BILL NUMBER: AB 871 CHAPTERED 10/03/01 CHAPTER 460 FILED WITH SECRETARY OF STATE OCTOBER 3, 2001 APPROVED BY GOVERNOR OCTOBER 2, 2001 PASSED THE ASSEMBLY AUGUST 30, 2001 PASSED THE SENATE AUGUST 27, 2001 AMENDED IN SENATE AUGUST 22, 2001 AMENDED IN SENATE JUNE 27, 2001 INTRODUCED BY Assembly Member Cox FEBRUARY 22, 2001 An act to amend Sections 286 and 1660 of the Vehicle Code, relating to vehicles. LEGISLATIVE COUNSEL'S DIGEST AB 871, Cox. Vehicles: dealers. (1) Existing law excludes from the term "dealer" for purposes of the Vehicle Code, among other persons and entities, public or private nonprofit charitable, religious, or educational institutions or organizations that sell vehicles if certain conditions are met, including that the proceeds of the sale of the vehicles are retained by that institution or organization for specific purposes and that the vehicles sold are donated to the institution or organization. This bill would allow an institution or organization to sell vehicles on behalf of another qualifying institution or organization under described circumstances. (2) Under existing law, any institution or organization described above is required to keep a record for not less than 3 years of the name and address of each vehicle donor. Existing law authorizes the Department of Motor Vehicles to inspect the records of a nonprofit institution or organization that sells vehicles in order to ascertain whether it meets the conditions described in (1). This bill would recast this provision to require the institutions or organizations to keep additional records including, if the donated property is being sold by an institution or organization on behalf of another institution or organization, unless sold at wholesale, a described signed, written contract and separate listings and documents pertaining to the sale. Because, under existing law, a violation of the Vehicle Code is a crime, this bill would impose a state-mandated local program by expanding the scope of that crime. (3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 286 of the Vehicle Code is amended to read: 286. The term "dealer" does not include any of the following: (a) Insurance companies, banks, finance companies, public officials, or any other person coming into possession of vehicles in the regular course of business, who sells vehicles under a contractual right or obligation, in performance of an official duty, or in authority of any court of law, if the sale is for the purpose of saving the seller from loss or pursuant to the authority of a court. (b) Persons who sell or distribute vehicles of a type subject to registration for a manufacturer to vehicle dealers licensed under this code, or who are employed by manufacturers or distributors to promote the sale of vehicles dealt in by those manufacturers or distributors. However, any of those persons who also sell vehicles at retail are vehicle dealers and are subject to this code. (c) Persons regularly employed as salespersons by vehicle dealers licensed under this code while acting within the scope of that employment. (d) Persons engaged exclusively in the bona fide business of exporting vehicles or of soliciting orders for the sale and delivery of vehicles outside the territorial limits of the United States, if no federal excise tax is legally payable or refundable on any of the transactions. Persons not engaged exclusively in the bona fide business of exporting vehicles, but who are engaged in the business of soliciting orders for the sale and delivery of vehicles, outside the territorial limits of the United States are exempt from licensure as dealers only if their sales of vehicles produce less than 10 percent of their total gross revenue from all business transacted. (e) Persons not engaged in the purchase or sale of vehicles as a business, who dispose of any vehicle acquired and used in good faith, for their own personal use, or for use in their business, and not for the purpose of avoiding the provisions of this code. (f) Persons who are engaged in the purchase, sale, or exchange of vehicles, other than motorcycles subject to identification under this code, which are not intended for use on the highways. (g) Persons temporarily retained as auctioneers solely for the purpose of disposing of vehicle stock inventories by means of public auction on behalf of the owners at the owners' place of business, or as otherwise approved by the department, if intermediate physical possession or control of, or an ownership interest in, the inventory is not conveyed to the persons so retained. (h) Persons who are engaged exclusively in the business of purchasing, selling, servicing, or exchanging racing vehicles, parts for racing vehicles, and trailers designed and intended by the manufacturer to be used exclusively for carrying racing vehicles. For purposes of this subdivision, "racing vehicle" means a motor vehicle of a type used exclusively in a contest of speed or in a competitive trial of speed which is not intended for use on the highways. (i) Any person who is a lessor. (j) Any person who is a renter. (k) Any salvage pool. (l) Any yacht broker who is subject to the Yacht and Ship Brokers Act (Article 2 (commencing with Section 700) of Chapter 5 of Division 3 of the Harbors and Navigation Code) and who sells used boat trailers in conjunction with the sale of a vessel. (m) Any licensed automobile dismantler who sells vehicles that have been reported for dismantling as provided in Section 11520. (n) The Director of Corrections when selling vehicles pursuant to Section 2813.5 of the Penal Code. (o) (1) Any public or private nonprofit charitable, religious, or educational institution or organization that sells vehicles if all of the following conditions are met: (A) The institution or organization qualifies for state tax-exempt status under Section 23701d of the Revenue and Taxation Code, and tax-exempt status under Section 501(c)(3) of the federal Internal Revenue Code. (B) The vehicles sold were donated to the nonprofit charitable, religious, or educational institution or organization. (C) The vehicles subject to retail sale meet all of the applicable equipment requirements of Division 12 (commencing with Section 24000) and are in compliance with emission control requirements as evidenced by the issuance of a certificate pursuant to subdivision (b) of Section 44015 of the Health and Safety Code. Under no circumstances may any institution or organization transfer the responsibility of obtaining a smog inspection certificate to the buyer of the vehicle. (D) The proceeds of the sale of the vehicles are retained by that institution or organization for its charitable, religious, or educational purposes. (2) An institution or organization described in paragraph (1) may sell vehicles on behalf of another institution or organization under the following conditions: (A) The nonselling institution or organization meets the requirements of paragraph (1). (B) The selling and nonselling institutions or organizations enter into a signed, written agreement pursuant to subparagraph (A) of paragraph (3) of subdivision (a) of Section 1660. (C) The selling institution or organization transfers the proceeds from the sale of each vehicle to the nonselling institution or organization within 45 days of the sale. All net proceeds transferred to the nonselling institution or organization shall clearly be identifiable to the sale of a specific vehicle. The selling institution or organization may retain a percentage of the proceeds from the sale of a particular vehicle. However, any retained proceeds shall be used by the selling institution or organization for its charitable, religious, or educational purposes. (D) At the time of transferring the proceeds, the selling institution or organization shall provide to the nonselling institution or organization, an itemized listing of the vehicles sold and the amount for which each vehicle was sold. (E) In the event the selling institution or organization cannot complete a retail sale of a particular vehicle, or if the vehicle cannot be transferred as a wholesale transaction to a dealer licensed under this code, the vehicle shall be returned to the nonselling institution or organization and the written agreement revised to reflect that return. Under no circumstances may a selling institution or organization transfer or donate the vehicle to a third party that is excluded from the definition of a dealer under this section. (3) An institution or organization described in this subdivision shall retain all records required to be retained pursuant to Section 1660. (p) Any motor club, as defined in Section 12142 of the Insurance Code, that does not arrange or negotiate individual motor vehicle purchase transactions on behalf of its members but refers members to a new motor vehicle dealer for the purchase of a new motor vehicle and does not receive a fee from the dealer contingent upon the sale of the vehicle. SEC. 2. Section 1660 of the Vehicle Code is amended to read: 1660. (a) Any institution or organization described in subdivision (o) of Section 286 shall keep the following records for not less than three years: (1) The name and address of each vehicle donor and the year, make, vehicle identification number, and, if available, the license plate number of the donated vehicle. (2) An itemized listing by vehicle identification number of the date each vehicle was donated, the date sold, and the amount for which it was sold. (3) If the donated vehicle is being sold by an institution or organization on behalf of another institution or organization pursuant to paragraph (2) of subdivision (o) of Section 286, the following documentation shall be retained in the following manner: (A) A signed, written agreement shall remain on the premises that identifies the percentage of the proceeds that may be retained by the selling institution or organization, a statement that each vehicle meets, or, unless sold at wholesale, by the time of sale will meet, the equipment requirements of Division 12 (commencing with Section 24000), and a statement that each vehicle is in compliance, or, unless sold at wholesale, at the time of sale will be in compliance, with emission control certification requirements pursuant to subdivision (b) of Section 44015 of the Health and Safety Code. (B) A separate listing that identifies each vehicle by year, make, and vehicle identification number. (C) All itemized listings pursuant to subparagraph (D) of paragraph (2) of subdivision (o) of Section 286. (D) The selling institution or organization shall retain all documentation pertaining to the sale of vehicles on behalf of another institution or organization in the same manner as is required for the sale of vehicles donated to the selling institution or organization. (b) The department may inspect the records of any nonprofit institution or organization that obtains donated vehicles in order to ascertain whether it meets the conditions specified in subdivision (o) of Section 286. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.