S T A T E O F N E W Y O R K ________________________________________________________________________ 8066 2015-2016 Regular Sessions I N A S S E M B L Y June 5, 2015 ___________ Introduced by M. of A. CRESPO -- read once and referred to the Committee on Transportation AN ACT to amend the vehicle and traffic law, in relation to surety bond requirements for car dealers THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: 1 Section 1. Paragraphs a, b and c of subdivision 6-b of section 415 of 2 the vehicle and traffic law, as amended by chapter 7 of the laws of 3 2000, paragraph a as further amended by section 104 of part A of chapter 4 62 of the laws of 2011, are amended to read as follows: 5 a. As a condition to obtaining a registration certificate pursuant to 6 this section, every new motor vehicle dealer applicant and every quali- 7 fied dealer applicant shall obtain and continue in effect a surety bond 8 in an amount of fifty thousand dollars executed by a surety company 9 authorized to transact business in the state by the department of finan- 10 cial services of the state. As a condition to obtaining a registration 11 certificate pursuant to this section, every dealer applicant [who is 12 applying for a registration certificate in the first instance or who 13 sold two hundred motor vehicles or fewer in the previous calendar year 14 shall obtain and continue in effect a surety bond in an amount of ten 15 thousand dollars executed by a surety company authorized to transact 16 business in the state by the department of financial services of the 17 state. As a condition of obtaining a registration certificate pursuant 18 to this section, every dealer applicant who sold more than two hundred 19 motor vehicles in the previous calendar year shall obtain and continue 20 in effect a surety bond in an amount of twenty-five thousand dollars 21 executed by a surety company authorized to transact business in the 22 state by the department of financial services of the state. The bonds 23 shall be approved as to form by the commissioner and shall be condi- 24 tioned on the new motor vehicle dealer's, qualified dealer's, and deal- 25 er's: payment of all valid bank drafts, including checks, drawn by such EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD10954-04-5 A. 8066 2 1 dealer for the purchase of motor vehicles; transfer of good title to 2 each motor vehicle such dealer sells; safekeeping of all customer depos- 3 its related to the sale of a motor vehicle between the time of receipt 4 of such customer deposit and the transfer of good title to the vehicle 5 to the customer; payment for all fines imposed upon the new motor vehi- 6 cle dealer, qualified dealer, or dealer by the commissioner pursuant to 7 the provisions of this chapter; and such dealer's repayment of any over- 8 charges of a customer by such dealer for the vehicle registration and 9 titling charges payable to the commissioner for registering and titling 10 the sold vehicle], WHO IS NOT A NEW MOTOR VEHICLE DEALER OR A QUALIFIED 11 MOTOR VEHICLE DEALER, WHO IS APPLYING FOR A NEW REGISTRATION CERTIFICATE 12 SHALL OBTAIN AND CONTINUE IN EFFECT A SURETY BOND IN AN AMOUNT OF (I) 13 TWENTY THOUSAND DOLLARS, FOR SUCH DEALERS WHO SELL FIFTY OR LESS MOTOR 14 VEHICLES A YEAR, AND (II) ONE HUNDRED THOUSAND DOLLARS, FOR SUCH DEALERS 15 WHO SELL MORE THAN FIFTY MOTOR VEHICLES A YEAR EXECUTED BY A SURETY 16 COMPANY AUTHORIZED TO TRANSACT BUSINESS IN THIS STATE BY THE DEPARTMENT 17 OF FINANCIAL SERVICES OF THE STATE. ANY SUCH DEALER WHICH IS BONDED 18 PRIOR TO THE EFFECTIVE DATE OF THE CHAPTER OF THE LAWS OF TWO THOUSAND 19 FIFTEEN WHICH AMENDED THIS PARAGRAPH, SHALL BE REQUIRED TO COMPLY WITH 20 THE AMENDMENTS MADE BY SUCH CHAPTER, ON AND AFTER JANUARY FIRST, TWO 21 THOUSAND SIXTEEN. 22 b. Recovery against a bond may be made by a person, including the 23 state, who obtains a judgment against the new motor vehicle dealer, 24 qualified dealer, or dealer for [an act or omission on which the bond is 25 conditioned if the act or omission occurred during the term of the bond] 26 ANY CLAIM RELATED TO THE BUSINESS OF SUCH NEW MOTOR VEHICLE DEALER, 27 QUALIFIED DEALER OR DEALER, INCLUDING BUT NOT LIMITED TO, CONTRACTUAL 28 VIOLATIONS, FRAUD, UNFAIR AND DECEPTIVE ACTS AND PRACTICES IN VIOLATION 29 OF SECTION THREE HUNDRED FORTY-NINE OF THE GENERAL BUSINESS LAW, ACTS 30 AND OMISSIONS, THE AMOUNT OF THE VALID BANK DRAFTS (INCLUDING CHECKS 31 DRAWN BY THE MOTOR VEHICLE DEALER), QUALIFIED CHECKS DRAWN BY THE NEW 32 MOTOR VEHICLE DEALER, QUALIFIED DEALER OR DEALER FOR THE PURCHASE OF 33 MOTOR VEHICLES OR THE AMOUNT OF OVERCHARGE BY SUCH DEALER FOR REGISTRA- 34 TION OR TITLE FEES OR THE AMOUNT PAID TO SUCH DEALER OR THE DEPOSIT, AS 35 THE CASE MAY BE, FOR THE MOTOR VEHICLE FOR WHICH GOOD TITLE WAS NOT 36 DELIVERED, AND TITLE CLAIMS, IF THE ACT OR OMISSION OCCURRED DURING THE 37 TERM OF THE BOND. The total liability imposed on the surety under this 38 section for all [breaches of the bond condition] CLAIMS is limited to 39 the face amount of the bond. [Such liability may include, but is not 40 limited to, the amount of the valid bank drafts, including checks, drawn 41 by the new motor vehicle dealer, qualified dealer, or dealer for the 42 purchase of motor vehicles or the amount of overcharge by such dealer 43 for registration or title fees or the amount paid to such dealer or the 44 deposit, as the case may be, for the motor vehicle for which good title 45 was not delivered.] In no event shall the surety on a bond be liable for 46 total claims in excess of the bond amount, regardless of the number or 47 nature of claims made against the bond or the number of years the bond 48 remained in force, nor shall any such surety bond provide coverage for 49 transactions involving sales of any motor vehicles for which a bond is 50 not required pursuant to the provisions of paragraph d of this subdivi- 51 sion. 52 c. Any surety issuing a bond pursuant to this subdivision shall be 53 required to provide sixty days' notice to the commissioner prior to the 54 effective date of cancellation OR LAPSE of the bond, AND SHALL PROVIDE 55 NOTICE TO THE COMMISSIONER UPON THE DATE OF THE CANCELLATION OR LAPSE OF 56 SUCH BOND. UPON THE CANCELLATION OR LAPSE OF ANY SURETY BOND REQUIRED BY A. 8066 3 1 THIS SUBDIVISION, THE COMMISSIONER SHALL WITHIN FIVE DAYS OF SUCH 2 CANCELLATION OR LAPSE, VERIFY THAT THE DEALER HOLDS A SURETY BOND WHICH 3 MEETS THE REQUIREMENTS OF THIS SUBDIVISION. 4 S 2. This act shall take effect on the one hundred eightieth day after 5 it shall have become a law.