FINAL BILL REPORT

SSB 6167

                              C 44 L 90

BYSenate Committee on Financial Institutions & Insurance (originally sponsored by Senators von Reichbauer, Rasmussen, McCaslin, Smitherman, Matson, Moore, Johnson, Warnke, Bauer and Conner; by request of Attorney General)

Regulating motor vehicle subleasing and ownership transfers.

Senate Committee on Financial Institutions & Insurance

House Committe on Financial Institutions & Insurance

SYNOPSIS AS ENACTED

BACKGROUND:

Auto brokerage firms solicit people who are having difficulty making their car payments to enter into agreements with them to help the car owner get out from under the payments.  The auto broker has the car owner enter into an agreement where the broker will find someone to assume the liability on the vehicle.  The auto broker then finds an individual to either sublease or purchase the car and charges that person a fee usually between $500 and $2,000. 

Problems arise when the auto broker fails to tell the bank or financing company about the transfer of ownership.  The company holding the financing on the vehicle can legally repossess a car when it learns of the transfer.  As a result, both the buyer and the selling parties may be subject to an unexpected repossession of the vehicle.  If the lender or finance company repossesses the vehicle, the person who originally was having difficulty with the payments acquires a negative credit history and the person who took over the payments for a substantial fee loses the car. 

Recently the Attorney General's office brought two consumer protection lawsuits against several auto brokers in the western Washington area.  Several states have adopted statutes prohibiting these practices.

SUMMARY:

The unlawful transfer or sublease of a motor vehicle is made a class C felony.  A violation of the act constitutes a crime under the criminal profiteering statute.  To engage in the unlawful transfer or sublease of a motor vehicle is an unfair and deceptive act, which is a violation of the Consumer Protection Act.

It is unlawful to transfer an ownership interest in a motor vehicle if:  the dealer fails to pay the lender the balance due within two business days after the acquisition of the vehicle; the dealer does not obtain a certificate of ownership for vehicles in its possession unless the certificate is held by the person with a security interest in the dealer's inventory; and the dealer does not transfer the certificate of ownership after the transferee has taken possession of the vehicle.

It is unlawful to sublease a motor vehicle when:  the vehicle lease contract or security agreement contains terms prohibiting transfers or assignments; the person is not a party to the lease contract or security agreement; the lease is transferred without the lessor's consent to a person who is not a party to the contract or agreement; and, the person receives compensation for the services provided.

Transfer of an ownership interest in a motor vehicle is unlawful pursuant to the auto dealer licensing law.

VOTES ON FINAL PASSAGE:

     Senate   46    0

     House 96  0

EFFECTIVE:June 7, 1990