WSR 02-09-057

PROPOSED RULES

DEPARTMENT OF LICENSING


[ Filed April 15, 2002, 11:17 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 02-04-059.

Title of Rule: Motor vehicle dealers and manufacturers, WAC 308-66-110 Definitions and 308-66-120 Dealer's license application.

Purpose: Add the definition of "used vehicle" and "bona fide retail purchaser/lessee" to the definition section and further define dealer certification requirements for dealer license applications and renewals due to the implementation of RCW 46.70.041 (1)(l) and 46.70.079 effective July 1, 2002.

Statutory Authority for Adoption: RCW 46.70.160.

Summary: Amending WAC 308-66-110 to add the definition of used vehicle and requiring a notarized affidavit to document exemptions to such definition. Amending WAC 308-66-120 defining who is required to take dealer certification and the length for which a certification is valid.

Reasons Supporting Proposal: Both amendments needed to support current trends in vehicle dealer business.

Name of Agency Personnel Responsible for Drafting and Implementation: Charles Coach, 2000 West 4th, Olympia, (360) 664-6453; and Enforcement: Mykel Gable, 2000 West 4th, Olympia, (360) 664-6451.

Name of Proponent: Washington State Auto Dealers Association and Washington State Independent Auto Dealers Association, private.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: Amendment to WAC 308-66-110 defines "used vehicle" and "bona fide retail purchaser/lessee" enabling vehicle dealers to determine whether a vehicle is used or new for retail/wholesale purposes.

Amendment to WAC 308-66-120 further defines who is required to furnish the department a certification of completion in the dealer education program to apply for an original vehicle dealer license and vehicle dealer renewal and the length a certification is valid.

Proposal does not change existing rules. Several sections are changed in light of the review for necessity, effectiveness, clarity, intent, coordination with other agencies, cost benefits and fairness.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposal does not impose additional duties on the vehicle dealer industry.

RCW 34.05.328 does not apply to this rule adoption.

Hearing Location: Department of Licensing, Dealer Services, Large Conference Room, 2000 West 4th, Olympia, WA 98502, on May 21, 2002, at 1:30 p.m.

Assistance for Persons with Disabilities: Contact Linda Mason by May 19, 2002, TDD (360) 664-8885, or (360) 664-6455.

Submit Written Comments to: Charles Coach, Dealer Services, Department of Licensing, P.O. Box 9039, Olympia, WA 98507-9039, fax (360) 586-6703, by May 19, 2002.

Date of Intended Adoption: May 31, 2002.

April 14, 2002

Fred Stephens

Director

OTS-5589.2


AMENDATORY SECTION(Amending WSR 98-20-039, filed 9/30/98, effective 10/31/98)

WAC 308-66-110   Definitions.   For the purpose of administering chapter 46.70 RCW, the following terms shall be construed in the following manner:

(1) "Offering" the sale of a vehicle shall include the distribution by any means of a list, with or without prices, of vehicles for sale.

(2) "Soliciting" the sale of a vehicle shall include an offer to effect the purchase or sale of a vehicle on behalf of another person.

(3) "Normal business hours" or "reasonable times" shall include, but not be limited to, the hours from 10:00 a.m. through 4:00 p.m. for five days each week. All hours during which the place of business is open for the purpose of bartering, trading or selling vehicles are normal business hours or reasonable times as long as the dealer is open for business at regular intervals. Whenever a dealer closes his place of business during normal business hours, a sign must be posted on the main door of the business stating the time that he will next be open for business or where he may be contacted.

(4) An "employee" of a dealer is a person on the payroll who appears on the record of the dealer as an employee for whom social security, withholding tax, and all deductions required by law have been made.

(5) A "broker" shall mean any person, partnership, corporation, or association acting independently, who for a commission, fee or any other form of compensation arranges or engages in the wholesale or retail purchase, sale or lease with option to purchase, of a vehicle.

(6) An "employee identification card" is a card that may be issued by a licensed dealer to an employee, identifying such employee as being in the employ of such dealer. The department will prescribe the form of the card.

(7) A "demonstration permit" is a permit issued by a dealer to a prospective customer entitling the prospective customer to operate a particular vehicle for demonstration purposes.

(8) Current service agreement - The agreement between a vehicle manufacturer or vehicle distributor and a seller, stipulating that the seller will provide warranty adjustments for the owners of said manufacturer's or distributor's new vehicles which qualify for adjustments under the said manufacturer's or distributor's warranty.

(9) New vehicle warranty - The warranty extended by a manufacturer or distributor to the first retail purchaser.

(10) "Closing" shall mean the process of completion of sale transaction.

(11) "Completion of sale" in the case of a consigned vehicle shall mean purchaser has possession of vehicle, all liens against vehicle are paid, seller has sale proceeds, and warranty of title to vehicle has been accomplished.

(12) "Listing" shall mean a contract between a seller of a used mobile/manufactured home and a listing dealer for the dealer to locate a willing purchaser of that listed used mobile/manufactured home.

(13) "Seller," as it relates to listing dealers, shall mean a person who lists a used mobile/manufactured home with a listing dealer.

(14) "Purchaser," as it relates to listing dealers, shall mean a person who agrees to buy a used mobile/manufactured home listed through a listing dealer.

(15) "Consignment" shall mean an arrangement whereby a vehicle dealer accepts delivery or entrustment of a vehicle and agrees to sell the vehicle on behalf of another.

(16) "Consignee" shall mean a vehicle dealer who accepts delivery or to whom a vehicle is entrusted for the purpose of sale on behalf of another.

(17) "Consignor" shall mean a person who delivers or entrusts a vehicle to a dealer for the purpose of sale.

(18) "Remanufactured" shall mean to remake or reprocess into a finished product by a large scale industrial process.

(19) "Guaranteed title" as it relates to a consigned vehicle shall mean a guarantee by the consignor to convey title to the consignee upon sale of the vehicle. The consignment agreement between the consignor and consignee shall comply with the provisions of WAC 308-66-155.

(20) "Used vehicle" in keeping with RCW 46.04.660, and for purposes of the requirement for a service agreement in RCW 46.70.101 (1)(a)(vii), a vehicle will be considered used if it meets the following requirements:

(a) It has been titled or registered to a bona fide retail purchaser/lessee for a period of 90 days or more; and

(b) The vehicle has been operated (driven) to the extent that its odometer registers 3,000 miles or more.

However, the requirements of (a) and (b) of this subsection will not apply if a bona fide retail purchaser/lessee sells, trades, or otherwise disposes of the vehicle prior to its having met those requirements. To document such an exemption, the subsequent wholesaling and retailing dealer must keep, as a dealer business record, a notarized affidavit from either the first bona fide retail purchaser/lessee, or in the case of an imported vehicle, a notarized affidavit from the importer of the vehicle. That affidavit will be prescribed by the department and must confirm that the first retail purchaser/lessee was a bona fide retail purchaser/lessee.

(21) A "bona fide retail purchaser/lessee" is one who purchases or leases a vehicle for the purpose of using it, rather than for the purposes of resale or lease.

[Statutory Authority: RCW 46.70.160. 98-20-039, 308-66-110, filed 9/30/98, effective 10/31/98; 96-19-025, 308-66-110, filed 9/9/96, effective 10/10/96. Statutory Authority: RCW 46.70.160 and 1986 c 199 1. 87-01-016 (Order DLR 115), 308-66-110, filed 12/9/86; Order MV 170, 308-66-110, filed 7/16/73; Order 70-08-04, 308-66-110, filed 8/6/70; Order 69-1, 308-66-110, filed 8/28/69; Order 2, 308-66-110, filed 1/29/68.]


AMENDATORY SECTION(Amending WSR 98-20-039, filed 9/30/98, effective 10/31/98)

WAC 308-66-120   Dealer's license application.   (1) Each application shall contain in addition to the information required by RCW 46.70.041:

(a) The names and residential addresses of all owners of ten percent or more of the assets of the firm;

(b) The name and address of the principal place of business of the firm;

(c) The names and addresses of each and every subagency of the firm, if any;

(d) A current balance sheet of assets and liabilities which shall have been prepared within ninety days of its submission;

(e) A statement of whether or not the applicant or any partner, member, officer, director, owner of ten percent or more of the assets of the firm, was the holder of a license issued pursuant to chapter 46.70 RCW which was revoked for cause and never reissued by the department, or which license was suspended for cause and the terms of the suspension have not been fulfilled;

(f) A detailed list of all dealerships previously operated by each person named on the application and with which each person presently or was formerly connected or employed.

(2) An applicant shall appear for a personal interview if requested by the department.

(3) The department may require a credit report for each party named on each application for a dealer's license.

(4) An applicant shall provide as evidence of leasehold or ownership interest of business location either:

(a) A copy of the rental or lease agreement between the applicant and landowner showing the business location by commonly known address, or

(b) A copy of the county assessor's record showing ownership of the business location, the applicant's name and the commonly known address.

(5) The bank reference for verifying financial condition consisting of:

(a) The name of applicant's bank, a person to contact at that bank concerning applicant's financial condition, or

(b) A letter of credit current within last 90 days, or

(c) A flooring agreement, if with a financial institution, or

(d) A line of credit with a financial institution.

(6) The department may require an applicant for a vehicle dealer license to provide evidence that the business location conforms to all zoning and land use ordinances.

(7) A corporation applicant shall provide the corporation number and corporation name issued by the secretary of state's office authorizing the company to do business within this state.

(8) The name and address on the license application and all required supporting documents must be the same. The sign at the certified location must identify the doing business as name (dba), if any, and that name shall appear on all documents as the applicant's name. The business telephone listing must also reflect the business name or the doing business as name.

(9) A certification of completion in the dealer education program:

(a) At least one principal of each company applying for an original vehicle dealer license must receive certification in the dealer education program required by RCW 46.70.041 (1)(l).

(b) The department encourages as many principals of each company as possible to obtain such certification.

(c) For annual dealer license renewals, either a company principal or a managing employee may complete the continuing education program. The continuing education certificate will indicate that the dealership has fulfilled the requirement.

(d) Certifications for either original or renewal applications will be valid for twelve months.

[Statutory Authority: RCW 46.70.160. 98-20-039, 308-66-120, filed 9/30/98, effective 10/31/98; 96-19-025, 308-66-120, filed 9/9/96, effective 10/10/96. Statutory Authority: RCW 46.70.160 and 46.70.041. 91-20-057, 308-66-120, filed 9/24/91, effective 10/25/91. Statutory Authority: RCW 46.70.160 and 1986 c 199 1. 87-01-016 (Order DLR 115), 308-66-120, filed 12/9/86; Order MV 170, 308-66-120, filed 7/16/73; Order 70-08-04, 308-66-120, filed 8/6/70; Order 69-1, 308-66-120, filed 8/28/69; Order 2, 308-66-120, filed 1/29/68.]

Washington State Code Reviser's Office