Proposed New Regulation Statement of Authority, Basis and Purpose

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Ernest James
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1 Proposed New Regulation Statement of Authority, Basis and Purpose The Statutory Authority for the adoption of this new Regulation is Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., and Section , C.R.S. The Basis and Purpose for adoption of this new regulation in the Motor Vehicle Dealer Board Regulations, and for the concomitant deletion of existing procedural regulations, is to replace the sizable number of adjudication-related Board procedures with a comprehensive procedural manual in which the Board sets out 1) those procedures generally applicable to the conduct of all hearings, reviews and other proceedings before the Board, and, 2) those procedures specifically and solely applicable to particular types of hearings, reviews and other proceedings before the Board. PROPOSED NEW REGULATION: REGULATION Procedural Manual Rule A. THE BOARD SHALL FORMULATE PROCEDURES FOR THE CONDUCT OF HEARINGS, REVIEWS, AND OTHER PROCEEDINGS WITHIN THE BOARD S JURISDICTION. B. THE BOARD SHALL COMPILE ALL PROCEDURES REQUIRED BY THIS RULE INTO A PROCEDURAL MANUAL. THE PROCEDURAL MANUAL MAY INCLUDE INSTRUCTIONS, EXPLANATIONS, APPROVED FORMS, OR APPROVED TEMPLATES ASSOCIATED WITH CERTAIN PROCEDURES. C. THE BOARD MAY, AT ANY TIME, REEXAMINE AND MAKE REVISIONS TO THE PROCEDURAL MANUAL. D. ALL PROCEDURES FOR THE CONDUCT OF HEARINGS, REVIEWS, AND OTHER PROCEEDINGS WITHIN THE BOARD S JURISDICTION IN EFFECT PRIOR TO THE PASSAGE OF THIS PROCEDURAL MANUAL RULE SHALL REMAIN IN EFFECT UNTIL THE EFFECTIVE DATE OF THE INITIAL EDITION OF THE PROCEDURAL MANUAL.

2 Proposed Revised Regulation (1)(m) Statement of Authority, Basis and Purpose The Statutory Authority for the adoption of this revised Regulation (1)(m) is Section 6-708(1)(a), C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., and Section (3)(p), C.R.S. The Basis and Purpose for adoption of this revised regulation in the Motor Vehicle Dealer Board Regulations is to establish a universal disclosure form for use in the sale of powersports vehicles and to clarify disclosure requirements for powersports vehicle dealers, used powersports vehicle dealers and consumers. PROPOSED REVISED REGULATION: REGULATION (1)(m) A. TITLE 1. DISCLOSURES REQUIRED AS PART OF A POWERSPORTS VEHICLE SALES CONTRACT. 2. ALSO REFERRED TO AS FORM 2434 OR DR2434. B. DEFINITIONS 1. CONTRACT --- FOR PURPOSES OF THIS REGULATION, CONTRACT SHALL MEAN ANY WRITTEN AGREEMENT BETWEEN A DEALER AND A PURCHASER FOR THE SALE OF A POWERSPORTS VEHICLE, INCLUDING BUT NOT LIMITED TO PURCHASE ORDER, BILL OF SALE, BUYER S ORDER, RETAIL INSTALLMENT SALES CONTRACT, AND FORM DEALER --- FOR PURPOSES OF THIS REGULATION, DEALER SHALL MEAN A POWERSPORTS VEHICLE DEALER OR A USED POWERSPORTS VEHICLE DEALER. 3. DEPOSIT --- PURCHASER S MONEY, OR OTHER THING OF VALUE, WHICH IS HELD BY THE DEALER TO HOLD A POWERSPORTS VEHICLE UNTIL THE PAPERWORK IS COMPLETED. THE DEPOSIT MAY BE CREDITED TOWARD THE DOWN PAYMENT. 4. DOWN PAYMENT --- CASH AND/OR TRADE-IN MADE AS PARTIAL PAYMENT BY THE PURCHASER AT THE TIME OF A POWERSPORTS VEHICLE PURCHASE. 5. GUARANTEE --- ANY WRITTEN DOCUMENT OR ORAL REPRESENTATION THAT WOULD LEAD THE PURCHASER TO HAVE A REASONABLE GOOD FAITH BELIEF THAT THE FINANCING OF THE VEHICLE IS CERTAIN. 6. SALE OF A POWERSPORTS VEHICLE --- FOR PURPOSES OF SECTIONS (1)(m)(I)(E) AND (1)(m)(II), C.R.S., THE SALE SHALL BE DEEMED CONSUMMATED AT THE TIME OF THE EXECUTION OF THE CONTRACT FOR THE SALE OF A POWERSPORTS VEHICLE BY A DEALER AND A PURCHASER.

3 C. APPLICATION 1. A COMPLETED FORM 2434, IDENTICAL TO THE SAMPLE FORM 2434 ATTACHED, MUST ACCOMPANY EVERY CONTRACT FOR THE SALE OF A POWERSPORTS VEHICLE OTHER THAN A SALE SOLELY BETWEEN DEALERS; BETWEEN WHOLESALERS; OR BETWEEN A DEALER AND A WHOLESALER. 2. FORM 2434 SHALL BE SEPARATE FROM THE CONTRACT, EXCEPT TO THE EXTENT THAT THE LANGUAGE IS INCORPORATED INTO A RETAIL INSTALLMENT SALES CONTRACT, AND THE TERMS OF THE FORM SHALL BECOME PART OF THE CONTRACT TERMS. 3. ONLY ONE FORM 2434 MAY BE COMPLETED AT THE TIME OF EXECUTING A CONTRACT FOR THE SALE OF A POWERSPORTS VEHICLE. IN THE EVENT THAT A SALE CANNOT BE CONSUMMATED BECAUSE OF AN INABILITY TO OBTAIN PROPOSED FINANCING ON THE TERMS SET FORTH IN A FORM 2434, THE DEALER OR POWERSPORTS VEHICLE SALESPERSON AND THE PURCHASER MAY NEGOTIATE A REVISED SALE TRANSACTION, INCLUDING MODIFIED PROPOSED FINANCING, AND SHALL ALSO COMPLETE A NEW FORM 2434, AND SHALL SUPERSEDE ALL PRIOR FORM 2434S. THE DEALER SHALL RETAIN ALL PRIOR EXECUTED COPIES OF FORM AT THE TIME OF THE EXECUTION OF A CONTRACT FOR THE SALE OF A POWERSPORTS VEHICLE, A COPY OF THE FULLY-EXECUTED CONTRACT AND A COMPLETED FORM 2434 MUST BE PROVIDED TO THE PURCHASER, EXCEPT IF THE SALE IS SOLELY BETWEEN DEALERS; BETWEEN WHOLESALERS; OR BETWEEN A DEALER AND A WHOLESALER. 5. THE DISCLOSURES REQUIRED IN PARAGRAPH D OF FORM 2434 DO NOT APPLY IF THE PURCHASER IS OBTAINING FINANCING BY OR THROUGH THE DEALERSHIP. IN THAT EVENT, PARAGRAPH D SHOULD NOT BE FILLED OUT, AND MAY BE MARKED NA FOR NOT APPLICABLE IN THE INITIALS SECTIONS. 6. THE DISCLOSURES REQUIRED IN PARAGRAPHS E AND F OF FORM 2434 DO NOT APPLY IF THE PURCHASER PAYS THE FULL PRICE OF THE VEHICLE AT THE TIME OF EXECUTING THE CONTRACT. IN THAT EVENT, PARAGRAPHS E AND F SHOULD NOT BE FILLED OUT, AND MAY BE MARKED NA FOR NOT APPLICABLE IN THE INITIALS SECTIONS. 7. IF PARAGRAPH E OF FORM 2434 APPLIES, THE DEALER OR POWERSPORTS VEHICLE SALESPERSON MUST REASONABLY BELIEVE THAT, BASED UPON THE CREDITWORTHINESS OF THE PURCHASER, THE INTEREST RATE FOR ANY PROPOSED FINANCING DISCLOSED IN PARAGRAPH E IS OBTAINABLE. THE DEALER OR POWERSPORTS VEHICLE SALESPERSON SHALL NOT MAKE ANY ORAL OR WRITTEN REPRESENTATION THAT THE DEALER OR POWERSPORTS VEHICLE SALESPERSON WILL BE ABLE TO OBTAIN A RATE LOWER THAN THE RATE DISCLOSED IN PARAGRAPH E OF FORM THE APR IN PARAGRAPH E OF FORM 2434 SHALL BE EQUAL TO THE APR IN THE RETAIL INSTALLMENT SALES CONTRACT SIGNED BY THE PURCHASER FOR THE SAME VEHICLE. 9. THE DISCLOSURES REQUIRED IN PARAGRAPH G OF FORM 2434 DO NOT APPLY IF THE DEALER DOES NOT CHARGE THESE FEES WHEN FINANCING CANNOT BE OBTAINED. THE DEALER MAY WRITE NA FOR NOT APPLICABLE OR ZERO IN THE DOLLAR AND CENTS FIELDS.

4 D. FORMAT 1. IF INCORPORATED INTO A RETAIL SALES INSTALLMENT CONTRACT, THE LANGUAGE WHICH APPEARS IN PARAGRAPHS A, B, C, D, E, F AND G OF FORM 2434 MUST APPEAR IN 12 POINT BOLD FACE TYPE OR A SIZE AT LEAST 3 POINTS LARGER THAN THE SMALLEST TYPE APPEARING IN THE FORM, WHICHEVER IS GREATER. E. BAILMENT 1. WHEN FINANCING CANNOT BE ARRANGED AT OR BELOW THE APR STATED ON THE FORM 2434, THE DEALER MUST NOTIFY THE PURCHASER WITHIN FIVE (5) CALENDAR DAYS OF REJECTION BY ANY POTENTIAL LENDER. IF THE DEALER CONTINUES TO ATTEMPT TO OBTAIN ALTERNATIVE FINANCE TERMS AFTER THE INITIAL FINANCING REJECTION, THE DEALER MUST REMIND THE PURCHASER OF ANY DAILY OR USAGE RATES THAT MAY APPLY IF FINANCING CANNOT BE OBTAINED ON TERMS THAT ARE ACCEPTED BY THE PURCHASER.

[NOTE: The form below is part of Regulation 12-6-504(1)(m) currently.

5 [NOTE: The form below is part of Regulation (1)(m) currently. Proposed Revised Regulation (1)(m)deletes this form and replaces it with the Sample 2434 form displayed on the following page(s)]

6 Sample Form 2434 DISCLOSURES REQUIRED AS PART OF A MOTOR VEHICLE/POWERSPORTS VEHICLE SALES CONTRACT INSTRUCTIONS These disclosures are required as part of every motor vehicle sale, other than sales solely between dealers, between wholesalers or between a dealer and a wholesaler. If the buyer has arranged independent financing or if the buyer has paid the purchase price in full at the time of the execution of the sale contract, subsections E and F below are not applicable and may be marked NA in the initials section. Initialing the provisions below incorporates them into your contract to purchase a Motor Vehicle/Powersports Vehicle. Fill in all blanks to the extent applicable. Seller s Initials A. IMPORTANT NOTICE: The papers you are signing as part of this Motor Vehicle/Powersports Vehicle sale are legal documents. You should read them carefully and if there is anything you do not understand, you should seek legal assistance. B. WARNING: Only the terms and conditions written into these documents are part of the contract. Be sure that any oral representations are also written into these documents otherwise they cannot be enforced. C. Any fraud or misrepresentation in a Motor Vehicle/Powersports Vehicle sale is punishable under Colorado law. D. The contract is for cash. It requires you to pay the dealer $, the total amount due after your down payment is deducted. Failure to pay this balance by may result in the loss of any down payment you have paid, including your trade-in vehicle. E. Dealer has agreed to use its best efforts to arrange financing for you and you agree to buy the Motor Vehicle/Powersports Vehicle if financing can be arranged at an interest rate that does not exceed % annual percentage rate. The dealer believes that it is possible to obtain financing on these terms. This annual percentage rate must be agreed upon by both you and the dealer. You are not required to accept different finance terms. F. You and the dealer have agreed that the vehicle will be delivered to you prior to the purchase price being paid in full. If financing cannot be arranged at the terms stated in the contract, THE DEALER MUST NOTIFY YOU WITHIN TEN CALENDAR DAYS of the date you sign the contract. If the contract is cancelled, you are required to return the vehicle to the dealer. The Dealer shall promptly return any down payment, including any trade-in vehicle. G. THE DEALER MAY CHARGE YOU THE DAILY AND MILEAGE AMOUNTS STATED BELOW FOR THE USE OF THE VEHICLE FROM THE DATE OF DELIVERY UNTIL IT IS RETURNED. If the contract is cancelled, you agree to pay the dealer $ dollars per day and cents per mile for your use of the vehicle. The contract may require you to pay the cost of repair for any damage occurring to the vehicle while it is in your possession along with the agreed upon daily and mileage charges. The contract may also give the dealer the right to demand the vehicle s return and take the vehicle from you 24 hours after cancellation. The contract also may require you to pay any costs the dealer pays in regaining possession of the vehicle. Buyer s Initials

7 The Colorado Motor Vehicle Dealer Board has the authority to investigate all complaints from the sale of a Motor Vehicle/Powersports Vehicle from a licensed dealer. Any complaints should be mailed to the Colorado Dept. of Revenue, Auto Industry Division, PO Box , Denver, CO or delivered to the Colorado Dept. of Revenue, Auto Industry Division, 1881 Pierce St. #112, Lakewood, CO 80214, or you may send via fax at You may visit our website at or contact us at I hereby certify that I have given the buyer a copy of this disclosure. Dealer/Agent s Printed Name I hereby certify that I have received a copy of this disclosure. Buyer s Printed Name Dealer/Agent s Signature Date Buyer s Signature Date

8 Proposed Deletion of Regulation (2) Statement of Authority, Basis and Purpose The Statutory Authority for the deletion of the existing Regulation (2) is Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., Section , C.R.S., and Section , C.R.S. The Basis and Purpose for the deletion of this existing procedural regulation in the Motor Vehicle Dealer Board Regulations, and for the concomitant adoption of proposed Regulation , is to replace the sizable number of adjudication-related Board procedures with a comprehensive procedural manual in which the Board sets out 1) those procedures generally applicable to the conduct of all hearings, reviews and other proceedings before the Board, and, 2) those procedures specifically and solely applicable to particular types of hearings, reviews and other proceedings before the Board. PROPOSED REGULATION TO DELETE: REGULATION 12-6-(521) (2) --- HEARING PROCEDURES (I) The board president will normally preside at hearings before the full board, or in the president s absence, such board member as may be designated by a majority of the board members present, may preside and conduct the hearing. (II) The presiding officer shall rule on all evidentiary and procedural matters during the course of the hearing. Rulings on motions prior to or after the hearing, and the findings, conclusions, and order shall be determined by a majority of board members present. In the event a motion is filed requesting relief from a board order, the effects of which will occur prior to the next scheduled meeting of the board, the board president may rule on said motion, and the executive secretary shall issue the written order on behalf of the board. In the absence of the president, the first vice-president or second vice-president respectively may rule on any motion. (III) An original and 10 copies of all documents intended to be introduced into evidence at hearings before the full board shall be provided for distribution to the board and the opposing party. Respondent s and applicant s exhibits shall be marked alphabetically. The Department of Revenue s exhibits shall be marked numerically. (IV) License applicants shall have the burden of proof to demonstrate to the board that they meet all the qualifications for licensure. If denied a license by the board, applicants shall have the burden of proof to demonstrate that the specific reasons given in the notice of denial should not preclude the issuance of a license. Salesperson license applicants shall provide written proof that the employing dealer is aware of the grounds giving rise to the initial license denial, and, that said dealer shall be responsible for the actions of the salesperson in the course of employment in the event that a restricted license is approved.

9 (V) Motions shall be served on the board through its executive secretary with proof of service on the opposing party. Except in the most extraordinary circumstances, motions shall be filed not later than 30 calendar days prior to the hearing. A response to any motion shall be filed within 5 business days of the filing of the initial motion. Failure to timely comply may result in the motion being denied. Motions will be considered by the board at its next opportunity. The pendency of motions shall not be cause to continue a scheduled hearing. (VI) Continuances will not be granted unless timely filed and with good cause shown. Unreasonable delay in securing legal counsel or failing to timely exercise discovery rights may not constitute good cause except in the most extraordinary circumstances.

Statement of Basis: The statutory basis for the regulations is C.R.S (3) (a).

DEPARTMENT OF REVENUE DEALING IN MOTOR VEHICLES 1 CCR 205-1 [Editor s Notes follow the text of the rules at the end of this CCR Document.] Statement of Basis: The statutory basis for the regulations is