HOUSE BILL REPORT
SSB 6571



As Passed House:
February 28, 2006

Title: An act relating to financing practices of motor vehicle dealers.

Brief Description: Refining the definition of "bushing."

Sponsors: By Senate Committee on Financial Institutions, Housing & Consumer Protection (originally sponsored by Senators Berkey, Benton, Fairley, Honeyford, Franklin and Parlette).

Brief History:

Commerce & Labor: 2/16/06 [DP].

Floor Activity:

Passed House: 2/28/06, 97-0.

Brief Summary of Substitute Bill
  • Modifies the prohibition on "bushing" by applying it to situations in which a contract or lease has been signed.
  • Preserves a dealer's right to assert a claim against a buyer for misrepresentations made during the sale or lease of a vehicle.
  • Clarifies that the dealer has four calendar days to inform the buyer or lessee that the contract or lease is either unconditionally accepted or rejected.


HOUSE COMMITTEE ON COMMERCE & LABOR

Majority Report: Do pass. Signed by 8 members: Representatives Conway, Chair; Wood, Vice Chair; Condotta, Ranking Minority Member; Chandler, Assistant Ranking Minority Member; Holmquist, Hudgins, Kenney and McCoy.

Staff: Lara Zarowsky (786-7119) and Sarah Dylag (786-7109).

Background:

If an offer to purchase or lease a vehicle is accepted contingent on securing financing, or on some other factor, the auto dealer must give final acceptance or rejection of the offer within three days (excluding Saturdays, Sundays, and holidays), without further negotiation. This means, for example, an offer made on Tuesday must be accepted or rejected by Friday. If the dealer rejects the agreement, any money, trade-in vehicle, or anything else given as initial payment or security must be returned, and the deal must be called off, before there can be any attempt to reopen negotiations.

Dealers may renegotiate the dollar amount of the trade-in allowance given to a buyer in only three situations: (1) the buyer fails to disclose that the title to the vehicle is branded, because the vehicle is rebuilt or for some other reason, (2) the vehicle has serious physical damage or mechanical defect that could not reasonably have been discovered when the offer was accepted, or (3) excessive additional miles are reflected on the vehicle's odometer between the time the vehicle was first valued and the time it was delivered.

Failure to adhere to the three-day limit to accept or reject, without renegotiation, an agreement to purchase or lease a motor vehicle is called "bushing." Bushing has been prohibited in statute since 1967, when Washington first specified unlawful practices for motor vehicle dealers.

Dealers typically use the time before the acceptance of an offer to obtain financing for the prospective buyer. In 1967, dealers were given two business days to complete these arrangements. The period was extended to three business days in 1997.


Summary of Bill:

The prohibition on bushing is amended to:

The dealer may inform the buyer or lessee of whether an offer has been accepted without signed documentation.

The provisions of the substitute bill apply prospectively only and not retroactively.


Appropriation: None.

Fiscal Note: Not requested.

Effective Date: The bill takes effect 90 days after adjournment of session in which bill is passed.

Testimony For: None.

Testimony Against: None.

Persons Testifying: None.

Persons Signed In To Testify But Not Testifying: None.