BILL NUMBER: AB 1447 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 1, 2012
INTRODUCED BY Assembly Member Feuer
JANUARY 4, 2012
An act to amend Section 2982 2981
of, and to add Sections 2981.6 1795.51
and 2983.35 to, the Civil Code, relating to automobile sales.
LEGISLATIVE COUNSEL'S DIGEST
AB 1447, as amended, Feuer. Automobile sales finance: sellers.
The Rees-Levering Motor Vehicle Sales and Finance Act regulates
conditional sales contracts for motor vehicles, and, among other
things, requires a person selling or leasing a motor vehicle under a
conditional sale contract to disclose certain information to the
buyer of the vehicle. A willful violation of those provisions is a
misdemeanor and may render the contract unenforceable. A seller who
violates the provisions of the act may also be liable to the buyer
for monetary damages.
This bill would require a buy-here-pay-here dealer, as
defined, to issue a 30-day or 1,000-mile warranty to the buyer or
lessee of a used vehicle bought at retail price, and would require
the warranty to cover the engine, transmission, drive axle, brakes,
radiator, steering, alternator, generator, starter, and
ignition system. The bill would require the buy-here-pay-here dealer
to either repair those covered parts that fail or to reimburse the
buyer or lessee, as specified, and would permit the warranty language
to exclude coverage under certain conditions. The bill would void an
agreement for the purchase or lease of a vehicle that waives,
limits, or disclaims these requirements. The bill would provide that
a warranty is deemed to have been issued if a buy-here-pay-here
dealer fails to issue a warranty pursuant to these provisions. The
bill would prohibit a seller under the act
buy-here-pay-here dealer from requiring, as part of a
contract, the buyer to make payments in person, with the exception of
the downpayment for the vehicle . Additionally, this bill
would require a seller to display the vehicle's sale price on the
vehicle. This bill would also prohibit a seller from calling a buyer'
s references after the sale of the vehicle, and ,
would prohibit a seller the
buy-here-pay-here dealer from, after the sale of the vehicle,
tracking the vehicle using Global Positioning System technology and
from disabling the vehicle with ignition override technology ,
except as specified, and would make a violation of these prohibitions
a misdemeanor . By expanding the definition of a crime,
this bill would impose a state-mandated local program. The bill would
also make findings and declarations related to buy-here-pay-here
dealers.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) A growing number of Californians need cars to get to work but
cannot qualify for conventional automobile loans.
(b) Some used car dealers, known as buy-here-pay-here, operate a
business model under which they stock and sell older, high-mileage
vehicles to consumers that cannot otherwise qualify for conventional
automobile loans. Unlike traditional new and used car dealers,
buy-here-pay-here dealers do not assign sales and lease contracts
they generate to third-party finance or lease sources. Because
buy-here-pay-here dealers maintain and administer their own sales and
lease contract portfolios, they do not have to comply with
underwriting and loan policies set by traditional lenders and are
free to set financial terms that are significantly higher than
conventional automobile loans or leases.
(c) Consumers who have little or no alternative other than to buy
or lease a used vehicle from a buy-here-pay-here dealer are
vulnerable to unfair or deceptive practices by buy-here-pay-here
dealers.
(d) It is the intent of the Legislature in enacting this act to
curb unfair and deceptive practices by buy-here-pay-here dealers and
to protect the consuming public.
SEC. 2. Section 1795.51 is added to the
Civil Code , to read:
1795.51. (a) No buy-here-pay-here dealer, as that term is defined
in subdivision (s) of Section 2981, shall sell or lease a used
vehicle, as defined in Section 665 of the Vehicle Code, at retail
price without giving the buyer or lessee a written warranty which
shall at minimum have a duration of at least 30 days from the date of
the contract or when the odometer has registered 1,000 miles from
that shown on the contract, whichever occurs first.
(b) The written warranty shall require the buy-here-pay-here
dealer or its agent to repair or, at the election of the
buy-here-pay-here dealer, reimburse the retail buyer or lessee for
the reasonable cost of repairing, the failure of a covered part.
Covered parts shall at least include the following items:
(1) Engine. All lubricated parts, water pump, fuel pump,
manifolds, engine block, cylinder head, rotary engine housings,
flywheel, and electronic components.
(2) Transmission. The transmission case, internal parts, the
torque converter, and electronic components.
(3) Drive axle. Front and rear drive axle housings and internal
parts, axle shafts, propeller shafts, universal joints, and
electronic components.
(4) Brakes. Master cylinder, vacuum assist booster, wheel
cylinders, hydraulic lines and fittings, disc brake calipers, and
electronic components.
(5) Radiator.
(6) Steering. The steering gear housing and all internal parts,
power steering pump, valve body, piston, rack, and electronic
components.
(7) The alternator, generator, starter, and ignition system,
excluding the battery.
(c) The buy-here-pay-here dealer shall make the repair or
reimbursement notwithstanding the fact that the warranty period has
expired, provided that the retail buyer or lessee notified the
buy-here-pay-here dealer of the failure of a covered part within the
specified warranty period.
(d) The written warranty may contain additional language excluding
coverage of any of the following:
(1) For a failure of a covered part caused by a lack of customary
maintenance after the vehicle was delivered to the buyer or lessee.
(2) For a failure of a covered part caused by collision, abuse,
negligence, theft, vandalism, fire, or other casualty and damage from
the environment (windstorm, lightning, road hazards, etc.) that
occurred after the vehicle was delivered to the buyer or lessee.
(3) If the odometer has been stopped or altered after the vehicle
was delivered to the buyer or lessee and the vehicle's actual mileage
cannot be readily determined, or if any covered part failed due to
an alteration of that part after the vehicle was delivered to the
buyer or lessee.
(4) For maintenance services and the parts used in connection with
those services, such as seals, gaskets, oil, or grease, unless
required in connection with the repair of a covered part.
(5) For a motor tune-up.
(6) For a failure resulting from racing or other competition after
the vehicle was delivered to the buyer or lessee.
(7) For a failure caused by towing a trailer or another vehicle
after the vehicle was delivered to the buyer or lessee, unless the
used vehicle is equipped for towing as recommended by the
manufacturer.
(8) If the used vehicle is used to carry passengers for hire.
(9) If the used vehicle is rented to someone other than the retail
buyer or lessee.
(10) For repair of valves, rings, or both to correct low
compression, oil consumption, or both, which is considered normal
wear.
(11) For property damage arising or allegedly arising out of the
failure of a covered part.
(12) For loss of the use of the used vehicle, loss of time,
inconvenience, commercial loss, or consequential damages, except for
reasonable towing expenses.
(e) If the retail buyer or lessee notifies the buy-here-pay-here
dealer within the specified warranty period that the vehicle does not
conform to the written warranties, and the nonconformity is not
otherwise excluded from coverage, the buy-here-pay-here dealer shall
either repair the vehicle to conform to the written warranties or
cancel the sale or lease contract. In the event that the
buy-here-pay-here dealer cancels the sale or lease contract, all of
the following shall apply:
(1) The buy-here-pay-here dealer shall give written notice to the
buyer or lessee of the election to cancel. Notice may be given by
personal delivery or by first-class mail.
(2) The buyer or lessee shall return the vehicle in the same
condition as when it was delivered by the buy-here-pay-here dealer,
reasonable wear and tear and any nonconformity with the written
warranties excepted.
(3) The buyer or lessee shall return to the buy-here-pay-here
dealer documents related to the sale that are necessary in order to
transfer ownership, including vehicle title and registration
documents.
(4) The buy-here-pay-here dealer shall refund to the buyer or
lessee, no later than the day after the day on which the buyer or
lessee returns the vehicle, all amounts paid under the sale or lease
contract, less a reasonable amount for damage sustained by the
vehicle after the sale or lease, excepting damage caused by a
nonconformity with the written warranty.
(f) In any proceeding in which the exclusion of coverage permitted
in subdivision (d) or the deduction allowed in paragraph (4) of
subdivision (e) is an issue, the buy-here-pay-here dealer shall have
the burden of proof.
(g) Any agreement entered into by a buyer for the purchase or
lease of a used motor vehicle that waives, limits, or disclaims the
rights set forth in this section shall be void as contrary to public
policy.
(h) If a buy-here-pay-here dealer fails to give the written
warranty required by this section, the buy-here-pay-here dealer shall
be deemed to have issued the warranty as a matter of law.
SEC. 3. Section 2981 of the Civil Code
is amended to read:
2981. As used in this chapter, unless the context otherwise
requires:
(a) "Conditional sale contract" means:
(1) A contract for the sale of a motor vehicle between a buyer and
a seller, with or without accessories, under which possession is
delivered to the buyer and either of the following:
(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.
(B) A lien on 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.
(2) A contract for the bailment of a motor vehicle between a buyer
and a seller, with or without accessories, by which the bailee or
lessee agrees to pay as compensation for use a sum substantially
equivalent to or in excess of the aggregate value of the vehicle and
its accessories, if any, at the time the contract is executed, and by
which it is agreed that the bailee or lessee will become, or for no
other or for a nominal consideration has the option of becoming, the
owner of the vehicle upon full compliance with the terms of the
contract.
(b) "Seller" means a person engaged in the business of selling or
leasing motor vehicles under conditional sale contracts.
(c) "Buyer" means the person who buys or hires a motor vehicle
under a conditional sale contract.
(d) "Person" includes an individual, company, firm, association,
partnership, trust, corporation, limited liability company, or other
legal entity.
(e) "Cash price" means the amount for which the seller would sell
and transfer to the buyer unqualified title to the motor vehicle
described in the conditional sale contract, if the property were sold
for cash at the seller's place of business on the date the contract
is executed, and shall include taxes to the extent imposed on the
cash sale and the cash price of accessories or services related to
the sale, including, but not limited to, delivery, installation,
alterations, modifications, improvements, document preparation fees,
a service contract, a vehicle contract cancellation option agreement,
and payment of a prior credit or lease balance remaining on property
being traded in.
(f) "Downpayment" means a payment that the buyer pays or agrees to
pay to the seller in cash or property value or money's worth at or
prior to delivery by the seller to the buyer of the motor vehicle
described in the conditional sale contract. The term shall also
include the amount of any portion of the downpayment the payment of
which is deferred until not later than the due date of the second
otherwise scheduled payment, if the amount of the deferred
downpayment is not subject to a finance charge. The term does not
include any administrative finance charge charged, received or
collected by the seller as provided in this chapter.
(g) "Amount financed" means the amount required to be disclosed
pursuant to paragraph (8) of subdivision (a) of Section 2982.
(h) "Unpaid balance" means the difference between subdivision (e)
and subdivision (f), plus all insurance premiums (except for credit
life or disability insurance when the amount thereof is included in
the finance charge), which are included in the contract balance, and
the total amount paid or to be paid as follows:
(1) To a public officer in connection with the transaction.
(2) For license, certificate of title, and registration fees
imposed by law, and the amount of the state fee for issuance of a
certificate of compliance or certificate of waiver pursuant to
Section 9889.56 of the Business and Professions Code.
(i) "Finance charge" has the meaning set forth for that term in
Section 226.4 of Regulation Z. The term shall not include delinquency
charges or collection costs and fees as provided by subdivision (k)
of Section 2982, extension or deferral agreement charges as provided
by Section 2982.3, or amounts for insurance, repairs to or
preservation of the motor vehicle, or preservation of the security
interest therein advanced by the holder under the terms of the
contract.
(j) "Total of payments" means the amount required to be disclosed
pursuant to subdivision (h) of Section 226.18 of Regulation Z. The
term includes any portion of the downpayment that is deferred until
not later than the second otherwise scheduled payment and that is not
subject to a finance charge. The term shall not include amounts for
which the buyer may later become obligated under the terms of the
contract in connection with insurance, repairs to or preservation of
the motor vehicle, preservation of the security interest therein, or
otherwise.
(k) "Motor vehicle" means a vehicle required to be registered
under the Vehicle Code that is bought for use primarily for personal
or family purposes, and does not mean any vehicle that is bought for
use primarily for business or commercial purposes or a mobilehome, as
defined in Section 18008 of the Health and Safety Code that is sold
on or after July 1, 1981. "Motor vehicle" does not include any
trailer that is sold in conjunction with a vessel and that comes
within the definition of "goods" under Section 1802.1.
( l ) "Purchase order" means a sales order, car
reservation, statement of transaction or any other such instrument
used in the conditional sale of a motor vehicle pending execution of
a conditional sale contract. The purchase order shall conform to the
disclosure requirements of subdivision (a) of Section 2982 and
Section 2984.1, and subdivision (m) of Section 2982 shall apply.
(m) "Regulation Z" means a rule, regulation or interpretation
promulgated by the Board of Governors of the Federal Reserve System ("
Board") under the federal Truth in Lending Act, as amended (15 U.S.C.
1601, et seq.), and an interpretation or approval issued by an
official or employee of the Federal Reserve System duly authorized by
the board under the Truth in Lending Act, as amended, to issue the
interpretations or approvals.
(n) "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.
(o) "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.
(p) "Service contract" means "vehicle service contract" as defined
in subdivision (c) of Section 12800 of the Insurance Code.
(q) "Surface protection product" means the following products
installed by the seller after the motor vehicle is sold:
(1) Undercoating.
(2) Rustproofing.
(3) Chemical or film paint sealant or protectant.
(4) Chemical sealant or stain inhibitor for carpet and fabric.
(r) "Theft deterrent device" means the following devices installed
by the seller after the motor vehicle is sold:
(1) A vehicle alarm system.
(2) A window etch product.
(3) A body part marking product.
(4) A steering lock.
(5) A pedal or ignition lock.
(6) A fuel or ignition kill switch.
(s) "Buy-here-pay-here dealer" means a seller who does both of the
following:
(1) Enters into conditional sales contracts, within the meaning of
subdivision (a), or lease contracts, within the meaning of Section
2985.7.
(2) Does not routinely assign the contracts described in
subdivision (a) to an unaffiliated third-party finance or leasing
source.
SEC. 4. Section 2983.35 is added to the
Civil Code , to read:
2983.35. (a) After a sale of a vehicle under this chapter, a
buy-here-pay-here dealer shall not do any of the following:
(1) Track the vehicle with electronic tracking technology, unless
the buyer's consent, as required under subdivision (b) of Section
637.7 of the Penal Code, is obtained in writing.
(2) Disable the vehicle by using ignition override technology,
unless the buy-here-pay-here dealer complies with both of the
following provisions:
(A) Notifies the buyer in writing at the time of the sale that the
vehicle is equipped with ignition override technology, which the
buy-here-pay-here dealer can use to shut down the vehicle remotely.
(B) The ignition override technology on the vehicle provides a
warning to the driver of the vehicle that the vehicle will become
inoperable. That warning shall begin no less than 120 hours before
the vehicle is disabled by the ignition override technology, and
shall be provided for a length of no less than 20 seconds every time
the vehicle is started within that 120-hour period.
(b) A buy-here-pay-here dealer shall not require the buyer to make
payments to the seller in person. For purposes of this subdivision,
"payments" does not include the downpayment.
(c) A violation of this section is punishable pursuant to Section
2983.6.
SEC. 5. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B 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 XIII B of the
California Constitution.
SECTION 1. Section 2981.6 is added to the Civil
Code, to read:
2981.6. Every seller subject to this chapter shall display the
sales price of a vehicle on the vehicle. For purposes of this
section, a seller may display a manufacturer's suggested retail price
if the vehicle is a new vehicle as defined in Section 430 of the
Vehicle Code.
SEC. 2. Section 2982 of the Civil Code, as
amended by Section 3 of Chapter 329 of the Statutes of 2011, is
amended to read:
2982. A conditional sale contract subject to this chapter shall
contain the disclosures required by Regulation Z, whether or not
Regulation Z applies to the transaction. In addition, to the extent
applicable, the contract shall contain the other disclosures and
notices required by, and shall satisfy the requirements and
limitations of, this section. The disclosures required by subdivision
(a) may be itemized or subtotaled to a greater extent than as
required by that subdivision and shall be made together and in the
sequence set forth in that subdivision. All other disclosures and
notices may appear in the contract in any location or sequence and
may be combined or interspersed with other provisions of the
contract.
(a) The contract shall contain the following disclosures, as
applicable, which shall be labeled "itemization of the amount
financed":
(1) (A) The cash price, exclusive of document preparation fees,
business partnership automation fees, taxes imposed on the sale,
pollution control certification fees, prior credit or lease balance
on property being traded in, the amount charged for a service
contract, the amount charged for a theft deterrent system, the amount
charged for a surface protection product, the amount charged for an
optional debt cancellation agreement, and the amount charged for a
contract cancellation option agreement.
(B) The fee to be retained by the seller for document preparation.
(C) The fee charged by the seller for certifying that the motor
vehicle complies with applicable pollution control requirements.
(D) A charge for a theft deterrent device.
(E) A charge for a surface protection product.
(F) Taxes imposed on the sale.
(G) The amount of any optional business partnership automation fee
to register or transfer the vehicle, which shall be labeled
"Optional DMV Electronic Filing Fee."
(H) The amount charged for a service contract.
(I) The prior credit or lease balance remaining on property being
traded in, as required by paragraph (6). The disclosure required by
this subparagraph shall be labeled "prior credit or lease balance
(see downpayment and trade-in calculation)."
(J) Any charge for an optional debt cancellation agreement.
(K) Any charge for a used vehicle contract cancellation option
agreement.
(L) The total cash price, which is the sum of subparagraphs (A) to
(K), inclusive.
(M) The disclosures described in subparagraphs (D), (E), and (K)
are not required on contracts involving the sale of a motorcycle, as
defined in Section 400 of the Vehicle Code, or on contracts involving
the sale of an off-highway motor vehicle that is subject to
identification under Section 38010 of the Vehicle Code, and the
amounts of those charges, if any, are not required to be reflected in
the total price under subparagraph (L).
(2) Amounts paid to public officials for the following:
(A) Vehicle license fees.
(B) Registration, transfer, and titling fees.
(C) California tire fees imposed pursuant to Section 42885 of the
Public Resources Code.
(3) The aggregate amount of premiums agreed, upon execution of the
contract, to be paid for policies of insurance included in the
contract, excluding the amount of any insurance premium included in
the finance charge.
(4) The amount of the state fee for issuance of a certificate of
compliance, noncompliance, exemption, or waiver pursuant to any
applicable pollution control statute.
(5) A subtotal representing the sum of the amounts described in
paragraphs (1) to (4), inclusive.
(6) The amount of the buyer's downpayment itemized to show the
following:
(A) The agreed value of the property being traded in.
(B) The prior credit or lease balance, if any, owing on the
property being traded in.
(C) The net agreed value of the property being traded in, which is
the difference between the amounts disclosed in subparagraphs (A)
and (B). If the prior credit or lease balance of the property being
traded in exceeds the agreed value of the property, a negative number
shall be stated.
(D) The amount of any portion of the downpayment to be deferred
until not later than the due date of the second regularly scheduled
installment under the contract and that is not subject to a finance
charge.
(E) The amount of any manufacturer's rebate applied or to be
applied to the downpayment.
(F) The remaining amount paid or to be paid by the buyer as a
downpayment.
(G) The total downpayment. If the sum of subparagraphs (C) to (F),
inclusive, is zero or more, that sum shall be stated as the total
downpayment and no amount shall be stated as the prior credit or
lease balance under subparagraph (I) of paragraph (1). If the sum of
subparagraphs (C) to (F), inclusive, is less than zero, then that
sum, expressed as a positive number, shall be stated as the prior
credit or lease balance under subparagraph (I) of paragraph (1), and
zero shall be stated as the total downpayment. The disclosure
required by this subparagraph shall be labeled "total downpayment"
and shall contain a descriptor indicating that if the total
downpayment is a negative number, a zero shall be disclosed as the
total downpayment and a reference made that the remainder shall be
included in the disclosure required pursuant to subparagraph (I) of
paragraph (1).
(7) The amount of any administrative finance charge, labeled
"prepaid finance charge."
(8) The difference between the amount described in paragraph (5)
and the sum of the amounts described in paragraphs (6) and (7),
labeled "amount financed."
(b) No particular terminology is required to disclose the items
set forth in subdivision (a) except as expressly provided in that
subdivision.
(c) If payment of all or a portion of the downpayment is to be
deferred, the deferred payment shall be reflected in the payment
schedule disclosed pursuant to Regulation Z.
(d) If the downpayment includes property being traded in, the
contract shall contain a brief description of that property.
(e) The contract shall contain the names and addresses of all
persons to whom the notice required pursuant to Section 2983.2 and
permitted pursuant to Sections 2983.5 and 2984 is to be sent.
(f) (1) If the contract includes a finance charge determined on
the precomputed basis, the contract shall identify the method of
computing the unearned portion of the finance charge in
the event of prepayment in full
of the buyer's obligation and contain a statement of the amount or
method of computation of any charge that may be deducted from the
amount of any unearned finance charge in computing the amount that
will be credited to the obligation or refunded to the buyer. The
method of computing the unearned portion of the finance charge shall
be sufficiently identified with a reference to the actuarial method
if the computation will be under that method. The method of computing
the unearned portion of the finance charge shall be sufficiently
identified with a reference to the Rule of 78's, the sum of the
digits, or the sum of the periodic time balances method in all other
cases, and those references shall be deemed to be equivalent for
disclosure purposes.
(2) If the contract includes a finance charge that is determined
on the simple-interest basis but provides for a minimum finance
charge in the event of prepayment in full, the contract shall contain
a statement of that fact and the amount of the minimum finance
charge or its method of calculation.
(g) (1) If the contract includes a finance charge that is
determined on the precomputed basis and provides that the unearned
portion of the finance charge to be refunded upon full prepayment of
the contract is to be determined by a method other than actuarial,
the contract shall contain a notice, in at least 10-point boldface
type if the contract is printed, reading as follows: "Notice to
buyer: (1) Do not sign this agreement before you read it or if it
contains any blank spaces to be filled in. (2) You are entitled to a
completely filled-in copy of this agreement. (3) You can prepay the
full amount due under this agreement at any time and obtain a
partial refund of the finance charge if it is $1 or more. Because of
the way the amount of this refund will be figured, the time when you
prepay could increase the ultimate cost of credit under this
agreement. (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
(2) If the contract includes a finance charge that is determined
on the precomputed basis and provides for the actuarial method for
computing the unearned portion of the finance charge upon prepayment
in full, the contract shall contain a notice, in at least 10-point
boldface type if the contract is printed, reading as follows:
"Notice to buyer: (1) Do not sign this agreement before you read it
or if it contains any blank spaces to be filled in. (2) You are
entitled to a completely filled-in copy of this agreement. (3) You
can prepay the full amount due under this agreement at any time and
obtain a partial refund of the finance charge if it is $1 or more.
(4) If you default in the performance of your obligations under this
agreement, the vehicle may be repossessed and you may be subject to
suit and liability for the unpaid indebtedness evidenced by this
agreement."
(3) If the contract includes a finance charge that is determined
on the simple-interest basis, the contract shall contain a notice, in
at least 10-point boldface type if the contract is printed, reading
as follows: "Notice to buyer: (1) Do not sign this agreement before
you read it or if it contains any blank spaces to be filled in. (2)
You are entitled to a completely filled-in copy of this agreement.
(3) You can prepay the full amount due under this agreement at any
time. (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
(h) The contract shall contain a notice in at least 8-point
boldface type, acknowledged by the buyer, that reads as follows:
"If you have a complaint concerning this sale, you should try to
resolve it with the seller.
Complaints concerning unfair or deceptive practices or methods by
the seller may be referred to the city attorney, the district
attorney, or an investigator for the Department of Motor Vehicles, or
any combination thereof.
After this contract is signed, the seller may not change the
financing or payment terms unless you agree in writing to the change.
You do not have to agree to any change, and it is an unfair or
deceptive practice for the seller to make a unilateral change.
-------------------------------
Buyer's Signature''
(i) (1) The contract shall contain an itemization of any insurance
included as part of the amount financed disclosed pursuant to
paragraph (3) of subdivision (a) and of any insurance included as
part of the finance charge. The itemization shall identify the type
of insurance coverage and the premium charged therefor, and, if the
insurance expires before the date of the last scheduled installment
included in the repayment schedule, the term of the insurance shall
be stated.
(2) If any charge for insurance, other than for credit life or
disability, is included in the contract balance and disbursement of
any part thereof is to be made more than one year after the date of
the conditional sale contract, any finance charge on the amount to be
disbursed after one year shall be computed from the month the
disbursement is to be made to the due date of the last installment
under the conditional sale contract.
(j) (1) Except for contracts in which the finance charge or a
portion of the finance charge is determined by the simple-interest
basis and the amount financed disclosed pursuant to paragraph (8) of
subdivision (a) is more than two thousand five hundred dollars
($2,500), the dollar amount of the disclosed finance charge may not
exceed the greater of:
(A) (i) One and one-half percent on so much of the unpaid balance
as does not exceed two hundred twenty-five dollars ($225), 11/6
percent on so much of the unpaid balance in excess of two hundred
twenty-five dollars ($225) as does not exceed nine hundred dollars
($900) and five-sixths of 1 percent on so much of the unpaid balance
in excess of nine hundred dollars ($900) as does not exceed two
thousand five hundred dollars ($2,500).
(ii) One percent of the entire unpaid balance; multiplied in
either case by the number of months (computed on the basis of a full
month for any fractional month period in excess of 15 days) elapsing
between the date of the contract and the due date of the last
installment.
(B) If the finance charge is determined by the precomputed basis,
twenty-five dollars ($25).
(C) If the finance charge or a portion thereof is determined by
the simple-interest basis:
(i) Twenty-five dollars ($25) if the unpaid balance does not
exceed one thousand dollars ($1,000).
(ii) Fifty dollars ($50) if the unpaid balance exceeds one
thousand dollars ($1,000) but does not exceed two thousand dollars
($2,000).
(iii) Seventy-five dollars ($75) if the unpaid balance exceeds two
thousand dollars ($2,000).
(2) The holder of the contract shall not charge, collect, or
receive a finance charge that exceeds the disclosed finance charge,
except to the extent (A) caused by the holder's receipt of one or
more payments under a contract that provides for determination of the
finance charge or a portion thereof on the 365-day basis at a time
or times other than as originally scheduled whether or not the
parties enter into an agreement pursuant to Section 2982.3, (B)
permitted by paragraph (2), (3), or (4) of subdivision (c) of Section
226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c)
of Section 2982.8.
(3) If the finance charge or a portion thereof is determined by
the simple-interest basis and the amount of the unpaid balance
exceeds five thousand dollars ($5,000), the holder of the contract
may, in lieu of its right to a minimum finance charge under
subparagraph (C) of paragraph (1), charge, receive, or collect on the
date of the contract an administrative finance charge not to exceed
seventy-five dollars ($75), provided that the sum of the
administrative finance charge and the portion of the finance charge
determined by the simple-interest basis shall not exceed the maximum
total finance charge permitted by subparagraph (A) of paragraph (1).
Any administrative finance charge that is charged, received, or
collected by a holder shall be deemed a finance charge earned on the
date of the contract.
(4) If a contract provides for unequal or irregular payments, or
payments on other than a monthly basis, the maximum finance charge
shall be at the effective rate provided for in paragraph (1), having
due regard for the schedule of installments.
(k) The contract may provide that for each installment in default
for a period of not less than 10 days the buyer shall pay a
delinquency charge in an amount not to exceed in the aggregate 5
percent of the delinquent installment, which amount may be collected
only once on any installment regardless of the period during which it
remains in default. Payments timely received by the seller under an
extension or deferral agreement may not be subject to a delinquency
charge unless the charge is permitted by Section 2982.3. The contract
may provide for reasonable collection costs and fees in the event of
delinquency.
( l ) Notwithstanding any provision of a
contract to the contrary, the buyer may pay at any time before
maturity the entire indebtedness evidenced by the contract without
penalty. In the event of prepayment in full:
(1) If the finance charge was determined on the precomputed basis,
the amount required to prepay the contract shall be the outstanding
contract balance as of that date, provided, however, that the buyer
shall be entitled to a refund credit in the amount of the unearned
portion of the finance charge, except as provided in paragraphs (3)
and (4). The amount of the unearned portion of the finance charge
shall be at least as great a proportion of the finance charge,
including any additional finance charge imposed pursuant to Section
2982.8 or other additional charge imposed because the contract has
been extended, deferred, or refinanced, as the sum of the periodic
monthly time balances payable more than 15 days after the date of
prepayment bears to the sum of all the periodic monthly time balances
under the schedule of installments in the contract or, if the
contract has been extended, deferred, or refinanced, as so extended,
deferred, or refinanced. If the amount of the refund credit is less
than one dollar ($1), no refund credit need be made by the holder.
Any refund credit may be made in cash or credited to the outstanding
obligations of the buyer under the contract.
(2) If the finance charge or a portion of the finance charge was
determined on the simple-interest basis, the amount required to
prepay the contract shall be the outstanding contract balance as of
that date, including any earned finance charges that are unpaid as of
that date and, if applicable, the amount provided in paragraph (3),
and provided further that in cases where a finance charge is
determined on the 360-day basis, the payments received under the
contract shall be assumed to have been received on their respective
due dates regardless of the actual dates on which the payments were
received.
(3) If the minimum finance charge provided by subparagraph (B) or
subparagraph (C) of paragraph (1) of subdivision (j), if either is
applicable, is greater than the earned finance charge as of the date
of prepayment, the holder shall be additionally entitled to the
difference.
(4) This subdivision shall not impair the right of the seller or
the seller's assignee to receive delinquency charges on delinquent
installments and reasonable costs and fees as provided in subdivision
(k) or extension or deferral agreement charges as provided in
Section 2982.3.
(5) Notwithstanding any provision of a contract to the contrary,
if the indebtedness created by any contract is satisfied prior to its
maturity through surrender of the motor vehicle, repossession of the
motor vehicle, redemption of the motor vehicle after repossession,
or any judgment, the outstanding obligation of the buyer shall be
determined as provided in paragraph (1) or (2). Notwithstanding, the
buyer's outstanding obligation shall be computed by the holder as of
the date the holder recovers the value of the motor vehicle through
disposition thereof or judgment is entered or, if the holder elects
to keep the motor vehicle in satisfaction of the buyer's
indebtedness, as of the date the holder takes possession of the motor
vehicle.
(m) The contract shall not require the buyer to make payments to
the seller in person. For purposes of this subdivision, "payments"
does not include the downpayment.
(n) Notwithstanding any other provision of this chapter to the
contrary, any information required to be disclosed in a conditional
sale contract under this chapter may be disclosed in any manner,
method, or terminology required or permitted under Regulation Z, as
in effect at the time that disclosure is made, except that permitted
by paragraph (2) of subdivision (c) of Section 226.18 of Regulation
Z, if all of the requirements and limitations set forth in
subdivision (a) are satisfied. This chapter does not prohibit the
disclosure in that contract of additional information required or
permitted under Regulation Z, as in effect at the time that
disclosure is made.
(o) If the seller imposes a fee for document preparation, the
contract shall contain a disclosure that the fee is not a
governmental fee.
(p) A seller shall not impose an application fee for a transaction
governed by this chapter.
(q) The seller or holder may charge and collect a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiated order of withdrawal, or
share draft issued in connection with the contract if the contract
so provides or if the contract contains a generalized statement that
the buyer may be liable for collection costs incurred in connection
with the contract.
(r) The contract shall disclose on its face, by printing the word
"new" or "used" within a box outlined in red, that is not smaller
than one-half inch high and one-half inch wide, whether the vehicle
is sold as a new vehicle, as defined in Section 430 of the Vehicle
Code, or as a used vehicle, as defined in Section 665 of the Vehicle
Code.
(s) The contract shall contain a notice with a heading in at least
12-point bold type and the text in at least 10-point bold type,
circumscribed by a line, immediately above the contract signature
line, that reads as follows:
THERE IS NO COOLING-OFF PERIOD UNLESS
YOU
OBTAIN A CONTRACT CANCELLATION
OPTION.
California law does not provide for a
""cooling-off'' or other cancellation period
for vehicle sales. Therefore, you cannot
later cancel this contract simply because you
change your mind, decide the vehicle costs
too much, or wish you had acquired a
different vehicle. After you sign below, you
may only cancel this contract with the
agreement of the seller or for legal cause,
such as
fraud.
However, California law does require a seller
to offer a 2-day contract cancellation
option on used vehicles with a purchase price
of less than $40,000, subject to certain
statutory conditions. This contract
cancellation option requirement does not
apply to the sale of a recreational vehicle,
a motorcycle, or an off-highway motor vehicle
subject to identification under California
law. See the vehicle contract cancellation
option agreement for details.
(t) This section shall become inoperative on July 1, 2012, and, as
of January 1, 2013, is repealed, unless a later enacted statute that
is enacted before January 1, 2013, deletes or extends the dates on
which it becomes inoperative and is repealed.
SEC. 3. Section 2982 of the Civil Code, as
added by Section 4 of Chapter 329 of the Statutes of 2011, is amended
to read:
2982. A conditional sale contract subject to this chapter shall
contain the disclosures required by Regulation Z, whether or not
Regulation Z applies to the transaction. In addition, to the extent
applicable, the contract shall contain the other disclosures and
notices required by, and shall satisfy the requirements and
limitations of, this section. The disclosures required by subdivision
(a) may be itemized or subtotaled to a greater extent than as
required by that subdivision and shall be made together and in the
sequence set forth in that subdivision. All other disclosures and
notices may appear in the contract in any location or sequence and
may be combined or interspersed with other provisions of the
contract.
(a) The contract shall contain the following disclosures, as
applicable, which shall be labeled "itemization of the amount
financed":
(1) (A) The cash price, exclusive of document processing charges,
charges to electronically register or transfer the vehicle, taxes
imposed on the sale, pollution control certification fees, prior
credit or lease balance on property being traded in, the amount
charged for a service contract, the amount charged for a theft
deterrent system, the amount charged for a surface protection
product, the amount charged for an optional debt cancellation
agreement, and the amount charged for a contract cancellation option
agreement.
(B) The charge to be retained by the seller for document
processing authorized pursuant to Section 4456.5 of the Vehicle Code.
(C) The fee charged by the seller for certifying that the motor
vehicle complies with applicable pollution control requirements.
(D) A charge for a theft deterrent device.
(E) A charge for a surface protection product.
(F) Taxes imposed on the sale.
(G) The charge to electronically register or transfer the vehicle
authorized pursuant to Section 4456.5 of the Vehicle Code.
(H) The amount charged for a service contract.
(I) The prior credit or lease balance remaining on property being
traded in, as required by paragraph (6). The disclosure required by
this subparagraph shall be labeled "prior credit or lease balance
(see downpayment and trade-in calculation)."
(J) Any charge for an optional debt cancellation agreement.
(K) Any charge for a used vehicle contract cancellation option
agreement.
(L) The total cash price, which is the sum of subparagraphs (A) to
(K), inclusive.
(M) The disclosures described in subparagraphs (D), (E), and (K)
are not required on contracts involving the sale of a motorcycle, as
defined in Section 400 of the Vehicle Code, or on contracts involving
the sale of an off-highway motor vehicle that is subject to
identification under Section 38010 of the Vehicle Code, and the
amounts of those charges, if any, are not required to be reflected in
the total price under subparagraph (L).
(2) Amounts paid to public officials for the following:
(A) Vehicle license fees.
(B) Registration, transfer, and titling fees.
(C) California tire fees imposed pursuant to Section 42885 of the
Public Resources Code.
(3) The aggregate amount of premiums agreed, upon execution of the
contract, to be paid for policies of insurance included in the
contract, excluding the amount of any insurance premium included in
the finance charge.
(4) The amount of the state fee for issuance of a certificate of
compliance, noncompliance, exemption, or waiver pursuant to any
applicable pollution control statute.
(5) A subtotal representing the sum of the amounts described in
paragraphs (1) to (4), inclusive.
(6) The amount of the buyer's downpayment itemized to show the
following:
(A) The agreed value of the property being traded in.
(B) The prior credit or lease balance, if any, owing on the
property being traded in.
(C) The net agreed value of the property being traded in, which is
the difference between the amounts disclosed in subparagraphs (A)
and (B). If the prior credit or lease balance of the property being
traded in exceeds the agreed value of the property, a negative number
shall be stated.
(D) The amount of any portion of the downpayment to be deferred
until not later than the due date of the second regularly scheduled
installment under the contract and that is not subject to a finance
charge.
(E) The amount of any manufacturer's rebate applied or to be
applied to the downpayment.
(F) The remaining amount paid or to be paid by the buyer as a
downpayment.
(G) The total downpayment. If the sum of subparagraphs (C) to (F),
inclusive, is zero or more, that sum shall be stated as the total
downpayment, and no amount shall be stated as the prior credit or
lease balance under subparagraph (I) of paragraph (1). If the sum of
subparagraphs (C) to (F), inclusive, is less than zero, then that
sum, expressed as a positive number, shall be stated as the prior
credit or lease balance under subparagraph (I) of paragraph (1), and
zero shall be stated as the total downpayment. The disclosure
required by this subparagraph shall be labeled "total downpayment"
and shall contain a descriptor indicating that if the total
downpayment is a negative number, a zero shall be disclosed as the
total downpayment and a reference made that the remainder shall be
included in the disclosure required pursuant to subparagraph (I) of
paragraph (1).
(7) The amount of any administrative finance charge, labeled
"prepaid finance charge."
(8) The difference between the amount described in paragraph (5)
and the sum of the amounts described in paragraphs (6) and (7),
labeled "amount financed."
(b) No particular terminology is required to disclose the items
set forth in subdivision (a) except as expressly provided in that
subdivision.
(c) If payment of all or a portion of the downpayment is to be
deferred, the deferred payment shall be reflected in the payment
schedule disclosed pursuant to Regulation Z.
(d) If the downpayment includes property being traded in, the
contract shall contain a brief description of that property.
(e) The contract shall contain the names and addresses of all
persons to whom the notice required pursuant to Section 2983.2 and
permitted pursuant to Sections 2983.5 and 2984 is to be sent.
(f) (1) If the contract includes a finance charge determined on
the precomputed basis, the contract shall identify the method of
computing the unearned portion of the finance charge in the event of
prepayment in full of the buyer's obligation and contain a statement
of the amount or method of computation of any charge that may be
deducted from the amount of any unearned finance charge in computing
the amount that will be credited to the obligation or refunded to the
buyer. The method of computing the unearned portion of the finance
charge shall be sufficiently identified with a reference to the
actuarial method if the computation will be under that method. The
method of computing the unearned portion of the finance charge shall
be sufficiently identified with a reference to the Rule of 78's, the
sum of the digits, or the sum of the periodic time balances method in
all other cases, and those references shall be deemed to be
equivalent for disclosure purposes.
(2) If the contract includes a finance charge that is determined
on the simple-interest basis but provides for a minimum finance
charge in the event of prepayment in full, the contract shall contain
a statement of that fact and the amount of the minimum finance
charge or its method of calculation.
(g) (1) If the contract includes a finance charge that is
determined on the precomputed basis and provides that the unearned
portion of the finance charge to be refunded upon full prepayment of
the contract is to be determined by a method other than actuarial,
the contract shall contain a notice, in at least 10-point
boldface type if the contract is
printed, reading as follows: "Notice to buyer: (1) Do not sign this
agreement before you read it or if it contains any blank spaces to
be filled in. (2) You are entitled to a completely filled-in copy of
this agreement. (3) You can prepay the full amount due under this
agreement at any time and obtain a partial refund of the finance
charge if it is $1 or more. Because of the way the amount of this
refund will be figured, the time when you prepay could increase the
ultimate cost of credit under this agreement. (4) If you default in
the performance of your obligations under this agreement, the vehicle
may be repossessed and you may be subject to suit and liability for
the unpaid indebtedness evidenced by this agreement."
(2) If the contract includes a finance charge that is determined
on the precomputed basis and provides for the actuarial method for
computing the unearned portion of the finance charge upon prepayment
in full, the contract shall contain a notice, in at least 10-point
boldface type if the contract is printed, reading as follows:
"Notice to buyer: (1) Do not sign this agreement before you read it
or if it contains any blank spaces to be filled in. (2) You are
entitled to a completely filled-in copy of this agreement. (3) You
can prepay the full amount due under this agreement at any time and
obtain a partial refund of the finance charge if it is $1 or more.
(4) If you default in the performance of your obligations under this
agreement, the vehicle may be repossessed and you may be subject to
suit and liability for the unpaid indebtedness evidenced by this
agreement."
(3) If the contract includes a finance charge that is determined
on the simple-interest basis, the contract shall contain a notice, in
at least 10-point boldface type if the contract is printed, reading
as follows: "Notice to buyer: (1) Do not sign this agreement before
you read it or if it contains any blank spaces to be filled in. (2)
You are entitled to a completely filled-in copy of this agreement.
(3) You can prepay the full amount due under this agreement at any
time. (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
(h) The contract shall contain a notice in at least 8-point
boldface type, acknowledged by the buyer, that reads as follows:
"If you have a complaint concerning this sale, you should try to
resolve it with the seller.
Complaints concerning unfair or deceptive practices or methods by
the seller may be referred to the city attorney, the district
attorney, or an investigator for the Department of Motor Vehicles, or
any combination thereof.
After this contract is signed, the seller may not change the
financing or payment terms unless you agree in writing to the change.
You do not have to agree to any change, and it is an unfair or
deceptive practice for the seller to make a unilateral change.
-------------------------------
Buyer's Signature''
(i) (1) The contract shall contain an itemization of any insurance
included as part of the amount financed disclosed pursuant to
paragraph (3) of subdivision (a) and of any insurance included as
part of the finance charge. The itemization shall identify the type
of insurance coverage and the premium charged therefor, and, if the
insurance expires before the date of the last scheduled installment
included in the repayment schedule, the term of the insurance shall
be stated.
(2) If any charge for insurance, other than for credit life or
disability, is included in the contract balance and disbursement of
any part thereof is to be made more than one year after the date of
the conditional sale contract, any finance charge on the amount to be
disbursed after one year shall be computed from the month the
disbursement is to be made to the due date of the last installment
under the conditional sale contract.
(j) (1) Except for contracts in which the finance charge or a
portion of the finance charge is determined by the simple-interest
basis and the amount financed disclosed pursuant to paragraph (8) of
subdivision (a) is more than two thousand five hundred dollars
($2,500), the dollar amount of the disclosed finance charge may not
exceed the greater of:
(A) (i) One and one-half percent on so much of the unpaid balance
as does not exceed two hundred twenty-five dollars ($225), 11/6
percent on so much of the unpaid balance in excess of two hundred
twenty-five dollars ($225) as does not exceed nine hundred dollars
($900) and five-sixths of 1 percent on so much of the unpaid balance
in excess of nine hundred dollars ($900) as does not exceed two
thousand five hundred dollars ($2,500).
(ii) One percent of the entire unpaid balance; multiplied in
either case by the number of months (computed on the basis of a full
month for any fractional month period in excess of 15 days) elapsing
between the date of the contract and the due date of the last
installment.
(B) If the finance charge is determined by the precomputed basis,
twenty-five dollars ($25).
(C) If the finance charge or a portion thereof is determined by
the simple-interest basis:
(i) Twenty-five dollars ($25) if the unpaid balance does not
exceed one thousand dollars ($1,000).
(ii) Fifty dollars ($50) if the unpaid balance exceeds one
thousand dollars ($1,000) but does not exceed two thousand dollars
($2,000).
(iii) Seventy-five dollars ($75) if the unpaid balance exceeds two
thousand dollars ($2,000).
(2) The holder of the contract shall not charge, collect, or
receive a finance charge that exceeds the disclosed finance charge,
except to the extent (A) caused by the holder's receipt of one or
more payments under a contract that provides for determination of the
finance charge or a portion thereof on the 365-day basis at a time
or times other than as originally scheduled whether or not the
parties enter into an agreement pursuant to Section 2982.3, (B)
permitted by paragraph (2), (3), or (4) of subdivision (c) of Section
226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c)
of Section 2982.8.
(3) If the finance charge or a portion thereof is determined by
the simple-interest basis and the amount of the unpaid balance
exceeds five thousand dollars ($5,000), the holder of the contract
may, in lieu of its right to a minimum finance charge under
subparagraph (C) of paragraph (1), charge, receive, or collect on the
date of the contract an administrative finance charge not to exceed
seventy-five dollars ($75), provided that the sum of the
administrative finance charge and the portion of the finance charge
determined by the simple-interest basis shall not exceed the maximum
total finance charge permitted by subparagraph (A) of paragraph (1).
Any administrative finance charge that is charged, received, or
collected by a holder shall be deemed a finance charge earned on the
date of the contract.
(4) If a contract provides for unequal or irregular payments, or
payments on other than a monthly basis, the maximum finance charge
shall be at the effective rate provided for in paragraph (1), having
due regard for the schedule of installments.
(k) The contract may provide that for each installment in default
for a period of not less than 10 days the buyer shall pay a
delinquency charge in an amount not to exceed in the aggregate 5
percent of the delinquent installment, which amount may be collected
only once on any installment regardless of the period during which it
remains in default. Payments timely received by the seller under an
extension or deferral agreement may not be subject to a delinquency
charge unless the charge is permitted by Section 2982.3. The contract
may provide for reasonable collection costs and fees in the event of
delinquency.
( l ) Notwithstanding any provision of a
contract to the contrary, the buyer may pay at any time before
maturity the entire indebtedness evidenced by the contract without
penalty. In the event of prepayment in full:
(1) If the finance charge was determined on the precomputed basis,
the amount required to prepay the contract shall be the outstanding
contract balance as of that date, provided, however, that the buyer
shall be entitled to a refund credit in the amount of the unearned
portion of the finance charge, except as provided in paragraphs (3)
and (4). The amount of the unearned portion of the finance charge
shall be at least as great a proportion of the finance charge,
including any additional finance charge imposed pursuant to Section
2982.8 or other additional charge imposed because the contract has
been extended, deferred, or refinanced, as the sum of the periodic
monthly time balances payable more than 15 days after the date of
prepayment bears to the sum of all the periodic monthly time balances
under the schedule of installments in the contract or, if the
contract has been extended, deferred, or refinanced, as so extended,
deferred, or refinanced. If the amount of the refund credit is less
than one dollar ($1), no refund credit need be made by the holder.
Any refund credit may be made in cash or credited to the outstanding
obligations of the buyer under the contract.
(2) If the finance charge or a portion of the finance charge was
determined on the simple-interest basis, the amount required to
prepay the contract shall be the outstanding contract balance as of
that date, including any earned finance charges that are unpaid as of
that date and, if applicable, the amount provided in paragraph (3),
and provided further that in cases where a finance charge is
determined on the 360-day basis, the payments received under the
contract shall be assumed to have been received on their respective
due dates regardless of the actual dates on which the payments were
received.
(3) If the minimum finance charge provided by subparagraph (B) or
subparagraph (C) of paragraph (1) of subdivision (j), if either is
applicable, is greater than the earned finance charge as of the date
of prepayment, the holder shall be additionally entitled to the
difference.
(4) This subdivision shall not impair the right of the seller or
the seller's assignee to receive delinquency charges on delinquent
installments and reasonable costs and fees as provided in subdivision
(k) or extension or deferral agreement charges as provided in
Section 2982.3.
(5) Notwithstanding any provision of a contract to the contrary,
if the indebtedness created by any contract is satisfied prior to its
maturity through surrender of the motor vehicle, repossession of the
motor vehicle, redemption of the motor vehicle after repossession,
or any judgment, the outstanding obligation of the buyer shall be
determined as provided in paragraph (1) or (2). Notwithstanding, the
buyer's outstanding obligation shall be computed by the holder as of
the date the holder recovers the value of the motor vehicle through
disposition thereof or judgment is entered or, if the holder elects
to keep the motor vehicle in satisfaction of the buyer's
indebtedness, as of the date the holder takes possession of the motor
vehicle.
(m) The contract shall not require the buyer to make payments to
the seller in person. For purposes of this subdivision, "payments"
does not include the downpayment.
(n) Notwithstanding any other provision of this chapter to the
contrary, any information required to be disclosed in a conditional
sale contract under this chapter may be disclosed in any manner,
method, or terminology required or permitted under Regulation Z, as
in effect at the time that disclosure is made, except that permitted
by paragraph (2) of subdivision (c) of Section 226.18 of Regulation
Z, if all of the requirements and limitations set forth in
subdivision (a) are satisfied. This chapter does not prohibit the
disclosure in that contract of additional information required or
permitted under Regulation Z, as in effect at the time that
disclosure is made.
(o) If the seller imposes a charge for document processing or to
electronically register or transfer the vehicle, the contract shall
contain a disclosure that the charge is not a governmental fee.
(p) A seller shall not impose an application fee for a transaction
governed by this chapter.
(q) The seller or holder may charge and collect a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiated order of withdrawal, or
share draft issued in connection with the contract if the contract
so provides or if the contract contains a generalized statement that
the buyer may be liable for collection costs incurred in connection
with the contract.
(r) The contract shall disclose on its face, by printing the word
"new" or "used" within a box outlined in red, that is not smaller
than one-half inch high and one-half inch wide, whether the vehicle
is sold as a new vehicle, as defined in Section 430 of the Vehicle
Code, or as a used vehicle, as defined in Section 665 of the Vehicle
Code.
(s) The contract shall contain a notice with a heading in at least
12-point bold type and the text in at least 10-point bold type,
circumscribed by a line, immediately above the contract signature
line, that reads as follows:
THERE IS NO COOLING-OFF PERIOD UNLESS
YOU
OBTAIN A CONTRACT CANCELLATION
OPTION.
California law does not provide for a
""cooling-off'' or other cancellation period
for vehicle sales. Therefore, you cannot
later cancel this contract simply because you
change your mind, decide the vehicle costs
too much, or wish you had acquired a
different vehicle. After you sign below, you
may only cancel this contract with the
agreement of the seller or for legal cause,
such as
fraud.
However, California law does require a seller
to offer a 2-day contract cancellation option
on used vehicles with a purchase price of
less than $40,000, subject to certain
statutory conditions. This contract
cancellation option requirement does not
apply to the sale of a recreational vehicle,
a motorcycle, or an off-highway motor vehicle
subject to identification under California
law. See the vehicle contract cancellation
option agreement for details.
(t) This section shall become operative on July 1, 2012.
SEC. 4. Section 2983.35 is added to the Civil
Code, to read:
2983.35. (a) After a sale of a vehicle under this chapter, a
seller shall not do any of the following:
(1) Call the buyer's references.
(2) Track the vehicle with Global Positioning System technology.
(3) Disable the vehicle by using ignition override technology.
(b) A violation of this section is punishable pursuant to Section
2983.6.
SEC. 5. No reimbursement is required by this
act pursuant to Section 6 of Article XIII B 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 XIII B of the
California Constitution.