S T A T E   O F   N E W   Y O R K
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                                  8066

                       2015-2016 Regular Sessions

                          I N  A S S E M B L Y

                              June 5, 2015
                               ___________

Introduced by M. of A. CRESPO -- read once and referred to the Committee
  on Transportation

AN  ACT to amend the vehicle and traffic law, in relation to surety bond
  requirements for car dealers

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

  Section  1. Paragraphs a, b and c of subdivision 6-b of section 415 of
the vehicle and traffic law, as amended by chapter  7  of  the  laws  of
2000, paragraph a as further amended by section 104 of part A of chapter
62 of the laws of 2011, are amended to read as follows:
  a.  As a condition to obtaining a registration certificate pursuant to
this section, every new motor vehicle dealer applicant and every  quali-
fied  dealer applicant shall obtain and continue in effect a surety bond
in an amount of fifty thousand dollars  executed  by  a  surety  company
authorized to transact business in the state by the department of finan-
cial  services  of the state. As a condition to obtaining a registration
certificate pursuant to this section, every  dealer  applicant  [who  is
applying  for  a  registration  certificate in the first instance or who
sold two hundred motor vehicles or fewer in the previous  calendar  year
shall  obtain  and  continue in effect a surety bond in an amount of ten
thousand dollars executed by a surety  company  authorized  to  transact
business  in  the  state  by the department of financial services of the
state. As a condition of obtaining a registration  certificate  pursuant
to  this  section, every dealer applicant who sold more than two hundred
motor vehicles in the previous calendar year shall obtain  and  continue
in  effect  a  surety  bond in an amount of twenty-five thousand dollars
executed by a surety company authorized  to  transact  business  in  the
state  by  the  department of financial services of the state. The bonds
shall be approved as to form by the commissioner  and  shall  be  condi-
tioned  on the new motor vehicle dealer's, qualified dealer's, and deal-
er's: payment of all valid bank drafts, including checks, drawn by  such

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD10954-04-5
              

A. 8066                             2

dealer  for  the  purchase  of motor vehicles; transfer of good title to
each motor vehicle such dealer sells; safekeeping of all customer depos-
its related to the sale of a motor vehicle between the time  of  receipt
of  such  customer deposit and the transfer of good title to the vehicle
to the customer; payment for all fines imposed upon the new motor  vehi-
cle  dealer, qualified dealer, or dealer by the commissioner pursuant to
the provisions of this chapter; and such dealer's repayment of any over-
charges of a customer by such dealer for the  vehicle  registration  and
titling  charges payable to the commissioner for registering and titling
the sold vehicle], WHO IS NOT A NEW MOTOR VEHICLE DEALER OR A  QUALIFIED
MOTOR VEHICLE DEALER, WHO IS APPLYING FOR A NEW REGISTRATION CERTIFICATE
SHALL  OBTAIN  AND  CONTINUE IN EFFECT A SURETY BOND IN AN AMOUNT OF (I)
TWENTY THOUSAND DOLLARS, FOR SUCH DEALERS WHO SELL FIFTY OR  LESS  MOTOR
VEHICLES A YEAR, AND (II) ONE HUNDRED THOUSAND DOLLARS, FOR SUCH DEALERS
WHO  SELL  MORE  THAN  FIFTY  MOTOR VEHICLES A YEAR EXECUTED BY A SURETY
COMPANY AUTHORIZED TO TRANSACT BUSINESS IN THIS STATE BY THE  DEPARTMENT
OF  FINANCIAL  SERVICES  OF  THE  STATE. ANY SUCH DEALER WHICH IS BONDED
PRIOR TO THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF  TWO  THOUSAND
FIFTEEN  WHICH  AMENDED THIS PARAGRAPH, SHALL BE REQUIRED TO COMPLY WITH
THE AMENDMENTS MADE BY SUCH CHAPTER, ON AND  AFTER  JANUARY  FIRST,  TWO
THOUSAND SIXTEEN.
  b.  Recovery  against  a  bond  may be made by a person, including the
state, who obtains a judgment against  the  new  motor  vehicle  dealer,
qualified dealer, or dealer for [an act or omission on which the bond is
conditioned if the act or omission occurred during the term of the bond]
ANY  CLAIM  RELATED  TO  THE  BUSINESS OF SUCH NEW MOTOR VEHICLE DEALER,
QUALIFIED DEALER OR DEALER, INCLUDING BUT NOT  LIMITED  TO,  CONTRACTUAL
VIOLATIONS,  FRAUD, UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN VIOLATION
OF SECTION THREE HUNDRED FORTY-NINE OF THE GENERAL  BUSINESS  LAW,  ACTS
AND  OMISSIONS,  THE  AMOUNT  OF THE VALID BANK DRAFTS (INCLUDING CHECKS
DRAWN BY THE MOTOR VEHICLE DEALER), QUALIFIED CHECKS DRAWN  BY  THE  NEW
MOTOR  VEHICLE  DEALER,  QUALIFIED  DEALER OR DEALER FOR THE PURCHASE OF
MOTOR VEHICLES OR THE AMOUNT OF OVERCHARGE BY SUCH DEALER FOR  REGISTRA-
TION  OR TITLE FEES OR THE AMOUNT PAID TO SUCH DEALER OR THE DEPOSIT, AS
THE CASE MAY BE, FOR THE MOTOR VEHICLE FOR  WHICH  GOOD  TITLE  WAS  NOT
DELIVERED,  AND TITLE CLAIMS, IF THE ACT OR OMISSION OCCURRED DURING THE
TERM OF THE BOND. The total liability imposed on the surety  under  this
section  for  all  [breaches of the bond condition] CLAIMS is limited to
the face amount of the bond. [Such liability may  include,  but  is  not
limited to, the amount of the valid bank drafts, including checks, drawn
by  the  new  motor  vehicle dealer, qualified dealer, or dealer for the
purchase of motor vehicles or the amount of overcharge  by  such  dealer
for  registration or title fees or the amount paid to such dealer or the
deposit, as the case may be, for the motor vehicle for which good  title
was not delivered.] In no event shall the surety on a bond be liable for
total  claims  in excess of the bond amount, regardless of the number or
nature of claims made against the bond or the number of years  the  bond
remained  in  force, nor shall any such surety bond provide coverage for
transactions involving sales of any motor vehicles for which a  bond  is
not  required pursuant to the provisions of paragraph d of this subdivi-
sion.
  c. Any surety issuing a bond pursuant to  this  subdivision  shall  be
required  to provide sixty days' notice to the commissioner prior to the
effective date of cancellation OR LAPSE of the bond, AND  SHALL  PROVIDE
NOTICE TO THE COMMISSIONER UPON THE DATE OF THE CANCELLATION OR LAPSE OF
SUCH BOND. UPON THE CANCELLATION OR LAPSE OF ANY SURETY BOND REQUIRED BY

A. 8066                             3

THIS  SUBDIVISION,  THE  COMMISSIONER  SHALL  WITHIN  FIVE  DAYS OF SUCH
CANCELLATION OR LAPSE, VERIFY THAT THE DEALER HOLDS A SURETY BOND  WHICH
MEETS THE REQUIREMENTS OF THIS SUBDIVISION.
  S 2. This act shall take effect on the one hundred eightieth day after
it shall have become a law.