S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 7300--A

                            I N  S E N A T E

                             March 29, 2010
                               ___________

Introduced  by  Sen. PERALTA -- read twice and ordered printed, and when
  printed to be committed to the Committee  on  Consumer  Protection  --
  committee  discharged,  bill amended, ordered reprinted as amended and
  recommitted to said committee

AN ACT to amend the general business law and  the  vehicle  and  traffic
  law,  in relation to requiring an automobile dealer to pay a specified
  amount on the prior credit or  lease  balance  owing  on  the  vehicle
  purchased or obtained in trade to the lessor, or to the legal owner of
  the  vehicle purchased or obtained in trade within twenty-one calendar
  days of purchasing or obtaining the vehicle in trade

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  Legislative  findings.  When consumers choose to purchase
vehicles from motor vehicle dealers that are licensed by the  department
of  motor  vehicles, they have a reasonable expectation that the dealers
have sufficient resources to honor their contractual commitments.
  Motor vehicle buyers have no reliable way to know in advance whether a
motor vehicle dealer is on the brink of insolvency  or  is  on  a  sound
financial footing.
  When  licensed  motor  vehicle  dealers  go out of business they occa-
sionally fail to pay off liens on  vehicles  purchased  or  obtained  in
trade, as agreed. When this happens, the obligation often reverts to the
consumer who traded in the vehicle. As the consumer has likely not budg-
eted  for  this  extra car payment, the result can be ruinous, including
harm to their credit, repossessions that remain on their credit  reports
for  seven  to ten years, home foreclosures, and bankruptcy. Such conse-
quences are brought about through no fault of the consumer.
  Honest dealers are also adversely  impacted  when  unscrupulous  motor
vehicle  dealers  siphon  off business and then harm the credit of their
customers by going out of business without paying  liens,  as  promised,
shrinking  the  automotive market at precisely the time when it is sound
public policy to expand the market and accelerate sales of newer, safer,
cleaner motor vehicles.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD15374-12-0
              

S. 7300--A                          2

  S 2. The general business law is amended by adding a new section 198-c
to read as follows:
  S  198-C. AUTOMOBILE TRADE-IN PROTECTION. (A) AS USED IN THIS SECTION,
"DEALER" SHALL HAVE THE SAME MEANING AS SUCH TERM IS DEFINED BY  SECTION
FOUR HUNDRED FIFTEEN OF THE VEHICLE AND TRAFFIC LAW.
  (B)  WHEN A DEALER PURCHASES OR OBTAINS A VEHICLE IN TRADE IN A RETAIL
SALE OR LEASE TRANSACTION AND THE VEHICLE IS SUBJECT TO A  PRIOR  CREDIT
OR LEASE BALANCE, ALL OF THE FOLLOWING APPLY:
  (1) IF THE DEALER AGREED TO PAY A SPECIFIED AMOUNT ON THE PRIOR CREDIT
OR  LEASE  BALANCE  OWING ON THE VEHICLE PURCHASED OR OBTAINED IN TRADE,
AND THE AGREEMENT TO PAY THE SPECIFIED AMOUNT IS CONTAINED IN A  WRITTEN
AGREEMENT  DOCUMENTING  THE  TRANSACTION,  THE  DEALER  SHALL TENDER THE
AGREED UPON AMOUNT AS PROVIDED IN THE WRITTEN AGREEMENT TO  THE  LESSOR,
OR  TO THE LIEN HOLDER, OR TO THE DESIGNEE OF THAT LESSOR OR LIEN HOLDER
OF THE VEHICLE PURCHASED OR OBTAINED IN TRADE WITHIN TWENTY-ONE CALENDAR
DAYS OF PURCHASING OR OBTAINING THE VEHICLE IN TRADE, PROVIDED, HOWEVER,
THAT THE DEALER MAY RELY UPON THE AMOUNT DUE AS STATED BY THE LESSOR  OR
LIEN HOLDER.
  (2)  IF THE DEALER DID NOT SET FORTH AN AGREEMENT REGARDING PAYMENT OF
A PRIOR CREDIT OR  LEASE  BALANCE  OWED  ON  THE  VEHICLE  PURCHASED  OR
OBTAINED  IN  TRADE, IN A WRITTEN AGREEMENT DOCUMENTING THE TRANSACTION,
THE DEALER SHALL TENDER TO THE LESSOR, OR TO THE LIEN HOLDER, OR TO  THE
DESIGNEE  OF  THAT  LESSOR  OR  LIEN  HOLDER OF THE VEHICLE PURCHASED OR
OBTAINED IN TRADE, AN AMOUNT NECESSARY TO DISCHARGE THE PRIOR CREDIT  OR
LEASE BALANCE OWING ON THE VEHICLE PURCHASED OR OBTAINED IN TRADE WITHIN
TWENTY-ONE  CALENDAR  DAYS  OF  PURCHASING  OR  OBTAINING THE VEHICLE IN
TRADE, PROVIDED, HOWEVER, THAT THE DEALER MAY RELY UPON THE  AMOUNT  DUE
AS STATED BY THE LESSOR OR LIEN HOLDER.
  (3) THE TIME PERIOD SPECIFIED IN PARAGRAPH ONE OR TWO OF THIS SUBDIVI-
SION MAY BE SHORTENED IF THE DEALER AND CONSUMER AGREE, IN WRITING, TO A
SHORTER TIME PERIOD.
  (4)  A DEALER SHALL NOT SELL, CONSIGN FOR SALE, OR TRANSFER ANY OWNER-
SHIP INTEREST IN THE VEHICLE PURCHASED OR OBTAINED  IN  TRADE  UNTIL  AN
AMOUNT NECESSARY TO DISCHARGE THE PRIOR CREDIT OR LEASE BALANCE OWING ON
THE  VEHICLE  HAS BEEN TENDERED TO THE LESSOR, OR TO THE LIEN HOLDER, OR
TO THE DESIGNEE OF THAT LESSOR OR LIEN HOLDER OF THE  VEHICLE  PURCHASED
OR OBTAINED IN TRADE.
  (C)  IF  THE  AGREEMENT  GIVES  EITHER  PARTY THE RIGHT TO RESCIND THE
ENTIRE AGREEMENT WITHIN A REASONABLE  TIME  PERIOD,  RESCISSION  OF  THE
ENTIRE  AGREEMENT  SHALL EFFECTIVELY RESCIND THE OBLIGATIONS PURSUANT TO
THIS SECTION WITHOUT VIOLATING THIS SECTION.
  (D) THIS SECTION SHALL NOT APPLY TO AGREEMENTS  OR  TRANSACTIONS  THAT
INVOLVE A STATE OR FEDERAL PROGRAM IN WHICH A DEALER IS ISSUED A VOUCHER
TO  OFFSET THE PURCHASE PRICE OR LEASE PRICE FOR A QUALIFYING LEASE OF A
NEW VEHICLE UPON THE SURRENDER OF AN  ELIGIBLE  TRADE-IN  VEHICLE  TO  A
DEALER PARTICIPATING IN THE PROGRAM.
  (E)  (1)  EVERY  VIOLATION OF THIS SECTION SHALL BE DEEMED A DECEPTIVE
ACT AND PRACTICE SUBJECT TO ENFORCEMENT UNDER  ARTICLE  TWENTY-TWO-A  OF
THIS  CHAPTER.  IN ADDITION, THE DISTRICT ATTORNEY, COUNTY ATTORNEY, AND
THE CORPORATION COUNSEL SHALL HAVE  CONCURRENT  AUTHORITY  TO  SEEK  THE
RELIEF  IN  PARAGRAPH  TWO  OF THIS SUBDIVISION, AND ALL CIVIL PENALTIES
OBTAINED IN ANY SUCH ACTION SHALL BE RETAINED  BY  THE  MUNICIPALITY  OR
COUNTY.
  (2)  IN EVERY CASE WHERE THE COURT SHALL DETERMINE THAT A VIOLATION OF
THIS SECTION HAS OCCURRED, IT MAY IMPOSE A CIVIL  PENALTY  OF  NOT  MORE
THAN  FIVE THOUSAND DOLLARS FOR EACH VIOLATION. SUCH PENALTY SHALL BE IN

S. 7300--A                          3

ADDITION TO ANY DENIAL OF REGISTRATION OR RENEWAL, SUSPENSION OF  REGIS-
TRATION OR REVOCATION OF REGISTRATION OR ASSESSMENT OF A FINE AUTHORIZED
BY  SUBDIVISION  NINE OF SECTION FOUR HUNDRED FIFTEEN OF THE VEHICLE AND
TRAFFIC LAW.
  (3)  NOTHING  IN THIS SECTION SHALL BE CONSTRUED TO RESTRICT ANY RIGHT
WHICH ANY PERSON MAY HAVE UNDER ANY OTHER STATUTE OR THE COMMON LAW.
  (4) NO DEALER SHALL BE DEEMED TO HAVE VIOLATED THE PROVISIONS OF  THIS
SECTION  IF  SUCH DEALER SHOWS, BY A PREPONDERANCE OF THE EVIDENCE, THAT
THE VIOLATION WAS NOT INTENTIONAL AND RESULTED FROM A  BONA  FIDE  ERROR
MADE NOTWITHSTANDING THE MAINTENANCE OF PROCEDURES REASONABLY ADOPTED TO
AVOID SUCH ERROR.
  (F)  ANY PERSON WHO IS CONVICTED OF KNOWINGLY VIOLATING PARAGRAPH FOUR
OF SUBDIVISION (B) OF THIS SECTION SHALL BE GUILTY OF A CLASS  A  MISDE-
MEANOR.
  (G) IF ANY PART OR PROVISION OF THIS SECTION OR THE APPLICATION THERE-
OF  TO  ANY  PERSON OR CIRCUMSTANCES BE ADJUDGED INVALID BY ANY COURT OF
COMPETENT JURISDICTION, SUCH JUDGMENT SHALL BE  CONFINED  IN  ITS  OPER-
ATIONS  TO  THE  PART, PROVISION OR APPLICATION DIRECTLY INVOLVED IN THE
CONTROVERSY IN WHICH SUCH JUDGMENT SHALL HAVE BEEN  RENDERED  AND  SHALL
NOT  AFFECT  OR  IMPAIR THE VALIDITY OF THE REMAINDER OF THIS SECTION OR
THE APPLICATION THEREOF TO OTHER PERSONS OR CIRCUMSTANCES.
  S 3. Subdivision 9 of section 415 of the vehicle and traffic  law,  as
amended by chapter 7 of the laws of 2000, is amended to read as follows:
  9. Suspension, revocation and refusal to issue or to renew a registra-
tion.  The  commissioner  or  any  person  deputized by him may deny the
application of any  person  for  registration  under  this  section  and
suspend or revoke a registration under this section or refuse to issue a
renewal  thereof  if he or such deputy determines that such applicant or
registrant or any officer, director, stockholder,  or  partner,  or  any
other person directly or indirectly interested in the business:
  a. Has made a material false statement in his application; or
  b. Has used or permitted the use of number plates contrary to law; or
  c.  Has been guilty of fraud or fraudulent practices, or has practiced
dishonest or misleading advertising; or
  d. Has failed to comply with any of the rules and regulations  of  the
commissioner  for  the enforcement of this article or with any provision
of this chapter applicable thereto; or
  e. Has wilfully violated any provisions of the  motor  vehicle  retail
instalment  sales  act  [or],  the  motor  vehicle retail leasing act OR
SECTION ONE HUNDRED NINETY-EIGHT-C OF THE GENERAL BUSINESS LAW; or
  f. Does not have a place  of  business  within  the  meaning  of  this
section; or
  g. Has been convicted of any crime involving dishonesty or deceit; or
  h. Was the former holder, or was an officer, director, stockholder, or
partner,  in a corporation or partnership which was the former holder of
a dealer's registration, which was suspended or revoked by  the  commis-
sioner.
  S  4.  This  act shall take effect on the ninetieth day after it shall
have become a law.