BILL NUMBER: AB 375 CHAPTERED 07/11/94 CHAPTER 180 FILED WITH SECRETARY OF STATE JULY 11, 1994 APPROVED BY GOVERNOR JULY 9, 1994 PASSED THE ASSEMBLY JUNE 27, 1994 PASSED THE SENATE JUNE 23, 1994 AMENDED IN SENATE MAY 25, 1994 AMENDED IN SENATE MAY 9, 1994 AMENDED IN ASSEMBLY JANUARY 31, 1994 INTRODUCED BY Assembly Member Bustamante FEBRUARY 9, 1993 An act to amend Section 1812.601 of the Civil Code, to amend Section 710 of the Harbors and Navigation Code, and to amend Sections 1819, 4456, 5602, 5901, 6100, 6102, and 9561 of the Vehicle Code, relating to vehicles, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 375, Bustamante. Vehicles: auctions: liquidation. (1) Under the Yacht and Ship Brokers Act, the Department of Boating and Waterways licenses the activities of brokers and salespersons engaged in the buying and selling of yachts and ships. The act exempts certain enumerated activities. This bill would exempt from the act a person licensed as a repossession agency when liquidating repossessed collateral and would exempt from the act any transaction in the regular course of business by a wholesale motor vehicle auction. (2) Existing law generally defines the term "auction." This bill would exclude motor vehicle auctions subject to regulation by the Department of Motor Vehicles from that definition. The bill would make other technical and clarifying changes with regard to wholesale motor vehicle auctions. (3) The bill would declare that it is to take effect immediately as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) Current law requires notice to the Department of Motor Vehicles of the transfer of a motor vehicle through a dealer conducting a wholesale motor vehicle auction by use of a notice of transfer form approved by the department. (b) Current law also requires any dealer who sells or transfers a motor vehicle through a dealer conducting a wholesale motor vehicle auction to file with the department a report-of-sale form evidencing transfer to the dealer conducting the motor vehicle auction and further requires the dealer conducting the auction to file a separate report-of-sale form respecting the sale or transfer of the vehicle through the auction. (c) Buyers of motor vehicles are currently able to determine significant facts and trends concerning a vehicle's history from documents filed with the department, including the report-of-sale and notice of transfer forms prepared and filed by each dealer selling or transferring a vehicle. (d) Buyers of vehicles sold through a wholesale motor vehicle auction rely on the fact that the dealer who conducts the auction sale becomes an owner of vehicles transferred to the auction for sale and the seller of vehicles purchased through the auction. (e) It is the intent of the Legislature in enacting this act to, among other things, streamline and make more efficient the process by which report-of-sale and notice of transfer forms are made to the department in wholesale motor vehicle auction transactions by consolidating the information contained in those forms into a single form to be approved by the department and to require that single form to be completed and filed by the dealer conducting the wholesale vehicle auction. However, notwithstanding the provisions of this act or any agreement or other attempt to recharacterize an auction transaction, it is the intent of the Legislature that, for all purposes of law and equity, any dealer who purchases a vehicle through a wholesale auction has the same rights and remedies against the dealer conducting the auction sale as if that dealer were the owner and seller of the auctioned vehicle. SEC. 2. Section 1812.601 of the Civil Code is amended to read: 1812.601. (a) "Advertisement" means any of the following: (1) Any written or printed communication for the purpose of soliciting, describing, or offering to act as an auctioneer or provide auction company services, including any brochure, pamphlet, newspaper, periodical, or publication. (2) A telephone or other directory listing caused or permitted by an auctioneer or auction company to be published that indicates the offer to practice auctioneering or auction company services. (3) A radio, television, or similar airwave transmission that solicits or offers the practice of auctioneering or auction company services. (b) "Auction" means a sale transaction conducted by means of oral or written exchanges between an auctioneer and the members of his or her audience, which exchanges consist of a series of invitations for offers for the purchase of goods made by the auctioneer and offers to purchase made by members of the audience and culminate in the acceptance by the auctioneer of the highest or most favorable offer made by a member of the participating audience. However, auction does not include either of the following: (1) A wholesale motor vehicle auction subject to regulation by the Department of Motor Vehicles. (2) A sale of real estate or a sale in any sequence of real estate with personal property or fixtures or both in a unified sale pursuant to subparagraph (ii) of paragraph (a) of subdivision (4) of Section 9501 of the Commercial Code. (c) "Auction company" means any person who arranges, manages, sponsors, advertises, accounts for the proceeds of, or carries out auction sales at locations, including, but not limited to, any fixed location, including an auction barn, gallery place of business, sale barn, sale yard, sale pavilion, and the contiguous surroundings of each. (d) "Auctioneer" means any individual who is engaged in, or who by advertising or otherwise holds himself or herself out as being available to engage in, the calling for, the recognition of, and the acceptance of, offers for the purchase of goods at an auction. (e) "Employee" means an individual who works for an employer, is listed on the employer's payroll records, and is under the employer's control. (f) "Employer" means a person who employs an individual for wages or salary, lists the individual on the person's payroll records, and withholds legally required deductions and contributions. (g) "Goods" means any goods, wares, chattels, merchandise, or other personal property, including domestic animals and farm products. (h) "Person" means an individual, corporation, partnership, trust, including a business trust, firm, association, organization, or any other form of business enterprise. SEC. 3. Section 710 of the Harbors and Navigation Code is amended to read: 710. The definitions of "broker" and "salesperson," as set forth in Section 701, do not include the following: (a) A person who directly performs any act subject to this article with reference to a yacht owned by that person or, in the case of a corporation which, through its regular officers receiving no special compensation therefor, performs any act subject to this article with reference to the corporation's yacht. (b) Services rendered by an attorney at law in performing duties as an attorney at law. (c) Any receiver, trustee in bankruptcy, or other person acting under the order of any court. (d) Any transaction involving the sale of property subject to foreclosure of a security interest in a yacht which is conducted only by the holder of the security interest or by a person licensed pursuant to Chapter 11 (commencing with Section 7500) of Division 3 of the Business and Professions Code when liquidating repossessed collateral pursuant to the written request of the holder of the security interest. (e) Any transaction involving the sale of a yacht in excess of 300 gross tons or tenders thereof sold at the same time. (f) Any transaction involving the sale of a new yacht or ship. (g) Any transaction in the regular course of business by a wholesale motor vehicle auction subject to regulation by the Department of Motor Vehicles. SEC. 4. Section 1819 of the Vehicle Code is amended to read: 1819. All records of the department containing information as to the actual mileage of motor vehicles submitted as required by subdivision (b) of Section 4456 and Sections 5900 and 5901 shall be open to inspection by the public during the office hours of the department. SEC. 5. Section 4456 of the Vehicle Code is amended to read: 4456. (a) When selling a vehicle, dealers and lessor-retailers shall use numbered report-of-sale forms issued by the department. The forms shall be used in accordance with the following terms and conditions: (1) The dealer or lessor-retailer shall attach for display a copy of the report of sale on the vehicle before the vehicle is delivered to the purchaser. (2) The dealer or lessor-retailer shall submit to the department an application accompanied by all fees and penalties due for registration or transfer of registration of the vehicle within 20 days from the date of sale. Penalties due for noncompliance with this paragraph shall be paid by the dealer or lessor-retailer. The dealer or lessor-retailer shall not charge the purchaser for the penalties. (3) As part of an application to transfer registration of a used vehicle, the dealer or lessor-retailer shall include all of the following information on the certificate of title, application for a duplicate certificate of title, or form prescribed by the department: (A) Date of sale and report of sale number. (B) Purchaser's name and address. (C) Dealer's name, address, number, and signature or signature of authorized agent. (D) Salesperson number. (4) If the department returns an application and the application was first received by the department within 20 days of the date of sale of the vehicle, the dealer or lessor-retailer shall submit a corrected application to the department within 40 days from the date of sale of the vehicle or within 20 days from the date that the application is first returned by the department, whichever is later. (5) If the department returns an application and the application was first received by the department more than 20 days from the date of sale of the vehicle, the dealer or lessor-retailer shall submit a corrected application to the department within 40 days from the date of sale of the vehicle. (6) An application first received by the department more than 40 days from the date of sale of the vehicle is subject to the penalties specified in subdivisions (a) and (b) of Section 4456.1. (7) The dealer or lessor-retailer shall report the sale pursuant to Section 5901. (b) (1) A transfer that takes place through a dealer conducting a wholesale motor vehicle auction shall be reported to the department by that dealer on a single form approved by the department. The completed form shall contain, at a minimum, all of the following information: (A) The name and address of the seller. (B) The seller's dealer number, if applicable. (C) The date of delivery to the dealer conducting the auction. (D) The actual mileage of the vehicle as indicated by the vehicle's odometer at the time of delivery to the dealer conducting the auction. (E) The name, address, and occupational license number of the dealer conducting the auction. (F) The name, address, and occupational license number of the buyer. (G) The signature of the dealer conducting the auction. (2) Submission of the completed form specified in paragraph (1) to the department shall fully satisfy the requirements of subdivision (a) and subdivision (a) of Section 5901 with respect to the dealer selling at auction and the dealer conducting the auction. (3) The single form required by this subdivision does not relieve a dealer of any obligation or responsibility that is required by any other provision of law. (c) A vehicle displaying a copy of the report of sale may be operated without license plates or registration card until the license plates and registration card are received by the purchaser. SEC. 6. Section 5602 of the Vehicle Code is amended to read: 5602. An owner who has made a bona fide sale or transfer of a vehicle and has delivered possession of the vehicle to a purchaser is not, by reason of any of the provisions of this code, the owner of the vehicle so as to be subject to civil liability or criminal liability for the parking, abandoning, or operation of the vehicle thereafter by another when the selling or transferring owner, in addition to that delivery and that bona fide sale or transfer, has fulfilled either of the following requirements: (a) He or she has made proper endorsement and delivery of the certificate of ownership as provided in this code. (b) He or she has delivered to the department or has placed in the United States mail, addressed to the department, either of the following documents: (1) The notice as provided in subdivision (b) of Section 4456 or Section 5900 or 5901. (2) The appropriate documents and fees for registration of the vehicle to the new owner pursuant to the sale or transfer. SEC. 7. Section 5901 of the Vehicle Code is amended to read: 5901. (a) Every dealer or lessor-retailer, upon transferring by sale, lease, or otherwise any vehicle, whether new or used, of a type subject to registration under this code, shall, not later than the end of the fifth calendar day thereafter not counting the day of sale, give written notice of the transfer to the department at its headquarters upon an appropriate form provided by it. (b) Except as otherwise provided in this subdivision or in subdivision (c), the dealer or lessor-retailer shall enter on the form and pursuant to the federal Motor Vehicle Information and Cost Savings Act (15 U.S.C. Sec. 1901 et seq.), on the ownership certificate, the actual mileage of the vehicle as indicated by the vehicle's odometer at the time of the transfer. However, if the vehicle dealer or lessor-retailer has knowledge that the mileage displayed on the odometer is incorrect, the licensee shall indicate on the form the true mileage, if known, of the vehicle at the time of the transfer. A vehicle dealer or lessor-retailer need not give the notice when selling or transferring a new unregistered vehicle to a dealer or lessor-retailer. (c) When the dealer or lessor-retailer is not in possession of the vehicle that is sold or transferred, the person in physical possession of the vehicle shall give the information required by subdivision (b). (d) A sale is deemed completed and consummated when the purchaser of the vehicle has paid the purchase price, or, in lieu thereof, has signed a purchase contract or security agreement, and has taken physical possession or delivery of the vehicle. SEC. 8. Section 6100 of the Vehicle Code is amended to read: 6100. A dealer who conducts a wholesale motor vehicle auction and who uses the form prescribed in subdivision (b) of Section 4456 shall include the phrase "SOLD THROUGH (name of dealer conducting the auction)" and the date of the auction on the certificate of title of every vehicle sold, in a manner prescribed by the department. SEC. 9. Section 6102 of the Vehicle Code is amended to read: 6102. For each vehicle sold pursuant to this article, the dealer who conducts the auction shall maintain a copy of the following documents for a period of not less than five years: (a) The form required by subdivision (b) of Section 4456. (b) A copy of the auction sales agreement. (c) A copy of the odometer statement required by Section 5900. SEC. 10. Section 9561 of the Vehicle Code is amended to read: 9561. (a) When a legal owner or his or her agent repossesses a vehicle on which renewal fees are due, the department shall waive any renewal penalties that are due for late payment if the fees are paid within 60 days of taking possession. (b) Notwithstanding any other provisions of this code, when a repossessed vehicle is sold through a dealer conducting a wholesale motor vehicle auction as provided in subdivision (b) of Section 4456 and Article 5 (commencing with Section 6100) of Chapter 2 of Division 3, any penalties that may be due are waived, if all renewal fees that are due are paid not later than 60 days after the date of sale at the auction. SEC. 11. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to streamline and make more efficient the process by which certain sales of vehicles are made, it is necessary that this act take effect immediately.