BILL ANALYSIS �
AB 281
Page 1
Date of Hearing: January 13, 2014
ASSEMBLY COMMITTEE ON TRANSPORTATION
Bonnie Lowenthal, Chair
AB 281 (Donnelly) - As Introduced: February 11, 2013
SUBJECT : Vehicle Registration: late penalties
SUMMARY : Requires the Department of Motor Vehicles (DMV) to
waive past due registration fees and penalties for a used car
buyer if the fees and penalties accrued before the buyer
purchased the vehicle.
EXISTING LAW :
1)Generally requires that a motor vehicle be registered
annually.
2)Specifies that outstanding registration fees and penalties
remain with the vehicle when vehicle ownership is transferred.
3)Requires used car buyers to pay any past due registration fees
and penalties before the vehicle can be registered.
4)Authorizes DMV to waive payment of past due registration fees
and penalties if the buyer can prove that they were not aware
of the overdue fees and penalties when they purchased the
vehicle.
5)Authorizes DMV to pursue collection of the past due fees and
penalties from the seller in an appropriate civil action if
past due fees and penalties are waived for the buyer.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, this bill is intended to
provide relief for unsuspecting car buyers who are required to
pay past due registration fees and penalties passed on to them
by the vehicle's previous owner. It is the author's contention
that buyers should not be responsible for paying these costs and
instead, the fees should be waived by DMV when the vehicle is
registered by the new owner.
The author notes that the idea for this bill came when a
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constituent in his district incurred past due registration fees
and penalties after purchasing a motorcycle from a private
seller. The buyer claimed that he was informed by the seller
that the motorcycle's registration was out of date and that it
would cost approximately $200 dollars to update it. After the
constituent purchased the motorcycle and went to DMV to get it
registered, they discovered that the past due fees totaled $640.
In private party vehicle transactions, buyers are required to
complete the transfer of ownership documents at DMV within 10
days of purchase. Documents that must be provided to DMV to
register the vehicle include a properly endorsed pink slip, the
vehicle's odometer reading, and a smog certification.
Additionally, before the vehicle can be registered in the
buyer's name, the buyer must pay transfer fees, applicable use
taxes, and current and past due registration fees and penalties.
The fees collected by DMV are deposited into the Motor Vehicle
Account (MVA) and used by the California Highway Patrol, DMV,
and Air Resources Board (ARB) to pay for the administration and
enforcement of laws related to vehicles.
If a buyer discovers, after a vehicle is purchased, that there
are unpaid registration fees and penalties associated with the
vehicle, the buyer has the option of having the fees and
penalties waived by DMV if he or she can satisfactorily
demonstrate that they were unaware that the fees and penalties
existed at the time of purchase. If the DMV waives the past due
fees and penalties for the buyer, DMV may assign the fees and
penalties to the seller and pursue collection in an appropriate
civil action.
The author is attempting to correct what he perceives as an
injustice to unsuspecting buyers.
It is important to note, however, that this bill is likely to
have the unintended consequence of encouraging people to not pay
their vehicle registration fees and penalties. An example could
include cases where vehicle owners intentionally not pay their
vehicle registration fees and then simply sell the car get out
of paying the accumulated charges. The bill would also
discourage buyers from scrutinizing third party vehicle
transactions to ensure that the vehicle registration is current
because they will not ultimately be held responsible for the
unpaid fees and penalties. While existing law would continue to
allow DMV to investigate whether or not a seller should be held
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responsible for past due fees and penalties, there would be
little motivation on the part of the buyer to disclose
information to incriminate the seller, making it difficult, if
not impossible, for DMV to conduct a successful investigation
and recoup the past due fees and penalties.
Given that existing law already provides a mechanism for waiving
outstanding registration fees and penalties incurred by
unsuspecting buyers, unilaterally waiving all fees and penalties
without the requirement that buyers provide any documentation
would only encourage fraud and result in potentially significant
loss of revenue to the MVA.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
Analysis Prepared by : Manny Leon / TRANS. / (916) 319- 2093