action and enhanced damages backed up by bonded sums to facilitate collection it would be malpractice for a plaintiff’s counsel not to file a claim against a dealer bond for any alleged contractual or statutory violation. If enacted, all breach of contract claims, no matter how small or meritorious, and all claims arising out of statute, including all lemon law and other warranty claims, would be filed against the bond.

7. Virtually No Surety Company Would Issue Dealer Bonds.

Given the breadth and scope of causes of actions that could be asserted against a dealer bond under SB 95 and the amount of damages that could be collected, it is doubtful that many bonding companies, if any, would be willing to underwrite the risk of indemnifying dealers under such a scheme. Even without SB 95, the number of bonding companies willing to issue dealer bonds in California has been dwindling. Any surety company willing to issue a California dealer bond would have to adopt strict underwriting guidelines that few dealers would be able to meet and charge premiums that few dealers could afford. Moreover, because dealers are required to replenish the bond every time its value decreases (or face automatic license suspension), the myriad of new bond claims that SB 95 would generate would make it extremely difficult for a dealer to continuously maintain a sufficient bond.

SB 95 would also amend Vehicle Code Section 11711 to exclude DMV licensees from filing claims against a dealer bond by limiting the universe of persons eligible to file a claim to persons who bought or leased a vehicle at retail and who suffered loss or damage related to that purchase or lease. This means that SB 95 would strip dealers of their current right to file a bond claim against another dealer (even a wholesale dealer that sells no vehicles at retail) unless the claim was for a vehicle purchased by a dealer for his or her own use and consumption. There is no justification for such a restriction, especially since dealer claims are already subordinate to claims of consumers and DMV.

The fiscal effect of the dealer bond increase, coupled with the expansion of the scope of claims available against the bonds, will create tremendous administrative and enforcement problems for DMV, at significant financial cost.

Since dealers are required to have a bond at the prescribed statutory amount ($100,000 as proposed), for each successful claim against the bond the DMV will have to monitor whether the dealer has posted cash sufficient to meet the threshold or the dealer has to replenish the bond to the required amount.

This could mean intensive interactions with potentially hundreds or thousands of claims against dealer bonds – a role for which DMV lacks sufficient financial resources.

BOTTOM LINE: SB 95 is poor public policy and would result in a severe contraction in the number of honest dealers that would be able to operate in California; cause thousands of dealership employees to lose their jobs; and, result in less consumer choice and diminished competition.

With respect to its state fiscal effect, the bill will result in significant additional financial costs to the DMV and therefore should be referred to the committee’s suspense file.

For these reasons, we must oppose SB 95 and ask for your “NO” vote when it comes before your for a vote.

Very truly yours,
Brian Maas
Director of Government Affairs
cc: The Honorable Ellen Corbett
Members of the Senate Judiciary Committee
Jacqueline Wong-Hernandez, Consultant, Senate Appropriations Committee
Mike Petersen, Senate Republican Caucus
Ralph Simoni, California Advocates

we could not agree more
well written and on point

we make it simple for you
red flag car dealer school

good luck
thx
charlotte

800-901-5950

the dmv currently requires each car dealer
to post and maintain a surety bond

this car dealer bond is a promise to the dmv and the government that you will always honor your obligations
and if you do not
the promise of the bond
insures that the government
or claimaints against your car dealer bond
will get paid

the car dealer surety bond insures:

the dmv will get all fees and penalties
the board will get all sales taxes
the order of the court will be honored

here is a list of dmv surety bond providers:

Aetna Casualty & Surety Company
PO Box 2940
Milwaukee, WI 53201-2940
(414)797-3000

Allied Mutual Insurance Company
701 5th Ave.
Des Moines, IA 50309-1304
(515)280-4439

American Casualty Company Of Reading Pennsylvania
CNA Insurance Company – CNA Plaza
333 S. Wabash Ave.
Chicago, IL 60685
(312)822-5000

American Hardware Mutual
5995 Opus Parkway
Minnetonka, MN 55343
(800)227-4663

American States Insurance Company
500 N Merridian St.
Indianapolis, IN 46204-1213
(612)896-0200

Auto Owners Insurance Company
PO Box 505
Appleton, WI 54912
(800)766-1772

Capitol Indemnity Corp.
PO Box 5900
Madison, WI 53705-0900
(608)231-4450

Chrysler Insurance Company
175 N Patrick Blvd., Suite 150
Brookfield, WI 53045

Cincinnati Insurance Company
PO Box 145496
Cincinnati, Ohio 45250-59496
(513)870-2000

Continental Casualty Company
One CNA Plaza
Chicago, IL 60685

Continental Western Insurance Co
11201 Douglas Ave.
Urbandale, IA 50322
(515)278-3000

Empire Fire & Marine Insurance Company
1624 Douglas St.
Omaha, NE 68102
(402)341-0135

Employers Mutual Casualty Company
PO Box 712
Des Moines, IA 50303

Federated Mutual Insurance Company
121 E. Park Square
Owatonna, MN. 55060
(507)455-5200

Fidelity & Deposit Company Of Maryland
10150 W. National Ave., Suite 300
Milwaukee, WI 53227-2145
(414)276-4628

Financial Pacific Insurance Company
PO Box 292220
Sacramento, CA 95829-2220
(800)470-2663

Firemen’s Insurance Company Of Newark, NJ
180 Maiden Ln.
New York, NY 10038
(212)440-3000

General Accident Insurance Company Of America
436 Walnut St.
Philadelphia, PA 19106

Great American Insurance Company
580 Walnut St.
Cincinnati, OH 45201

Hanover Insurance Company
100 N. Parkway
Worcester, MA 01605-1343
(508)853-7200

Harco National Insurance Company
2850 W. Golf Rd.
Rolling Meadows, IL 60008
(847)734-4100
(800)448-4642

Hartford (ITT Hartford)
PO Box 3057
Naperville, IL 60566-7057
(800)323-3546

Heritage Mutual Insurance Company
2800 S. Taylor Drive, PO Box 58
Sheboygan, WI 53082-0058
(800)242-7611

InterCargo Insurance Company
1450 E. American Ln. – 20th Floor
Schaumburg, IL 60173-5458
(800)394-3924

John Deere Insurance
3400 80th St.
Moline, IL 61265-5886
(309)765-7383

Liberty Mutual Insurance Company
175 Berkeley St.
Boston, MA 02117
(617)357-9500

Markel American Insurance Company (Financial Pacific)
PO Box 292220
Sacramento, CA 95829-2220
(800)470-2663

E. R. Munro and Company
14 Wood St
Pittsburgh, PA 15222-1921
(412)281-0673

Nobel Insurance Company
3010 LBJ Freeway, Suite 300
Dallas, TX 75234-9999
(800)766-6235

Ohio Casualty Insurance Company
PO Box 543
Milwaukee, WI 53201-0543
(414)784-8080

Old Republic Surety
PO Box 941
Brookfield, WI 53008-0941
(800)872-2885

Pekin Insurance Company
2505 Court St.
Pekin, IL 61556
(800)447-0122

RLI Insurance Company
Surety Division
9025 N. Lindbergh Dr.
Peoria, IL. 61615
(800)645-2402

Redland Insurance Company
22 S. 15th St., Suite 600 N
Omaha, NE 68102
(402)344-8800

SAFECO Insurance Company
3637 S. Geyer Rd.
Sunset Hills, MO 63127
(314)965-0400

St Paul Fire & Marine Insurance Company
20800 Swenson Dr., Suite 300
Waukesha, WI 53186
(414)784-5530

Sentry Select Insurance Company
34th Ave. & 80th St.
Moline, IL 61265
(800)447-0633

Star Insurance Company
PO Box 2054
Southfield, MI 48037
(810)358-1100

State Farm Insurance Company
Centralized Bonds
1 State Farm Plaza
Bloomington, IL 61710-0001
(309)766-2311

Statewide Insurance Company
329 N. Genesee, PO Box 799
Waukegan, IL 60079

The Travelers Indemnity Company
1 Tower Square
Hartford, CT 06183-0001
(203)277-0111

Tri-State Insurance Company of Minnesota
1 Roundwind Rd.
Luverne, MN 56156
(507)283-9561

USF&G
PO Box 26009
Milwaukee, WI 53226-0009
(414)256-3190

United Pacific Insurance Company
4 Penn Center Plaza
Philadelphia, PA 19103
(215)864-4000

Universal Surety Company
PO Box 80468
Lincoln, NE 68501
(402)435-4302

Universal Underwriters Group
6363 College Blvd.
Overland Park, KS 66211
(913)339-1000

Regional Underwriting
(800)293-8842

Utica Mutual Insurance Company
180 Genesee St.
New Hartford, NY 13413
(315)734-2000

Vigilant Insurance Company
15 Mountain View Rd.
Warren, NJ 07059
(908)903-2000

Washington International Insurance Company
300 Park Blvd., Suite 500
Itasca, IL 60143-2625
(800)338-0753

Western Surety Company
PO Box 5077
Sioux Falls, SD 57117-5077
(605)336-0850

good luck
thx
charlotte
800-901-5950

Aetna Casualty & Surety Company
PO Box 2940
Milwaukee, WI 53201-2940
(414)797-3000

Allied Mutual Insurance Company
701 5th Ave.
Des Moines, IA 50309-1304
(515)280-4439

American Casualty Company Of Reading Pennsylvania
CNA Insurance Company – CNA Plaza
333 S. Wabash Ave.
Chicago, IL 60685
(312)822-5000

American Hardware Mutual
5995 Opus Parkway
Minnetonka, MN 55343
(800)227-4663

American States Insurance Company
500 N Merridian St.
Indianapolis, IN 46204-1213
(612)896-0200

Auto Owners Insurance Company
PO Box 505
Appleton, WI 54912
(800)766-1772

Capitol Indemnity Corp.
PO Box 5900
Madison, WI 53705-0900
(608)231-4450

Chrysler Insurance Company
175 N Patrick Blvd., Suite 150
Brookfield, WI 53045

Cincinnati Insurance Company
PO Box 145496
Cincinnati, Ohio 45250-59496
(513)870-2000

Continental Casualty Company
One CNA Plaza
Chicago, IL 60685

Continental Western Insurance Co
11201 Douglas Ave.
Urbandale, IA 50322
(515)278-3000

Empire Fire & Marine Insurance Company
1624 Douglas St.
Omaha, NE 68102
(402)341-0135

Employers Mutual Casualty Company
PO Box 712
Des Moines, IA 50303

Federated Mutual Insurance Company
121 E. Park Square
Owatonna, MN. 55060
(507)455-5200

Fidelity & Deposit Company Of Maryland
10150 W. National Ave., Suite 300
Milwaukee, WI 53227-2145
(414)276-4628

Financial Pacific Insurance Company
PO Box 292220
Sacramento, CA 95829-2220
(800)470-2663

Firemen’s Insurance Company Of Newark, NJ
180 Maiden Ln.
New York, NY 10038
(212)440-3000

General Accident Insurance Company Of America
436 Walnut St.
Philadelphia, PA 19106

Great American Insurance Company
580 Walnut St.
Cincinnati, OH 45201

Hanover Insurance Company
100 N. Parkway
Worcester, MA 01605-1343
(508)853-7200

Harco National Insurance Company
2850 W. Golf Rd.
Rolling Meadows, IL 60008
(847)734-4100
(800)448-4642

Hartford (ITT Hartford)
PO Box 3057
Naperville, IL 60566-7057
(800)323-3546

Heritage Mutual Insurance Company
2800 S. Taylor Drive, PO Box 58
Sheboygan, WI 53082-0058
(800)242-7611

InterCargo Insurance Company
1450 E. American Ln. – 20th Floor
Schaumburg, IL 60173-5458
(800)394-3924

John Deere Insurance
3400 80th St.
Moline, IL 61265-5886
(309)765-7383

Liberty Mutual Insurance Company
175 Berkeley St.
Boston, MA 02117
(617)357-9500

Markel American Insurance Company (Financial Pacific)
PO Box 292220
Sacramento, CA 95829-2220
(800)470-2663

E. R. Munro and Company
14 Wood St
Pittsburgh, PA 15222-1921
(412)281-0673

Nobel Insurance Company
3010 LBJ Freeway, Suite 300
Dallas, TX 75234-9999
(800)766-6235

Ohio Casualty Insurance Company
PO Box 543
Milwaukee, WI 53201-0543
(414)784-8080

Old Republic Surety
PO Box 941
Brookfield, WI 53008-0941
(800)872-2885

Pekin Insurance Company
2505 Court St.
Pekin, IL 61556
(800)447-0122

RLI Insurance Company
Surety Division
9025 N. Lindbergh Dr.
Peoria, IL. 61615
(800)645-2402

Redland Insurance Company
22 S. 15th St., Suite 600 N
Omaha, NE 68102
(402)344-8800

SAFECO Insurance Company
3637 S. Geyer Rd.
Sunset Hills, MO 63127
(314)965-0400

St Paul Fire & Marine Insurance Company
20800 Swenson Dr., Suite 300
Waukesha, WI 53186
(414)784-5530

Sentry Select Insurance Company
34th Ave. & 80th St.
Moline, IL 61265
(800)447-0633

Star Insurance Company
PO Box 2054
Southfield, MI 48037
(810)358-1100

State Farm Insurance Company
Centralized Bonds
1 State Farm Plaza
Bloomington, IL 61710-0001
(309)766-2311

Statewide Insurance Company
329 N. Genesee, PO Box 799
Waukegan, IL 60079

The Travelers Indemnity Company
1 Tower Square
Hartford, CT 06183-0001
(203)277-0111

Tri-State Insurance Company of Minnesota
1 Roundwind Rd.
Luverne, MN 56156
(507)283-9561

USF&G
PO Box 26009
Milwaukee, WI 53226-0009
(414)256-3190

United Pacific Insurance Company
4 Penn Center Plaza
Philadelphia, PA 19103
(215)864-4000

Universal Surety Company
PO Box 80468
Lincoln, NE 68501
(402)435-4302

Universal Underwriters Group
6363 College Blvd.
Overland Park, KS 66211
(913)339-1000

Regional Underwriting
(800)293-8842

Utica Mutual Insurance Company
180 Genesee St.
New Hartford, NY 13413
(315)734-2000

Vigilant Insurance Company
15 Mountain View Rd.
Warren, NJ 07059
(908)903-2000

Washington International Insurance Company
300 Park Blvd., Suite 500
Itasca, IL 60143-2625
(800)338-0753

Western Surety Company
PO Box 5077
Sioux Falls, SD 57117-5077
(605)336-0850

one of the steps in the process of becoming a car dealer

is obtaining your car dealer surety bond

the cost of the bond is based on your credit

if you cannot post a cash or savings bond

you must obtain the bond from a licensed bond agent

with good credit a $ 10, 000 bond runs $ 200. per year

with good credit a $ 50, 000 bond runs $ 800. per year

the bond is a promise to honor your obligations

to the state of california

our suggested bond agent is:

unipoint insurance services @ 714-677-0843

for more information on our class to obtain

your car dealer license

visit us at   www.gotplates.com

or just give our gal Tina a call @ 800-901-5950

hello shuki

we always suggest a full retail license with broker endorsement, if possible

wholesale cannot sell directly to the public

brokers receive fees for bringing customers to retail dealers

brokers do not sell anything

perhaps you are mistaking broker

for a retail dealer who drafts a retail sale

on behalf of a wholesale dealer

a wholesaler can bring a retail customer

to a retail dealer to complete a retail sale

that draft fee is usually $ 500.

separate of sales taxes and dmv fees due on a sale

your office becomes the trigger point of sale if you hold a retail license

local zoning rules dictate the number of spaces needed

we know of two retail locations available in san carlos

probably 1500-2000 per month each

good luck

hope this helps

J
Shuki Alburati <shuki@pacbell.net> wrote:
Hi, This is Shuki Alburati. I attended one of your dealership classes. I had a couple of questions that i do not understand. First off, I do not know I am better off obtaining a retail or a wholesale licensee. If i choose a wholesale license what would I be missing that a retail license has. I know the bond is cheaper, but if i am going to pay a broker to sell a car for me, it might be the same thing and i will not be saving any money. Also, I do not understand how the broker works. If i want to use a broker, and i bought a car from a friend or online or an auction for $1000 and found a seller that is willing to pay $2000 dollars for it, how would the steps or process be? I can use a broker, but i still have to find my own customers, right? A broker is a person i can use his or her license and i wouldn’t need to get a  retail license, right? ALso, if i do get a retail, can i get a cheap small lot in a bad area, but have a good office somewhere else,
or do they have to be together. I have a storage room in my basement of my apartment that i pay $50 dollars a month for, can i put a  chair and use it as my office? And for the lot, what is the minimum required square or car spaces? can i get a lot that only fits 3 cars or 6 cars? Also, do you know any places/ways to find lots. SOrry, I know these are a lot of questions but i do not know anyone else to ask.