VA General Assembly Passes Laws to Define Spot Delivery and Clarify new and used Vehicles
[I]Consumer Disclosures Required July 1[/I]To define once and for all the long standing automobile business practice of spot delivery, VADA, with WANADAs support, got legislation through the Virginia General Assembly and signed into law to accomplish this. Additionally, legislation successfully passed into law to more appropriately set forth the legal definition of new vehicles versus used vehicles. All of these changes to clarify the law will require written disclosures, from dealer to consumers, when the changes go into effect July 1, 2010. Here are the details:
[U]New Vehicle Definition[/U] The governor signed into law a bill ascertaining that a vehicle with less than 7,500 miles on the odometer cannot be considered used until it has been titled. Correspondingly, new vehicles become used only when titled or when they accumulate 7,500 miles or more. A dealer selling a car or light duty truck with more than 750 miles on the odometer can sell it as new with this notice to the consumer: Notice: This new motor vehicle has accumulated mileage in excess of 750 miles as the result of use as a demonstrator and/or as the result of delivery to a prior prospective purchaser who never took title to it and who returned it. This disclosure must be given to a buyer by the dealer either on the buyers order or in a separate document commencing July 1. If it is in the buyer$s order, it must be in type no smaller than 10 point. If given separately, the document must contain only the disclosure in type no smaller than 14 point, along with the actual odometer reading at time of sale, and a signature by the buyer(s). [U]Spot Delivery Language[/U] Last year, Virginia enacted a bill specifically recognizing and permitting spot delivery and revising the notice that must be given to a buyer. The spot delivery notice in the buyers order of the right to rescind a transaction must comply with the wording of the statute. This language replaces both the notice giving the customer a right to rescind and the notice giving the dealer a right to rescind. Dealers were permitted to change the language last year, and many dealers have already adjusted their buyers orders. For a dealer that has not, here is the notice that must be in buyers order form by July 1 in bold face type, no smaller than 10 point:IF YOU ARE FINANCING THIS VEHICLE, PLEASE READ THIS NOTICE. YOU ARE PROPOSING TO ENTER INTO A RETAIL INSTALLMENT SALES CONTRACT WITH THE DEALER. PART OF YOUR CONTRACT INVOLVES FINANCING THE PURCHASE OF YOUR VEHICLE. IF YOU ARE FINANCING THIS VEHICLE AND THE DEALER INTENDS TO TRANSFER YOUR FINANCING TO A FINANCE PROVIDER SUCH AS A BANK, CREDIT UNION OR OTHER LENDER, YOUR VEHICLE PURCHASE DEPENDS ON THE FINANCE PROVIDER$S APPROVAL OF YOUR PROPOSED RETAIL INSTALLMENT SALES CONTRACT. IF YOUR RETAIL INSTALLMENT SALES CONTRACT IS APPROVED WITHOUT A CHANGE THAT INCREASES THE COST OR RISK TO YOU OR THE DEALER, YOUR PURCHASE CANNOT BE CANCELLED. IF YOUR RETAIL INSTALLMENT SALES CONTRACT IS NOT APPROVED, THE DEALER WILL NOTIFY YOU VERBALLY OR IN WRITING. YOU CAN THEN DECIDE TO PAY FOR THE VEHICLE IN SOME OTHER WAY OR YOU OR THE DEALER CAN CANCEL YOUR PURCHASE. IF THE SALE IS CANCELLED, YOU NEED TO RETURN THE VEHICLE TO THE DEALER WITHIN 24 HOURS OF VERBAL OR WRITTEN NOTICE IN THE SAME CONDITION IT WAS GIVEN TO YOU, EXCEPT FOR NORMAL WEAR AND TEAR. ANY DOWN PAYMENT OR TRADE-IN YOU GAVE THE DEALER WILL BE RETURNED TO YOU. IF YOU DO NOT RETURN THE VEHICLE WITHIN 24 HOURS OF VERBAL OR WRITTEN NOTICE OF CANCELLATION, THE DEALER MAY LOCATE THE VEHICLE AND TAKE IT BACK WITHOUT FURTHER NOTICE TO YOU AS LONG AS THE DEALER FOLLOWS THE LAW AND DOES NOT CAUSE A BREACH OF THE PEACE WHEN TAKING THE VEHICLE BACK. IF THE DEALER DOES NOT RETURN YOUR DOWN PAYMENT AND ANY TRADE-IN WHEN THE DEALER GETS THE VEHICLE BACK IN THE SAME CONDITION IT WAS GIVEN TO YOU, EXCEPT FOR NORMAL WEAR AND TEAR, THE DEALER MAY BE LIABLE TO YOU UNDER THE VIRGINIA CONSUMER PROTECTION ACT.
Note that the required notice applies only to retail installment sales. To cover leases, this language should be added to a buyers order, following the language quoted above. IF YOU ARE LEASING THIS VEHICLE, THE SAME PROCEDURES, RIGHTS, AND OBLIGATIONS APPLICABLE TO A TRANSACTION INVOLVING A RETAIL INSTALLMENT SALES CONTRACT STATED ABOVE APPLY TO THIS LEASE TRANSACTION. While not required by the statute, the above disclosure may be helpful to a dealer trying to avoid misunderstandings with customers.
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