USED MOTOR VEHICLE DEALER EDUCATION ONLINE STUDY GUIDE
Continuing Education Edition
Certified For Use By The California-
Department Of Motor Vehicles
TriStar Motors, L. L. C. -
www.gotplates.com
San Francisco, California 2005
USING THE ONLINE STUDY GUIDE
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Please choose from the topics to your left
- Or Scroll down the page to review the different sections
- For additional information and links about a given topic you are reviewing, simply mouse
over the
Did You Know icon which is located throughout the Study Guide.
- On many topics we also provide you with helpful links to sites and forms that we feel
might be a useful resource for you - feel free to bookmark these sites as you go along.
LESSON PLAN OUTLINE
We will provide you a complete course of instruction.
As a renewal dealer:
- You must take a minimum of four hours to complete the online dealer education curriculum and
examination as stated by the DMV
- The examine usually takes about 60 minutes to complete.
- Please check in the FAQ area for explanations on how to operate within
current DMV guidelines.
- Upon completion we will provide you with a DMV certificate of completion
We now have three methods to teach you:
- In-Person with discussion and testing
- Home Study with testing and written review
- On Line with discussion, testing and review
- Renewals are mandatory every TWO years.
A 70 % score is needed to pass the dealer examination.
- All materials provided, including study materials and handbook.
- Licensed Sales Persons may attend on behalf of the owner.
- We will need to a copy of your existing dealer license along with a valid Calif. DL or ID
and Salespersons License, if appropriate.
TriStar Motors, L.L.C.
1601 Folsom Street
San Francisco, California, 94103
Attention: Al, Joe, Kevin & Willis
1-800-901-5950 schedule information & paging
1-888-948-1795 reservation fax machine
jw974@juno.com e - mail
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DEALER LICENSING
Bond Posting and Information
No person shall act as a dealer without having first been issued:
A Dealer license or a temporary permit.
A dealer must post a bond of $ 50,000. prior to license being issued.
An unpaid ASF can result in bond activation and loss of license.
A lesser bond of $ 10,000. is allowed for wholesale only if:
fewer than 25 sales annually.
- In lieu of posting a bond a dealer may deposit cash with the DMV or
with an approved FDIC bank or savings and loan.
- This deposit shall be held 3 years after license is retired.
With no claims outstanding, the deposit is returned.
- It is unlawful to operate w/o having a bond in effect.
The office of the principal place of business, and each branch location,
must be established prior to license issuance. Photo set of each required.
- Temporary, transitory & mobile offices are acceptable, provided
items are not a part of the inventory for sale.
- All records must be kept at the place of business. (4 years)
- The display area of each location, required for retail locations,
must comply as follows:
It must be of sufficient size to accommodate each type of vehicle the dealer
is licensed to sell and be clearly marked for exclusive use. Display areas
must be within 1000 ft. of the office.
- See Dealer Surety Bond Forms
Permanent signage required for retail locations sufficient to withstand weather.
A temporary sign is allowed with a permanent sign on order.
- It shall have an area of at least two ( 2 ) square feet per side.
It shall be able to be read from a distance of fifty ( 50 ) feet.
- At each location the dealer must post the dealer's license.
At each location the dealer must post the sales license(s)
The sales license fee is $ 93. with no test, good for three years.
Notice Posting
Every retail dealer, at each location, shall post a notice, at least
8" by 10", which states:
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"The prospective purchaser of any vehicle may, at his or
her own expense, and with the approval of the dealer, have
the vehicle inspected by an independent third party, either
on or off the premises."
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Every retail dealer, at each location, in each sales office, at
each desk where terms of sales or lease transactions are discussed,
shall post a notice at least 8" by 10" which states:
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California law does NOT provide for a "cooling off" or
cancellation period for vehicle purchase or lease contracts.
THEREFORE, You cannot later cancel such a contract simply
because you change your mind, decide the vehicle costs too
much, or wish you had acquired a different vehicle. After you sign
a motor vehicle purchase or lease contract, it may only be
canceled with the agreement of the seller or lessor OR for legal
causes such as fraud.
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Permanent signage required for retail locations sufficient to withstand weather. A
temporary sign is allowed with a permanent sign on order.
It shall have an area of at least two ( 2 ) square feet per side. It shall be able to be read from a distance of fifty ( 50 ) feet.
At each location the dealer must post the dealer's license.
At each location the dealer must post the sales license(s)
The sales license fee is $ 93. with no test, good for three years.
Fee Schedule
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Initial Fees |
Renewals |
Late Penalty |
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Original Application |
$ 151. |
$ 101. |
$ 150. |
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Each Branch License |
$ 70. |
$ 70. |
$ 70. |
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Each Fingerprint Card |
$ 42. |
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-0- |
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Each Dealer Plate * |
$ 41. |
$ 41. |
$ 3. 1-10 days |
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$ 6. 11-30 days |
Renewal fees are due annually and must be paid by the expiration date. You may renew
within 30 days after expiration, with penalty as listed above. After 30
days, NO renewal means NO more license.
- Some counties impose additional fees for dealer plates.
- Every dealer must complete a 4 hour continuing education course, once every two years,
prior to license renewal. Only those dealers who are wholesale only, selling fewer than
50 cars per year are exempt.
- Along with renewal notice send the original continuing education certificate of completion to:
DMV Occupational Licensing
PO Box 932342
Sacramento, CA, 94232 - 3420
- See Continuing Education Exemption Form
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Dealer Notification
Every dealer shall notify DMV:
- 10 days prior to the effective date of an ownership change.
- 30 days prior to the effective date of any corporate change.
- $ 70. is the fee for a corporate change.
If there has been an ownership or corporate change, the dealer will
need to submit a new original application and fees, along with a new
dealer bond. Once the application is completed, the dealer will be
issued a new dealer number.
If there is a corporate officer change, an OL-15, Application, Personal
History Questionnaire, Livescan and a fee of $ 70.
Any change in the dealer address, be it branch add or removal, name
change, add or delete category, add autobroker, dealer type change.
or location change requires immediate notification to the Inspector of
jurisdiction, an application and fees posted prior to change.
Dealer license & plates automatically & immediately cancel whenever:
- Change of the established place of business is made w/o notice.
- Established place of business is abandoned w/o notice.
- Bond is not maintained.
- Inadequate bond is not replaced or restored.
- Voluntary surrender of speial plates & license.
- Involuntary surrender of special plates & license.
- Failure to notify DMV new person designated as licensee.
- Suspension or revocation by the Secretary of State.
- Suspension or revocation by the Board of Equalization.
BROKER AND CONSIGNMENT LICENSING
Licensed Dealers may be auto brokers.
An auto broker must complete a written agreement with a customer prior to
arranging a sale through another dealer.
The agreement must clearly indicate the broker fee.
The broker fee can be paid by the selling dealer or buyer.
The autobroker endorsement fee for this license is:
- $ 50. the first year, $ 25. for renewal.
The broker must maintain a log of each brokered transaction.
See Related Links:
- DMV Brokering
Agreement: Form and Contents
- Auto Broker Log
- DMV Consignment Form Requirements
A consignment is an arrangement under which a dealer agrees to accept possession
for the purpose of sale and the owner will then pay the dealer from the proceeds
of the sale.
Auto consignors must be licensed dealers.
Auto consignors must write an agreement prior to sale.
Auto consignors must complete an accounting and make payment within 20 days
of the date of sale.
Failure to complete and/or comply with the terms of the agreement or failure
to pay the consignor within 20 days of the sale is cause for suspension
and/or revocation of the dealer's license.
The consignment agreement shall include:
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vehicle description |
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date of agreement |
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current market value |
*low book value |
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liens outstanding |
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repairs to be made |
*repairs to be left as-is and disclosed compensation to
consignor |
The sales accounting, within 20 days, shall include:
date of sale
repairs authorized with records
liens payable to lienholders
evidence of payment of liens
total sales price
PERMANENT BRANCH LOCATIONS
A dealer branch is any location beside the principal location which is
maintained for the sale and/or exchange of motor vehicles.
Branch license required when retail vehicles are offered for sale.
Any attempt, solicitation or negotiation at the location requires a license.
On all reports of sale from a branch location the dealer shall use that
location and not his principal location address.
*Taxes are distributed by point of sale & county of residence.
The dealer shall submit to DMV a branch application, with a fee of $ 70.
All permanent branch locations must provide with application:
OFFSITE SALES / TEMP BRANCH LOCATIONS
An offsite sales license is needed when a dealer, at a location used for a limited duration, intends
to engage in motor vehicle sales. These sales are handled as temporary branch location sales.
The branch location must have:
Sign of two square feet readable from 50 feet with dealer name and permanent license address posted
Temporary permit, Salesperson licenses, No Cooling Off and Vehicle Inspection Notice signs posted
Display area independent of other dealers with no other vehicles.
No parking of public or employee vehicles in display area
A branch license is not required when:
Motor vehicles are displayed on a temporary basis at a location
such as a public shopping mall, an exhibition or similar exhibit
provided the dealer meets the following provisions :
The vehicle display is less than 30 days and No sales are offered.
No consideration, deposit or trade-in to be accepted.
Location must be of a type available to all dealers.
The dealer shall, display a sign, including the dealer's name and
principal location. with the statement :
No sales permitted and no deposits accepted at this location.
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CONDITIONAL SALES CONTRACT
The contract definition derives from California civil code section 2981.
"Any contract for the sale of a motor vehicle between a buyer and
seller under which possession is delivered to the buyer and seller and either:
(a) the title vests in the buyer thereafter only upon the payment
of all or a part of the price, or the performance of any other
condition, or
(b) a lien in the property is to vest in the seller as security for the
payment of part or all of the price, or for the performance of
any other condition."
A successful sale is a process involving a certain order of events.
A sale made in the wrong order may "unwind" a sale.
A sales tax refund is allowed if the buyer does not take possession.
All contracts for purchase of a motor vehicle must be in writing.
The contract must be contained in a single document.
We recommend contracts containing "California Judicial Council" stamp.
The contract must contain all agreements of the buyer and seller with respect to the total cost and
terms of repayment for the motor vehicle. This shall include any evidences of indebtedness, including
a promissory note.
All contracts for the purchase of a motor vehicle must be signed by
both buyer and seller and delivered to the buyer.
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A contract signed by the dealer only is called a purchase order.
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A Spanish copy, blank, attached to the original for Spanish speakers.
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All contracts for the purchase of a motor vehicle require certain
disclosures as per the civil code and federal regulation z.
These items must be disclosed on the sales contract:
Itemization Of Amount To Be Financed
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cash price
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* w/ demand of title price + tax only
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document prep fee
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$ 45. maximum. ( same for ALL )
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smog fee
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$ 50. maximum for inspection
$ 8.25 maximum for certificate
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sales tax
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based on county of residence
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service contract charge
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only if sold by dealer ( extra warranty )
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Amounts Paid To DMV
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license fee
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$ 15.
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registration fee
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collect if:
registration expired or within 60 days
dealer pays to date of sale
buyer pays forward
to estimate .2.2% + $ 60. x .40
Dealer Hotline 800.777.0133
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Amounts Paid For Insurance Premiums * only if sold by dealer
Down Payment Total
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trade-in allowance
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describe vehicle & subtract payoff
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deferred down payment
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paid within 30 days * no post dated checks
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cash amount
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paid on date of contract
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Total Amount Financed * must match Amount Financed below.
These items must be disclosed on the sales contract per federal law:
- Annual Percentage Rate
- Finance Charge
- Amount Financed
* must match Total Amount Financed above.
- Total Of Payments
- Total Sales Price
- Payment Schedule
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Refunds
A refund of any and all moneys paid by purchaser shall be made by the
dealer when the purchaser elects not to sign the contract.
- Deposits do not give the dealer ANY advantage.
- Even if the purchaser signs the contract and pays for the vehicle
the sale does not transact until the purchaser takes delivery of the vehicle.
Remember: Seller signs, Buyer signs, Buyer gets copy,
Seller gets cash.
The civil code and federal truth in lending regulations apply to all dealer transactions.
A printed contract form from a law form supply house is required.
The dealer may repossess w/o notice if the buyer defaults.
*We suggest you keep a set of KEYS for each vehicle under contract.
Contract Breach
A dealer breach nullifies the contract and the dealer is required to
refund any and all moneys.
- Do not deliver the vehicle until all contract items have been done.
- A dealer DO list carries a liability and leaves the contract OPEN.
The party carrying the contract must prove default as a prerequisite to
further action. They may repossess as follows:
- A 15 day notice must be issued. The original buyer may pay in full and be reinstated.
This may occur multiple times w/o penalty.
- The original buyer shall receive sale information within 20 days of sale.
* 20 day consignment sale rules apply.
- Loan amount, repossession costs & Division 12 items are the only charges against this type of sale.
- A bill or a check must be issued to close the sale.
- Whenever a contract fails to execute due to an inability to obtain
financing the dealer must:
Refund all moneys paid by purchaser
Return trade-in vehicle to purchaser
*Never sell a trade-in vehicle until the contract is fully executed.
Spanish Speaking Buyers
All sales contract negotiated in Spanish require the dealer to provide a
Spanish language contract.
All disclosure signs posted should be in Spanish.
Any required disclosures should have blank Spanish copy attached.
A statement signed by the Spanish speaker is recommended.
The maximum fee a dealer may charge for document prep is $ 45.
MOTOR VEHICLE FINANCING
Once again, the dealer must disclose the terms of financing on the
sales contract as per sections 2981 of the civil code & regulation Z.
The Truth In Lending Act enables buyers to compare the costs of borrowing from different lenders.
The Truth In Lending Act, under regulation Z requires lenders to disclose the terms and costs of all
loan plans, including:
- the annual percentage rate, points and fees,
- the total of the principal amount being financed,
- payment due date and terms,
- including any balloon payment where fees would be charged,
- including the highest rate the lender would charge,
- how it is calculated and the monthly payment,
- total finance charges, whether the loan is assumable, application fees, annual or
one time fees and pre-payment penalties.
The simple interest method & the precomputed basis method are the
two methods permissible by the civil code.
"Simple-interest basis" means the determination of a finance charge, other than an administrative finance
charge, by applying a constant rate to the unpaid balance as it changes from time to time either:
(1) Calculated on the basis of a 365-day year and actual days elapsed (although the seller may, but need not,
adjust its calculations to account for leap years); reference in this chapter to the "365-day basis" shall mean
this method of determining the finance charge, or
(2) For contracts entered into prior to January 1, 1988, calculated on the basis of a 360-day
year consisting of 12 months of 30 days each and on the assumption that all payments will be received by the
seller on their respective due dates; reference in this chapter to the "360-day basis" shall mean this method
of determining the finance charge.
"Precomputed basis" means the determination of a finance charge by multiplying the original unpaid balance of the
contract by a rate and multiplying that product by the number of payment periods elapsing between the date of
the contract and the date of the last scheduled payment.
- Usury laws have been eliminated and rates do vary.
- Regardless of the method, the rate must be converted into an annual percentage rate applicable to
the unpaid balance.
- The unpaid balance, using the annual percentage rate must then be computed into a base monthly
payment over the term of the contract.
*This allows a comparison between dealers for a similar vehicle.
See Civil Code Lending Requirements
SALES AND USE TAX
All dealers are required to obtain and post a permit from the State Board of
Equalization to collect and remit sales & use taxes.
All dealers shall, in every transaction of a used vehicle, pay to the state the
applicable sales and use taxes.
We recommend a separate check to the board for each retail transaction.
The memo box of the check should include:
- ROS number
- Year make and model of the vehicle
- Taxable sales price ( with docs fee and smog inspection included)
- Buyers county of residence
- Tax rate for that county.
- These checks should be set aside for monthly or quarterly reports.
The basic sales and use tax is 7.25 %
There are some counties with increased rates.
Check with state board local office for applicable rate at your location.
Dealers are not required to collect additional tax if the buyer lives
outside the higher tax district as per B of E regulation 1823.5(d).
The taxable selling price of the vehicle is the total of the following:
- The vehicle cost
- The accessories added and the labor to install them.
- The document preparation fee ( $ 45. Max.)
- The smog inspection fee ( $ 50. Max.)
This total is then used and multiplied by the applicable tax rate for the buyers county of
residence. For example:
1000. + 45. + 50. = 1095. x .0875 = $ 96.00 tax due. Or:
Price + docs + smog = total x Alameda County = Tax Due
The following items are non-taxable:
- Finance charges
- License & registration fees
- Insurance charges
- Smog certificate fee ( $ 8.25 Max.)
All dealers shall, when applicable, pay a separate use tax for vehicles in inventory
obtained with advance registration. All dealers shall, when applicable, pay a separate
use tax for vehicles in inventory used for personal use. Use tax rate is equal to the
sales tax rate at the licensed location.
DEPARTMENT OF MOTOR VEHICLE FORMS
The report of sale (ROS) book is required of each dealer, provided by and remains DMV property.
There are separate wholesale and retail report of sale forms.
The wholesale report of sale form is a three-part form and one part must be sent to DMV within 5 days upon vehicle
transfer to another dealer. One copy remains with the selling dealer and one with the buying dealer.
The retail used vehicle report of sale is required for each sale. The four parts are:
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Application copy
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(mail w/title & reg262 within 30 days, local)
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Dealer's notice
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(mail to DMV within 5 days, Sacramento)
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Purchaser's operating copy
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(in vehicle window)
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Book copy
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(in office for four ( 4 ) years)
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Mark voided forms and place all parts in your dealer book.
The dealer must keep track of each numbered form.
The DMV recommends using the forms in numerical order.
The retail used car dealer uses two forms to transact business.
The retail report of sale form is a full page and used for all retail
transactions.
The wholesale report of sale form is one half (1/2) page and used for all
wholesale transactions.
Remember, a retail dealer is automatically a wholesaler (included in
the license). But, a wholesaler is not necessarily a retail dealer.
Retail Timeline and the Penalties which apply
A retail sale begins on the date listed on the Report of Sale:
Retail Time
Line within:
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5 days
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20 days
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30 days
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50 days
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ASF Penalties:
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$5.
(no notice sent)
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$5.
(incorrect notice
posted on vehicle)
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$5.
(no documents sent)
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$25.
(no corrections returned)
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- within 5 days a notice must be sent to DMV (DMV, PO Box 944292-2920, Sac,CA, 94244-2920)
- within 20 days ( per regulation, extended to 3o days by memo ) fees must be posted
- within 30 days documents must be posted
- within 50 days corrections must be returned
If this is not done in a timely manner the following ASF ( administrative service fee ) apply:
- $5. ASF for not sending the retail notice within 5 calendar days, not counting the date of sale
- $5. ASF for posting the incorrect notice in the vehicle
- $5. ASF for not sending documents within 30 calendar days, not counting the date of sale
- $25. ASF for not sending corrections and completing an application within 50 days, not counting
the date of sale
If you need forms:
The books are the property of the DMV, must be available for inspection and
the dealer must take steps to reasonably store and protect the documents.
Report of Sales
Each retail ROS form must be completed in its entirety. The sections are :
- Date of sale as is the date the buyer paid for the vehicle or the date
the buyer signed a contract and took possession of the vehicle.
- The vehicle make and not the model.
- The manufacturer's year model as on title.
- The body type abbreviation as per DMV.
- The mode of power, generally gas or diesel.
- The number of axles.
- The unladen weight.
- The vehicle identification number. *Check vin as on title.
- The last year of registration.
- The last state or country of registration.
- The last registered license plate number.
- The buyer's residence county, to determine fee.
- The buyer's name and California DL or ID.
- The buyer's mailing address.
- The dealer's name, address & authorized signer's signature.
- The dealer and salesperson license numbers.
- The buyer's signatures.
- The vehicle odometer mileage
The five day dealer notice of sale copy, bottom of original, shall be mailed to
the DMV within five calendar days, not counting the date of sale.
The temporary operating copy shall be affixed to the vehicle interior so that it
may be read from outside of the vehicle.
If the vehicle has expired registration or will expire within 60 days place the
copy in the lower rear window on the drivers side.
The vehicle may have printed flashers while temporary is in the window.
If the vehicle is missing a front plate, remove rear plate, destroy it, charge
the customer an additional $ 16. and make application for new plates.
The fees shall be delivered to the DMV within 20 days of the date of sale.
The dealer must pay fees, including penalties if expiration occurs prior to acquisition into
dealer inventory. The buyer only pays fees from the date of sale forward, and the fee must be
prorated, if applicable.
The buyer must pay one full year of fees when making application of an out of state vehicle.
Dealer may not charge for required vehicle verification.
The application copy shall be delivered to the DMV, along with all transfer
documents, within 30 days of the date of sale.
As of 01-01-99 fees may be paid within 30 days after the date of sale.
VEHICLE LICENSING & REGISTRATION
There are two types of California title. They are complying title, date & miles
printed on the front, and non-complying title, no date & miles printed.
To transfer a used vehicle you need to submit a signed title or duplicate
application and a completed DMV REG262 after 05-01-98.
You may encounter old style paperwork and you may still have to process
this to complete a transfer.
The DMV REG 262 contains, on one form, all of the documentation needed
for most vehicle transfers. The sections are:
Vehicle identification section
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*Transfers w/o vin will be returned.
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Bill of sale section
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The dealer identifies the buyer & seller,
purchase price & if transfer is gift.
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Odometer disclosure statement
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Must be complete and signed by both the
buyer/ seller and the dealer.
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Power of attorney
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This allows the dealer to register the
vehicle into the buyer's name. The power of
attorney is not valid without a signature.
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Buyer and seller information
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Must be completed.
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All relevant documents pertaining to the terms and conditions of any sale
shall be signed by the buyer. Printed names and signatures must be in ink.
Errors or alterations on this form will void and a new one will have to be
completed. No strikeouts, No whiteout and No highlighting.
A dealer cannot represent both a buyer and a seller in the same transaction
regarding assignment of power of attorney. Two bill of sale forms required.
No person shall drive, move or leave standing upon a highway.......any motor
vehicle unless it is registered and the appropriate fees have been paid in full.
If a vehicle has expired California registration or it will expire within 60 days
or it is an out of state vehicle, registration fees shall be collected by the
dealer at the time of sale.
All registration fees collected by the dealer are to be submitted to the DMV
within 20 days of the date of sale.
* As of 01-01-99 fees may be paid within 30 days after the date of sale.
All dealers must pay a transfer fee following the sale of a used motor vehicle
to the DMV. The fee is $ 15. as of 07-01-99.
The time requirements for transfers are as follows:
If the registration is expired or out of state the fees must be paid within
20 days from the date of sale.
All other applications and transfer fees must be submitted and paid
within 30 days of the date of sale.
If the application is first submitted within 30 days of the date of sale
and the application is returned the dealer has 30 days to correct and
return the item but may not exceed 50 days from the date of sale to
complete the transfer with the DMV to avoid a penalty.
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Administrative Service Fees
Administrative service fees are penalties issued against a dealer by DMV.
Each ASF count against a dealer can be used as a separate count against
the dealer's license in any administrative action taken against the dealer.
ASF penalties cannot be passed on to the buyer.
When the following omissions occur a penalty is required:
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- Dealer fails to send in "dealer notice" of report of sale.
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ASF penalty of $ 5.
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- Dealer fails to display a report of sale copy on vehicle.
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ASF penalty of $ 5.
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- Dealer fails to submit application with all fees,
penalties and supporting documents to DMV
within 30 days of the date of sale.
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ASF penalty of $ 5.
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- Dealer fails to clear an application within 50 days
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ASF penalty of $ 25.
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Application for waiver of fees requires a statement of facts from the manager of the DMV field
office accepting application.
Unpaid ASF's can result in bond activation and loss of license.
An out of state delivery occurs when a buyer resides in another state and he
wishes to register the vehicle in that state.
The used report of sale should state :" for registration out of state ".
The buyer must obtain registration from his home state before the
vehicle is moved on the highways, or the buyer must obtain a one way
permit from the DMV for a fee of $ 15.
Notarized documentation of direct delivery needed for tax rules, unless a bill of
lading from a licensed transporter is on file.
Board of equalization forms recommended
Access them @ www.boe.ca.gov
For vehicle sales out of country, if time is critical:
A quick title request for certificate of title to be issued within 72 hours may be
honored for an additional fee of $ 15. All original fees still apply and a
completed original or transfer application must accompany the request.
All quick title requests must be submitted to a specific office for processing.
The quick title office:
Department of Motor Vehicles
72 Hour Special Processing D - 238
2415 First Avenue
Sacramento, California, 95818
A dealer shall, without notice or request from the buyer and/or DMV return all fees overpaid by a
buyer for licensing, taxes and transfer of vehicle.
A dealer may not collect a non- refundable deposit and must refund all deposits when a
buyer chooses not to complete a sales transaction.
Delivery of the vehicle at the licensed location is required for completion.
This would include so called "auto buying service" fees.
This would include deposits for custom or specialty vehicles.
VEHICLE EQUIPMENT, DIVISION 12 COMPLIANCE
Dealer liability exists on all safety equipment. A vehicle sold by a licensed
dealer must comply with all division 12 requirements.
The vehicle must be safe.
The vehicle must comply with federal safety standards.
The lighting equipment must be operational.
The brakes must be above 30% useful life.
The rear view mirrors must be operational.
The horn must be operational.
The smog devices must be operational.
The safety belts must be operational.
The seatbelt warning system must be operational in 1st sold after 01-01-93.
The bumpers must be in place.
The muffler must be operational.
The tires must be above minimum wear standards.
The windshield must be in place with no cracks.
The wipers must be operational.
No as-is sales are allowed. If a vehicle does not meet division 12
requirements, it may only be sold to another dealer with a disclosure,
a statement of facts stating:
This vehicle DOES NOT meet division 12 requirements.
This vehicle is being sold for parts. *not to be driven again or
This vehicle is being sold for salvage. *may be reconditioned
As of Jan 1, 2001. all auctions must be licensed dealers.
Disclosure requirements for as - is vehicles required in writing.
ODOMETERS
The odometer must be functional & in working condition at the time of sale. It is an illegal act to
operate a motor vehicle with the intent to defraud. Altered odometers are also illegal. It is a
crime to disconnect, reset, rollback or alter an odometer with the intent to alter the mileage
displayed. Repaired odometers require disclosure unless mileage remains the same.
If the odometer is repaired and cannot accurately reflect the mileage, the odometer shall be adjusted to
read "00000" and a plate shall be attached
to the left doorframe indicating the mileage before and date of service.
* This plate shall be made of engraved metal or hard plastic.
Odometer disclosure shall be completed by the legal owner of record, the
repossessor, on all vehicles that have been repossessed, using a separate
odometer disclosure statement of facts form.
The word "repo" is entered in lieu of a signature on the face of complying
title. A certificate of repossession
is used to complete a transfer without the registered owner's signature.
SMOG / AIR POLLUTION CONTROL
All used motor vehicles, must pass a smog test and certificate on file prior to
offering a vehicle for retail sale.
For purposes of the smog test vehicles must be in excess of 7500 miles.
Dealer to dealer sales have an exemption from smog test requirements.
A vehicle is assumed to pass unless disclosed in writing.
Therefore, Statement of Facts & salvage disclosure required
if no smog or non division 12.
As of January 2001, ALL auctions must be licensed dealers and written disclosure required on as-is
sales to dealers @ auction sale.
The maximum charge for smog inspection is $ 50.
The maximum charge for the certificate is $ 8.25.
* if smog fee exceeds allowance only charge $ 58.25.
Only increase fee when the law changes per DMV.
As of 01-2000, dealer smog good for (2) two years.
The current calendar year minus 29 equals the year model exempt from smog certification.
Example: The calendar year is 2004- 29 = 1975 exempt year model
A Release of Liability, filed in the name of the dealership, as buyer, may assist in removing
enhanced status for dealers in non - enhanced areas. It will also register as an application
in process moving the vehicle into dealer inventory in the DMV computer database.
BUREAU OF AUTOMOTIVE REPAIR REGULATIONS
Any dealer who desires to offer and conduct automotive repair is required to
register with the Department of Consumer Affairs. This registration is
required by the Bureau of automotive repair Act and includes all who, for
compensation, engage in the business of repairing or diagnosing vehicle
malfunctions.
VEHICLE HISTORY DISCLOSURES
The dealer must accurately reflect the known condition of the vehicle at the
time of sale and/or advertisement. The dealer must disclose material
damage to a buyer. This is any damage a buyer might want to know in
making their decision to purchase the vehicle. Failure to disclose may result
in a sale being unwound ( give the money back ) and punitive damages.
This information shall be disclosed on a statement of facts form. At this time
there is no section which requires this disclosure, yet section 9900 cvc
requires it in new car and demo transactions.
Some dealers perform a carfax
type report on each vehicle to avoid unpleasant surprises.
Once again, repaired odometers require disclosure unless the mileage
remains the same and the odometer remains functional.
Disclosure of prior history usage is required when a vehicle has been:
Rental, Taxi, Insurance salvage, Revived salvage, City, county, state
or federal vehicle or any former law enforcement vehicle.
Disclosures must be signed by the buyer prior to completion of the contract.
Minor items may be listed on the Federal Buyer's Guide.
A Spanish language copy should be provided, when appropriate.
The lemon law requires manufactures to repurchase or replace vehicles from new car buyers when they
prove to be defective. IF a new vehicle is in the shop more than 30 days or repaired 4 or more times,
it is a defective vehicle. See Lemon Law Definition
And a "lemon" as per civil code. As such, any dealer who offers a lemon
vehicle for sale, prior to lease, sale or transfer must provide the
buyer a statement which reads: This motor vehicle has been returned to
the manufacturer due to a defect in the vehicle pursuant to consumer
warranty laws. The title to this vehicle is permanently branded with the
notation "lemon law buyback".
The dealer shall affix a plate identifying the vehicle as a "lemon law buyback" to the left front door
frame and it cannot be removed.
* This plate shall be made of engraved metal or hard plastic.
It is the dealers responsibility to brand title and doorframe of out of state
vehicles for resale.
WARRANTIES
There are several types of warranties which may arise during the dealer offer
for sale of a motor vehicle.
Two implied warranties exist, as specified by the uniform commercial code
unless affirmatively disclaimed by the dealer. These are:
Implied warranty of merchantability. This warrants the vehicle is fit for the
ordinary purposes for which it was intended. It goes without saying that the
vehicle complies with Division 12.
If an after sale repair is made on for a NON -Division 12 item we suggest:
A small nominal fee ( $5. ) for the repair and a warranty release signed with copy to the buyer
to prevent further repairs and avoid an implied extension of the warranty from the 'goodwill' repair.
Implied warranty of fitness for a particular purpose. This warrants the
vehicle is fit for a particular purpose, for instance, towing a boat.
Express warranties arise from oral or written agreements between the
dealer and the buyer.
* Be careful what you & your staff say to your customers. Most dealers do not
get themselves in trouble, their salespeople usually do that for them.
The dealer may include a warranty in the price of the vehicle by means of the
Buyer's Guide. This type of inclusive warranty is taxable.
You must specify full or limited warranty, % of parts and labor you will
pay, which systems are covered and for how long.
Service agreements are required to fully and conspicuously disclose in
simple and readily understood language the terms, conditions and
exclusions of the contract. This type of warranty is not taxable.
The disclosure requirements are:
- name of the buyer
- description of the vehicle
- date of commencement & duration
- parts covered
- steps to obtain warranty service
- right to cancel provision, if any.
- dispute resolution procedures available.
- dealer statement of who has the legal & financial obligation to perform
the warranty service & of what he will and will not do in the event of a
problem.
See Related Links:
- Division 12 - Equipment of Vehicles
- Completed Buyers Guide
- Better Business Bureau Used CAR Warranties
FEDERAL BUYER'S GUIDE
The requirements for the used car buyers guide as specified in section 455 of
the US code of regulations. They are:
This form is signed by the buyer only before sale.
A buyers guide
must be posted by the dealer on the side window of every
vehicle displayed for sale with both sides visible.
The label may be removed temporarily for a test drive but must be re-affixed
after the test drive is complete.
The dealer shall have the buyer's signatures.
The original or a copy of the buyer's guide, including all terms and
required disclosures, shall be presented to the buyer prior to presentation of the sales contract of a used vehicle sale. This
document should be used to identify ALL known defects in writing.
If you disclose it, you do not have to fix it, excluding Division 12 items.
USE OF SPECIAL PLATES
The use of dealer plates is appropriate when :
used by the licensed dealer for any purpose
used by an individual in the dealer household for pickup & dropoff
used to operate any vehicle in the dealer's inventory for demonstration
with letter of authorization, unaccompanied up to seven days or
with a licensed salesperson and no letter
used for a special event by any individual w/ letter of authorization
used by any employee of the dealer for dealer related functions.
used by an employee transferring between dealer sales locations.
used by a licensed salesperson for demonstration purposes only.
*no additional use unless vehicle is leased or rented to him / her.
used by a family member as long as the licensee is present in vehicle.
The personal use of a dealer plate creates tax liability. The rates of tax are
based upon the purchase price and they are:
1 / 40th per month for dealer personal use.
1 / 60th per month for salesperson personal use.
All vehicles should be placed in inventory using a release of liability form placing the dealer
as buyer on the date of acquisition.
All vehicles in inventory operated on the public streets, regardless of registration tag expiration date,
shall have a dealer plate affixed.
The use of dealer plates is not appropriate when :
used by an employee doing personal business.
used for work and service vehicles.
used by a family member without the licensee present in the vehicle
unless for pickup and dropoff as described above.
see DMV Memo on Dealer Plate Use
The dealer plate shall be displayed on the rear of the vehicle and over the
original plates, if a vehicle has been previously registered.
If a dealer plate becomes lost or stolen, it is the dealer's responsibility to immediately notify
the local police and report a lost or stolen plate.
Notify Occupational Licensing of theft and need for replacement. Use DMV form OL 247.
Replacement Plate: $ 15.
Replacement Reg Card $ 7.
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