SENATE BILL REPORT

                  SHB 2179

              As Reported By Senate Committee On:

               Transportation, February 22, 1996

Title:  An act relating to new motor vehicle transactions involving buyer's agents.

Brief Description:  Regulating motor vehicle transactions involving buyer's agents.

Sponsors:  House Committee on Transportation (originally sponsored by Representatives Horn, Blanton, Scott, Mitchell, Quall and Thompson).

Brief History:

Committee Activity:  Transportation:  2/15/96, 2/22/96 [DP].

SENATE COMMITTEE ON TRANSPORTATION

Majority Report:  Do pass.

  Signed by Senators Owen, Chair; Heavey, Vice Chair; Goings, Haugen, Morton, Oke, Prentice, Prince, Rasmussen, Schow, Sellar, Thibaudeau and Wood.

Staff:  Jeff Doyle (786-7322)

Background:  A buyer's agent is a person or firm paid by a consumer to negotiate or arrange for the purchase of a new vehicle on the consumer's behalf.  A buyer's agent must maintain the same type of surety bond as vehicle dealers, currently a $15,000 bond.

A typical buyer's agent is hired and paid by a prospective buyer.  The buyer's agent then negotiates with several auto dealerships to obtain a discounted price for the consumer.  These types of firms are not permitted to accept payment from dealers for their services.

Not all car-buying services operate in this manner.  Some companies that perform car-buying services do not specifically represent either the buyer or seller.  These companies typically offer discounted prices on new cars to their members.  In order to obtain the discounted price, the member must travel to the dealership to fill out the necessary paperwork and deliver the purchase money.  These types of companies do not collect fees from their members, but rather receive promotional fees from participating auto dealerships. 

There is some question as to whether a firm may represent both car buyers and car sellers (dealerships).  This type of service would be similar to a real estate agent, who has a client base consisting of home sellers and has a separate client base of home buyers. 

Under current Washington law, it is not clear which types of car-buying services require a vehicle dealer's license and which services are regulated under the buyer's agent statute.

Summary of Bill:  Buyer's agents may not accept purchase moneys unless made payable to the vehicle dealership.  Buyer's agents are prohibited from signing any purchase moneys, purchase orders, sales contracts, disclosure documents or other forms on behalf of the customer.  Buyer's agents are prohibited from using a power of attorney to conduct these activities, with one exception:  a buyer's agent may pick up and deliver license plates to the customer.

A buyer's agents must have written agreements with his or her customers disclosing all fees and compensation paid for the agent's services.  The agreements must also include a disclosure that any vehicles purchased outside of Washington are not protected by Washington's "lemon law."  The Department of Licensing (DOL) is directed to develop a standard form contract to be used by buyer's agents and their customers.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  This legislation is necessary prevent incidents where buyer's agents abuse the trust and powers of attorney granted them by customers.

Testimony Against:  None.

Testified:  PRO:  Rep. Horn, prime sponsor; Jim Boldt, WA Auto Dealers; Tony Rinehart, Used Car Dealers.