New Maryland spot delivery law goes into effect, Oct. 1
Dealers finally get a workable approach to vehicle sales on credit
As all are aware, the new law in Maryland establishing a tangible, workable approach for dealers delivering vehicles sold to consumers before the financing is finalized went onto the books after the General Assembly passed it last spring and becomes effective this week,
October 1, 2015.
Maryland dealers, led by MADA with WANADAês support, came together earlier this year with the Motor Vehicle Administration to fashion a bill acceptable to legislative leaders that recognized, at long last, the widespread, time honored auto business reality of spot deliveries and the pressing need for a proper law to take the legal uncertainty out of the practice which gets sellers and buyers of vehicles on credit the consumer financing required from lending institutions.
Here are the important features of Marylandês new spot delivery law that have been covered in detail by management seminars, like the one MADA staged with automobile business lawyer, Mike Charapp, last week for dealers at Turf Valley Resort:
1) A period of four (4) business days exclusive of the day of delivery, Sundays and legal holidays comprises a notice period from the dealer to the consumer during which time the dealer is working to put the terms of the finance sale with a third party lending institution. For a copy of the required notice, click here. Note that the law requires that the form be signed by both the dealer and consumer before the vehicle is delivered.
2) Once during the four day notice period the terms of the retail installment sales contract (RISC) or lease agreement have been approved and accepted by the lending institution, the sale cannot be cancelled.
3) Correspondingly, the dealer must notify the consumer within the four day period if the terms of the financing or lease are not approved either by the lending institution or dealer. Among other things, notice of non-approval preserves the dealerês right to cancel, so it is imperative for the dealer to have the customerês current address for this notice to go by U.S. Mail, in addition to via his/her FAX or email. Note: A notice of non-approval from the dealer to the customer triggers the customerês right to cancel.
If the dealer cancels the sale within the four day period, the consumer must be notified accordingly, in which case he/she has two (2) days to return the spot-delivered vehicle in the same condition it was when it left the dealership in the consumerês care.
For a sample copy of the non-approval notice devised by Mike Charapp, click here.
4) Renegotiation of financing terms is authorized under the law, to include approval after a non-approval notice is sent. Note, however, that when new terms are negotiated, the original terms need to be rescinded.
For a sample copy of the form covering these circumstances, click here.
5) If the deal fails altogether, the dealer must return the customerês trade-in, along with any and all fees or taxes collected, including title tax and processing fees. Note, too, that the dealer may not charge the customer for the use of the vehicle while it was out on spot delivery.
6) If the buyer does not return the vehicle, per a failed sale, within the prescribed two (2) day period, the dealer may repossess the vehicle in accordance with Maryland law.
7) The dealerês property and casualty insurance is primary on the delivered vehicle so long as the vehicle remains on spot-delivery, i.e., until such time as financing is finalized.
WANADA joined MADA the week before last at the MVA Dealer Advisory Forum meeting where MVA administrator Nizer and her staff pledged to sort out the new spot delivery rules with dealers until the various issues likely to arise with a change in the law of this magnitude are resolved. One thing is for certain: The juice is worth the squeeze with a spot delivery law in Maryland that fills the void where no tangible, workable rules of engagement previously existed. Now that they do, it is far preferable for all concerned, serving as it does the public interest.Download Bulletin PDF