Brief Description: Refining the definition of "bushing."

Sponsors: Representatives Conway, McMorris and McIntire.

Hearing Date: 1/28/04

Staff: Susan Kavanaugh (786-7106).

Background:

If an offer to purchase or lease a vehicle is accepted contingent on securing financing, or on some other factor, the 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, money, the trade-in vehicle, or anything else given as initial payment or security must be returned, and the deal called off, before there is any attempt to re-open negotiations.

Dealers may renegotiate the dollar amount of the trade-in allowance given to a buyer in only two 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, or (2) the vehicle has serious physical damage or mechanical defect that could not reasonably have been discovered when the offer was accepted.

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 an acceptance of an offer must be final 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.

The Consumer Protection Division of the Office of the Attorney General reports receiving 72 written complaints regarding bushing in 2003.

Summary of Bill:

Car dealers are given five, rather than three, days (excluding Saturdays, Sundays, and holidays), to accept or reject a purchase offer. This means, for example, an offer made on Tuesday must be accepted or rejected by the following Tuesday.

It is clarified that the prohibition on bushing:

•    Applies only to situations where there is a contract signed by the buyer or lessee;

•    Does not affect the right of a dealer to take legal action against a buyer or lessee who is not truthful about income, employment, or debt in applying for a financing or lease (unless the dealer was involved in the deception); and

•    Applies to situations where the dealer is seeking financing from a commercial lending institution, as well as situations where financing is through the dealership.

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

The buyer's disclosure that the title to a trade-in vehicle has been branded is required to be in writing.

Appropriation: None.

Fiscal Note: Not requested.

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