11700. No person shall act as a dealer, remanufacturer,
manufacturer, or transporter, or as a manufacturer branch,
remanufacturer branch, distributor, or distributor branch, without
having first been issued a license as required in Section 11701 or
temporary permit issued by the department, except that, when the
license or temporary permit has been canceled, suspended, or revoked
or has expired, any vehicle in the dealer's inventory and owned by
the dealer when the dealer ceased to be licensed may be sold at
wholesale to a licensed dealer. The former licensee shall give the
purchasing dealer a statement of facts stating that the seller is not
a licensed dealer. Any vehicle on consignment with the dealer when
the dealer ceased to be licensed shall be returned to the consignor.
Any vehicle in the dealer's possession, but not owned by the dealer
and not on consignment when the dealer ceased to be licensed, shall
be returned to the owner of the vehicle.
11700.1. A dealer who does not have an established place of
business in this state but who is currently authorized to do business
as, and who has an established place of business as, a vehicle
dealer in another state is not subject to licensure under this
article if the business transacted in California is limited to the
importation of vehicles for sale to, or the export of vehicles
purchased from, persons licensed in California under this chapter.
11700.2. A dealer who obtains an autobroker's endorsement to his or
her dealer's license is subject to all of the licensing,
advertising, and other statutory and regulatory requirements and
prohibitions applicable to a dealer, regardless of whether that
dealer acts as the buyer of a vehicle, the seller of a vehicle, or
provides brokering services on behalf of another or others for the
purpose of arranging, negotiating, assisting, or effectuating the
sale of a vehicle not owned by that dealer.
11700.3. No person may aid and abet a person in the performance of
any act in violation of this chapter.
11701. Every manufacturer of, and manufacturer branch,
remanufacturer of, and remanufacturer branch, distributor of, and
distributor branch, transporter of, or dealer in vehicles of a type
subject to registration, or snowmobiles, motorcycles, or trailers of
a type subject to identification, shall make application to the
department for a license containing a general distinguishing number.
The applicant shall submit proof of his or her status as a bona fide
manufacturer, manufacturer branch, remanufacturer, remanufacturer
branch, distributor, distributor branch, transporter, or dealer as
may reasonably be required by the department.
11702. The department may issue, or for reasonable cause shown,
refuse to issue a license to any applicant applying for a
manufacturer's, manufacturer's branch, remanufacturer's,
remanufacturer's branch, distributor's, distributor's branch,
transporter's, or dealer's license.
11703. The department may refuse to issue a license to a
manufacturer, manufacturer branch, remanufacturer, remanufacturer
branch, distributor, distributor branch, transporter, or dealer, if
it determines any of the following:
(a) The applicant was previously the holder, or a managerial
employee of the holder, of a license issued under this chapter which
was revoked for cause and never reissued by the department, or which
was suspended for cause and the terms of suspension have not been
fulfilled.
(b) The applicant was previously a business representative of a
business whose license issued under this chapter was revoked for
cause and never reissued or was suspended for cause and the terms of
suspension have not been fulfilled.
(c) If the applicant is a business, a business representative of
the business was previously the holder of a license, or was a
business representative of a business whose license, issued under
this chapter was revoked for cause and never reissued or was
suspended for cause and the terms of suspension have not been
fulfilled; or, by reason of the facts and circumstances related to
the organization, control, and management of the business, the
operation of that business will be directed, controlled, or managed
by individuals who, by reason of their conviction of violations of
the provisions of this code, would be ineligible for a license and,
by licensing the business, the purposes of this chapter would be
defeated.
(d) The applicant, or a business representative if the applicant
is a business, has been convicted of a crime or committed any act or
engaged in any conduct involving moral turpitude which is
substantially related to the qualifications, functions, or duties of
the licensed activity. A conviction after a plea of nolo contendere
is a conviction within the meaning of this section.
(e) The applicant was previously the holder of an occupational
license issued by another state, authorizing the same or similar
activities of a license issued under this division; and that license
was revoked or suspended for cause and was never reissued, or was
suspended for cause, and the terms of suspension have not been
fulfilled.
(f) The information contained in the application is incorrect.
(g) Upon investigation, the business history required by Section
11704 contains incomplete or incorrect information, or reflects
substantial business irregularities.
(h) A decision of the department to cancel, suspend, or revoke a
license has been made and the applicant was a business representative
of the business regulated under that license.
11703.1. Any of the causes specified in this chapter as a cause to
suspend or revoke the license issued to a dealer, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, or transporter, is cause to refuse
to issue a license to a dealer, manufacturer, manufacturer branch,
remanufacturer, remanufacturer branch, distributor, distributor
branch, or transporter.
11703.2. The department may refuse to issue a license to a
manufacturer, manufacturer branch, remanufacturer, remanufacturer
branch, distributor, distributor branch, transporter, or dealer, when
it determines that the applicant has outstanding an unsatisfied
final judgment rendered in connection with the purchase, sale, or
lease of any vehicle.
11703.3. A person whose license has been revoked or whose
application for a license has been denied may reapply for a license
after a period of not less than one year has elapsed from the
effective date of the decision revoking the license or denying the
application; except that if the decision was entered under the
authority of subdivision (a), (b), (c), or (g) of Section 11703, or
11703.2, or paragraph (6) of subdivision (a) of Section 11705, a
reapplication accompanied by evidence satisfactory to the department
that such grounds no longer exist may be made earlier than such
one-year period.
11703.4. The department may refuse to issue a license to a dealer
when it determines that an applicant for a dealer's license has
failed to effectively endorse an authorization for disclosure of an
account or accounts relating to the operation of the dealership as
provided for in Section 7473 of the Government Code.
11704. (a) Every applicant who applies for a license pursuant to
Section 11701 shall submit an application to the department on the
forms prescribed by the department. Such applicant shall provide the
department with information as to the applicant's character,
honesty, integrity, and reputation, as the department may consider
necessary. The department, by regulation, shall prescribe what
information is required of such an applicant for the purposes of this
subdivision.
(b) Upon receipt of an application for a license which is
accompanied by the appropriate fee, the department shall, within 120
days, make a thorough investigation of the information contained in
the application.
(c) Every person holding a license issued pursuant to Section
11701 shall notify the department, within 10 days, of any change in
the ownership or corporate structure of the licensee.
11704.5. (a) Except as provided in subdivision (e), every person
who applies for a dealer's license pursuant to Section 11701 for the
purpose of transacting sales of used vehicles on a retail or
wholesale basis only shall be required to take and successfully
complete a written examination prepared and administered by the
department before a license may be issued. The examination shall
include, but need not be limited to, all of the following laws and
subjects:
(1) Division 12 (commencing with Section 24000), relating to
equipment of vehicles.
(2) Advertising.
(3) Odometers.
(4) Vehicle licensing and registration.
(5) Branch locations.
(6) Offsite sales.
(7) Unlawful dealer activities.
(8) Handling, completion, and disposition of departmental forms.
(b) Prior to the first taking of an examination under subdivision
(a), every applicant shall successfully complete a preliminary
educational program of not less than four hours. The program shall
address, but not be limited to, all of the following topics:
(1) Chapter 2B (commencing with Section 2981) of Title 14 of Part
4 of Division 3 of the Civil Code, relating to motor vehicle sales
finance.
(2) Motor vehicle financing.
(3) Truth in lending.
(4) Sales and use taxes.
(5) Division 12 (commencing with Section 24000), relating to
equipment of vehicles.
(6) Advertising.
(7) Odometers.
(8) Vehicle licensing and registration.
(9) Branch locations.
(10) Offsite sales.
(11) Unlawful dealer activities.
(12) Air pollution control requirements.
(13) Regulations of the Bureau of Automotive Repair.
(14) Handling, completion, and disposition of departmental forms.
(c) (1) Except as provided in paragraph (2) or (3), every dealer
who is required to complete a written examination and an educational
program pursuant to subdivisions (a) and (b) and who is thereafter
issued a dealer's license shall successfully complete, every two
years after issuance of that license, an educational program of not
less than four hours that offers instruction in the subjects listed
under subdivision (a) and the topics listed under subdivision (b), in
order to maintain or renew that license.
(2) A dealer is not required to complete the educational program
set forth in paragraph (1) if the educational program is completed by
a managerial employee employed by the dealer.
(3) Paragraph (1) does not apply to dealers who sell vehicles on a
wholesale basis only and who, in a one-year period, deal with less
than 50 vehicles that are subject to registration.
(d) Instruction described in subdivisions (b) and (c) may be
provided by generally accredited educational institutions, private
vocational schools, and educational programs and seminars offered by
professional societies, organizations, trade associations, and other
educational and technical programs that meet the requirements of this
section or by the department.
(e) This section does not apply to any of the following:
(1) An applicant for a new vehicle dealer's license or any
employee of that dealer.
(2) A person who holds a valid license as an automobile
dismantler, an employee of that dismantler, or an applicant for an
automobile dismantler's license.
(3) An applicant for a motorcycle only dealer's license or any
employee of that dealer.
(4) An applicant for a trailer only dealer's license or any
employee of that dealer.
11704.7. Every person who applies to the department to take or
retake the examination required under Section 11704.5 shall pay to
the department a fee of sixteen dollars ($16).
11705. (a) The department, after notice and hearing, may suspend or
revoke the license issued to a dealer, transporter, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, or distributor branch upon determining that the person
to whom the license was issued is not lawfully entitled thereto, or
has done any of the following:
(1) Filed an application for the license using a false or
fictitious name not registered with the proper authorities, or
knowingly made any false statement or knowingly concealed any
material fact, in the application for the license.
(2) Made, or knowingly or negligently permitted, any illegal use
of the special plates issued to the licensee.
(3) Used a false or fictitious name, knowingly made any false
statement, or knowingly concealed any material fact, in any
application for the registration of a vehicle, or otherwise committed
a fraud in the application.
(4) Failed to deliver to a transferee lawfully entitled thereto a
properly endorsed certificate of ownership.
(5) Knowingly purchased, sold, or otherwise acquired or disposed
of a stolen motor vehicle.
(6) Failed to provide and maintain a clear physical division
between the type of business licensed pursuant to this chapter and
any other type of business conducted at the established place of
business.
(7) Willfully violated Section 3064 or 3065 or any rule or
regulation adopted pursuant thereto.
(8) Violated any provision of Division 3 (commencing with Section
4000) or any rule or regulation adopted pursuant thereto, or
subdivision (a) of Section 38200.
(9) Violated any provision of Division 4 (commencing with Section
10500) or any rule or regulation adopted pursuant thereto.
(10) Violated any provision of Article 1 (commencing with Section
11700) of Chapter 4 of Division 5 or any rule or regulation adopted
pursuant thereto.
(11) Violated any provision of Part 5 (commencing with Section
10701) of Division 2 of the Revenue and Taxation Code or any rule or
regulation adopted pursuant thereto.
(12) Violated any provision of Chapter 2b (commencing with Section
2981) of Title 14 of Part 4 of Division 3 of the Civil Code or any
rule or regulation adopted pursuant thereto.
(13) Submitted a check, draft, or money order to the department
for any obligation or fee due the state which was dishonored or
refused payment upon presentation.
(14) Has caused any person to suffer any loss or damage by reason
of any fraud or deceit practiced on that person or fraudulent
representations made to that person in the course of the licensed
activity.
For purposes of this paragraph, "fraud" includes any act or
omission which is included within the definition of either "actual
fraud" or "constructive fraud" as defined in Sections 1572 and 1573
of the Civil Code, and "deceit" has the same meaning as defined in
Section 1710 of the Civil Code. In addition, "fraud" and "deceit"
include, but are not limited to, a misrepresentation in any manner,
whether intentionally false or due to gross negligence, of a material
fact; a promise or representation not made honestly and in good
faith; an intentional failure to disclose a material fact; and any
act within Section 484 of the Penal Code.
For purposes of this paragraph, "person" also includes a
governmental entity.
(15) Failed to meet the terms and conditions of an agreement
entered into pursuant to Section 11707.
(16) Violated Section 43151, 43152, or 43153 of, or subdivision
(b) of Section 44072.10 of, the Health and Safety Code.
(b) Any of the causes specified in this chapter as a cause for
refusal to issue a license to a transporter, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, or dealer applicant is cause to
suspend or revoke a license issued to a transporter, manufacturer,
manufacturer branch, remanufacturer, remanufacturer branch,
distributor, distributor branch, or dealer.
(c) Except as provided in Section 11707, every hearing provided
for in this section shall be conducted pursuant to Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.
11705.4. (a) The department, after notice and hearing, may suspend
or revoke the license issued to a dealer, transporter, manufacturer,
manufacturer branch, distributor, or distributor branch upon
determining that the person to whom the license was issued is not
lawfully entitled thereto or has willfully violated the terms and
conditions of any warranty responsibilities as set forth in Title 1.7
(commencing with Section 1790) of Part 4 of Division 3 of the Civil
Code.
(b) Every hearing as provided for in this section shall be
pursuant to the provisions of Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
11705.5. (a) The department, after notice and hearing, may suspend
or revoke the license issued to a manufacturer upon determining that
the manufacturer has violated paragraph (2) of subdivision (b) of
Section 6262 of the Revenue and Taxation Code.
(b) The hearing provided for in subdivision (a) shall be conducted
pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code.
11706. The department may, pending a hearing, temporarily suspend
the license and special plates issued to a manufacturer, manufacturer
branch, remanufacturer, remanufacturer branch, distributor,
distributor branch, transporter, or dealer, for a period not to
exceed 30 days, if the director finds that such action is required in
the public interest. In any such case, a hearing shall be held and
a decision thereon issued within 30 days after notice of the
temporary suspension.
Every hearing, as provided for in this section, shall be conducted
pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code.
11707. (a) After the filing of an accusation under this article,
the director may enter into a stipulated compromise settlement
agreement with the consent of the licensee on terms and conditions
mutually agreeable to the director, the respondent licensee, and the
accuser without further hearing or appeal. The agreement may
include, but is not limited to, a period of probation or monetary
penalties, or both. Except as provided in Section 11728, the
monetary penalty shall not exceed one thousand dollars ($1,000) for
each violation, and it shall be based on the nature of the violation
and the effect of the violation on the purposes of this article.
(b) A compromise settlement agreement may be entered before,
during, or after the hearing, but is valid only if executed and filed
pursuant to subdivision (d) before the proposed decision of the
hearing officer, if any, is adopted or the case is decided.
(c) The department shall adopt, by regulation, a schedule of
maximum and minimum amounts of monetary penalties, the payment of
which may be included as a term or condition of a compromise
settlement agreement entered under subdivision (a). Any monetary
penalty included in a compromise settlement agreement shall be within
the range of monetary penalties in that schedule.
(d) Any compromise settlement agreement entered under this section
shall be signed by the director, the respondent licensee, and the
accuser, or by their authorized representatives. The director shall
file, or cause to be filed, the agreement with the Office of
Administrative Hearings, together with the department's notice of
withdrawal of the accusation or statement of issues upon which the
action was initiated.
(e) If the respondent licensee fails to perform all of the terms
and conditions of the compromise settlement agreement, the agreement
is void and the department may take any action authorized by law,
notwithstanding the agreement, including, but not limited to,
refiling the accusation or imposing license sanctions.
11708. (a) Upon refusal of the department to issue a license and
special plates to a manufacturer, manufacturer branch,
remanufacturer, remanufacturer branch, distributor, distributor
branch, transporter, or dealer, the applicant shall be entitled to
demand, in writing, a hearing before the director or his or her
representative within 60 days after notice of refusal.
(b) The hearing shall be conducted pursuant to Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of
the Government Code.
11709. (a) A dealer's established place of business, and other
sites or locations as may be operated and maintained by the dealer in
conjunction with his or her established place of business, shall
have posted, in a place conspicuous to the public in each and every
location, the license issued by the department to the dealer and to
each salesman employed by the dealer and shall have erected or posted
thereon signs or devices providing information relating to the
dealer's name and the location and address of the dealer's
established place of business to enable any person doing business
with the dealer to identify him or her properly. Every such sign
erected or posted, on an established place of business, shall have an
area of not less than two square feet per side displayed and shall
contain lettering of sufficient size to enable the sign to be read
from a distance of at least 50 feet. This section shall not apply to
a dealer who is a wholesaler involved for profit only in the sale of
vehicles between licensed dealers.
(b) Notwithstanding Section 11704 and this section, a dealer may
display vehicles at a fair, exposition, or similar exhibit without
securing a branch license, if no actual sales are made at those
events and the display does not exceed 30 days.
(c) All vehicles displayed pursuant to subdivision (b) or (e)
shall be identified by a sign or device providing information
relating to the dealer's name and the location and address of the
dealer's established place of business.
(d) This section shall not be applicable to a dealer who deals
only in off-highway vehicles subject to identification, as defined in
Section 38012.
(e) Notwithstanding Section 11704 and this section, a vessel
dealer may display a trailer and may sell a trailer in conjunction
with the sale of a vessel at a fair, exposition, or similar exhibit
without securing a branch license, if the display does not exceed 30
days.
11709.1. Every dealer who displays or offers one or more used
vehicles for sale at retail shall post a notice not less than 8
inches high and 10 inches wide, in a place conspicuous to the public,
which states the following:
"The prospective purchaser of a vehicle may, at his or her own
expense and with the approval of the dealer, have the vehicle
inspected by an independent third party either on or off these
premises."
11709.2. Every dealer shall conspicuously display a notice, not
less than eight inches high and 10 inches wide, in each sales office
and sales cubicle of a dealer's established place of business where
written terms of specific sale or lease transactions are discussed
with prospective purchasers or lessees, and in each room of a dealer'
s established place of business where sale and lease contracts are
regularly executed, which states the following:
"NO COOLING-OFF PERIOD
California law does not provide for a "cooling-off" or other
cancellation period for vehicle lease or purchase contracts.
Therefore, you cannot later cancel such a contract simply because you
change your mind, decide the vehicle costs too much, or wish you had
acquired a different vehicle. After you sign a motor vehicle
purchase or lease contract, it may only be canceled with the
agreement of the seller or lessor or for legal cause, such as fraud."
11709.3. (a) Every dealer shall clearly and conspicuously display
in its showroom at its established place of business, in a place that
is easily accessible to prospective purchasers, a clear and
conspicuous listing of each vehicle that the dealer has advertised
for sale if the vehicle meets all of the following requirements:
(1) The vehicle is advertised for sale in a newspaper or other
publication of general circulation, or in any other advertising
medium that is disseminated to the public generally, including, but
not limited to, radio, television, or the Internet.
(2) The vehicle is advertised at a specific price and is required
pursuant to subdivision (a) of Section 11713.1 to be identified in
the advertisement by its vehicle identification number or license
number.
(3) The vehicle has not been sold or leased during the time that
the advertised price is valid.
(4) The vehicle does not clearly and conspicuously have displayed
on or in it the advertised price.
(b) The listing required by subdivision (a) may be satisfied by
clearly and conspicuously posting in the showroom a complete copy of
any print advertisement that includes vehicles currently advertised
for sale or by clearly and conspicuously displaying in the showroom a
list of currently advertised vehicles described by make, model,
model-year, vehicle identification number, or license number, and the
advertised price.
11710. (a) Before any dealer's or remanufacturer's license is
issued or renewed by the department to any applicant therefor, the
applicant shall procure and file with the department a bond executed
by an admitted surety insurer, approved as to form by the Attorney
General, and conditioned that the applicant shall not practice any
fraud or make any fraudulent representation which will cause a
monetary loss to a purchaser, seller, financing agency, or
governmental agency.
(b) A dealer's bond shall be in the amount of fifty thousand
dollars ($50,000), except the bond of a dealer who deals exclusively
in motorcycles shall be in the amount of ten thousand dollars
($10,000). Before the license is renewed by the department, the
dealer, other than a dealer who deals exclusively in motorcycles,
shall procure and file a bond in the amount of fifty thousand dollars
($50,000). A remanufacturer bond shall be in the amount of fifty
thousand dollars ($50,000).
(c) Liability under the bond is to remain at full value. If the
amount of liability under the bond is decreased or there is
outstanding a final court judgment for which the dealer or
remanufacturer and sureties are liable, the dealer's or
remanufacturer's license shall be automatically suspended. In order
to reinstate the license and special plates, the licensee shall
either file an additional bond or restore the bond on file to the
original amount, or shall terminate the outstanding judgment for
which the dealer or remanufacturer and sureties are liable.
(d) A dealer's or remanufacturer's license, or renewal of the
license, shall not be issued to any applicant therefor, unless and
until the applicant files with the department a good and sufficient
instrument, in writing, in which the applicant appoints the director
as the true and lawful agent of the applicant upon whom all process
may be served in any action, or actions, which may thereafter be
commenced against the applicant, arising out of any claim for damages
suffered by any firm, person, association, or corporation, by reason
of the violation of the applicant of any of the terms and provisions
of this code or any condition of the dealer's or remanufacturer's
bond. The applicant shall stipulate and agree in the appointment
that any process directed to the applicant, when personal service of
process upon the applicant cannot be made in this state after due
diligence and, in that case, is served upon the director or, in the
event of the director's absence from the office, upon any employee in
charge of the office of the director, shall be of the same legal
force and effect as if served upon the applicant personally. The
applicant shall further stipulate and agree, in writing, that the
agency created by the appointment shall continue for and during the
period covered by any license that may be issued and so long
thereafter as the applicant may be made to answer in damages for a
violation of this code or any condition of the bond. The instrument
appointing the director as the agent for the applicant for service of
process shall be acknowledged by the applicant before a notary
public. In any case where the licensee is served with process by
service upon the director, one copy of the summons and complaint
shall be left with the director or in the director's office in
Sacramento or mailed to the office of the director in Sacramento. A
fee of five dollars ($5) shall also be paid to the director at the
time of service of the copy of the summons and complaint. Service on
the director shall be a sufficient service on the licensee if a
notice of service and a copy of the summons and complaint are
immediately sent by registered mail by the plaintiff or the plaintiff'
s attorney to the licensee. A copy of the summons and complaint
shall also be mailed by the plaintiff or the plaintiff's attorney to
the surety on the applicant's bond at the address of the surety given
in the bond, postpaid and registered with request for return
receipt. The director shall keep a record of all process so served
upon the director, which record shall show the day and hour of
service and shall retain the summons and complaint so served on file.
Where the licensee is served with process by service upon the
director, the licensee shall have and be allowed 30 days from and
after the service within which to answer any complaint or other
pleading which may be filed in the cause. However, for purposes of
venue, where the licensee is served with process by service upon the
director, the service is deemed to have been made upon the licensee
in the county in which the licensee has or last had an established
place of business.
11710.1. Notwithstanding subdivision (b) of Section 11710, the bond
amount of a dealer who sells vehicles on a wholesale basis only, and
who sells fewer than 25 vehicles per year, shall be ten thousand
dollars ($10,000).
11710.2. If a deposit is given instead of the bond required by
Section 11710 both of the following apply:
(a) The director may order the deposit returned at the expiration
of three years from the date an applicant for a dealer's license who
has operated a business of selling vehicles under a temporary permit
has ceased to do business, or three years from the date a licensee
has ceased to be licensed, if the director is satisfied that there
are no outstanding claims against the deposit. A judge of a superior
court may order the return of the deposit prior to the expiration of
three years upon evidence satisfactory to the judge that there are
no outstanding claims against the deposit.
(b) If either the director, department, or state is a defendant in
any action instituted to recover all or any part of the deposit, or
any action is instituted by the director, department, or state to
determine those entitled to any part of the deposit, the director,
department, or state shall be paid reasonable attorney fees and costs
from the deposit. Costs shall include those administrative costs
incurred in processing claims against the deposit.
11711. (a) If any person (1) shall suffer any loss or damage by
reason of any fraud practiced on him or fraudulent representation
made to him by a licensed dealer or one of such dealer's salesmen
acting for the dealer, in his behalf, or within the scope of the
employment of such salesman and such person has possession of a
written instrument furnished by the licensee, containing stipulated
provisions and guarantees which the person believes have been
violated by the licensee, or (2) if any person shall suffer any loss
or damage by reason of the violation by such dealer or salesman of
any of the provisions of Division 3 (commencing with Section 4000) of
this code, or (3) if any person is not paid for a vehicle sold to
and purchased by a licensee, then any such person shall have a right
of action against such dealer, his salesman, and the surety upon the
dealer's bond, in an amount not to exceed the value of the vehicle
purchased from or sold to the dealer.
(b) If the state or any political subdivision thereof shall suffer
any loss or damage by reason of any fraud practiced on the state or
fraudulent representation made to the state by a licensed dealer, or
one of such dealer's representatives acting for the dealer, in his
behalf, or within the scope of employment of such representatives, or
shall suffer any loss or damage by reason of the violation of such
dealer or representative of any of the provisions of Division 3
(commencing with Section 4000) of this code, or Part 5 (commencing
with Section 10701), Division 2 of the Revenue and Taxation Code, the
state or any political subdivision thereof, through the department,
shall have a right of action against such dealer, his representative,
and the surety upon the dealer's bond in an amount not to exceed the
value of the vehicles involved.
(c) The failure of a dealer upon demand to pay the fees and
penalties determined to be due as provided in Section 4456 hereof is
declared to be a violation of Division 3 (commencing with Section
4000) of this code, and Part 5 (commencing with Section 10701),
Division 2 of the Revenue and Taxation Code and to constitute loss or
damage to the state in the amounts of such fees and penalties
determined to be due and not paid.
(d) The claims of the state under subdivision (b) shall be
satisfied first and entitled to preference over all claims under
subdivision (a).
(e) The claims of any person under subdivision (a) who is not a
licensee shall be satisfied first and entitled to preference over all
other claims under subdivision (a).
11711.3. A person acting as a dealer, who was not licensed as a
dealer as required by this article, or a person acting as a
lessor-retailer, who was not licensed as a lessor-retailer as
required by Chapter 3.5 (commencing with Section 11600), may not
enforce any security interest or bring or maintain any action in law
or equity to recover any money or property or obtain other relief
from the purchaser or lessee of a vehicle in connection with a
transaction in which the person was, at the time at the transaction,
required to be licensed as a dealer or a lessor-retailer.
11712. (a) The department shall not issue a dealer's license to any
applicant therefor who has not an established place of business as
defined in this code. Should the dealer change the site or location
of his established place of business, he or she shall, immediately
upon making that change, so notify the department. Should a dealer
for any reason whatsoever, cease to be in possession of an
established place of business from and on which he or she conducts
the business for which he or she is licensed, he or she shall
immediately notify the department and, upon demand by the department,
shall deliver to the department the dealer's license, dealer's
special plate or plates, and all report of sale books in his or her
possession.
(b) Should the dealer change to, or add another franchise for the
sale of new vehicles, or cancel or, for any cause whatever, otherwise
lose a franchise for the sale of new vehicles, he or she shall
immediately so notify the department.
(c) Any person licensed under this article who has closed his or
her established place of business may be served with process issued
pursuant to Chapter 5 (commencing with Section 11500) of Part 1 of
Division 3 of Title 2 of the Government Code by registered mail at
that place of business or at the mailing address of record if
different from the established place of business, unless the person
has notified the department in writing of another address where
service may be made.
11712.5. It is unlawful and a violation of this code for a dealer
issued a license pursuant to this article to sell, offer for sale, or
display any new vehicle, as follows:
(a) A new motorcycle unless there is securely attached thereto a
statement as required by Section 24014.
(b) A new light duty truck with a manufacturer's gross vehicle
weight rating of 8,500 pounds or less unless there is affixed to the
light duty truck the label required by Section 24013.5.
11713. No holder of any license issued under this article shall do
any of the following:
(a) Make or disseminate, or cause to be made or disseminated,
before the public in this state, in any newspaper or other
publication, or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatever, any statement
which is untrue or misleading and which is known, or which by the
exercise of reasonable care should be known, to be untrue or
misleading; or to so make or disseminate, or cause to be so
disseminated, any statement as part of a plan or scheme with the
intent not to sell any vehicle or service so advertised at the price
stated therein, or as so advertised.
(b) (1) (A) Advertise or offer for sale or exchange in any manner,
any vehicle not actually for sale at the premises of the dealer or
available to the dealer directly from the manufacturer or distributor
of the vehicle at the time of the advertisement or offer. However,
a dealer who has been issued an autobroker's endorsement to his or
her dealer's license may advertise his or her service of arranging or
negotiating the purchase of a new motor vehicle from a franchised
new motor vehicle dealer and may specify the line-makes and models of
those new vehicles. Autobrokering service advertisements may not
advertise the price or payment terms of any vehicle and shall
disclose that the advertiser is an autobroker or auto buying service,
and shall clearly and conspicuously state the following: "All new
cars arranged for sale are subject to price and availability from the
selling franchised new car dealer."
(B) As to printed advertisements, the disclosure statement
required by subparagraph (A) shall be printed in not less than
10-point bold type size and shall be textually segregated from the
other portions of the printed advertisement.
(2) Notwithstanding subparagraph (A), classified advertisements
for autobrokering services that measure two column inches or less are
exempt from the disclosure statement in subparagraph (A) pertaining
to price and availability.
(3) Radio advertisements of a duration of less than 11 seconds
that do not reference specific line-makes or models of motor vehicles
are exempt from the disclosure statement required in subparagraph
(A).
(c) Fail, within 48 hours, in writing to withdraw any
advertisement of a vehicle that has been sold or withdrawn from sale.
(d) Advertise or represent a vehicle as a new vehicle if the
vehicle is a used vehicle.
(e) Engage in the business for which the licensee is licensed
without having in force and effect a bond as required by this
article.
(f) Engage in the business for which the dealer is licensed
without at all times maintaining an established place of business as
required by this code.
(g) Include, as an added cost to the selling price of a vehicle,
an amount for licensing or transfer of title of the vehicle, which is
not due to the state unless, prior to the sale, that amount has been
paid by a dealer to the state in order to avoid penalties that would
have accrued because of late payment of the fees. However, a dealer
may collect from the second purchaser of a vehicle a prorated fee
based upon the number of months remaining in the registration year
for that vehicle, if the vehicle had been previously sold by the
dealer and the sale was subsequently rescinded and all the fees that
were paid, as required by this code and Chapter 2 (commencing with
Section 10751) of Division 2 of the Revenue and Taxation Code, were
returned to the first purchaser of the vehicle.
(h) Employ any person as a salesperson who has not been licensed
pursuant to Article 2 (commencing with Section 11800), and whose
license is not displayed on the premises of the dealer as required by
Section 11812, or willfully fail to notify the department by mail
within 10 days of the employment or termination of employment of a
salesperson.
(i) Deliver, following the sale, a vehicle for operation on
California highways, if the vehicle does not meet all of the
equipment requirements of Division 12 (commencing with Section
24000). This subdivision does not apply to the sale of a leased
vehicle to the lessee if the lessee is in possession of the vehicle
immediately prior to the time of the sale and the vehicle is
registered in this state.
(j) Use, or permit the use of, the special plates assigned to him
or her for any purpose other than as permitted by Section 11715.
(k) Advertise or otherwise represent, or knowingly allow to be
advertised or represented on behalf of, or at the place of business
of, the licenseholder that no downpayment is required in connection
with the sale of a vehicle when a downpayment is in fact required and
the buyer is advised or induced to finance the downpayment by a loan
in addition to any other loan financing the remainder of the
purchase price of the vehicle. The terms "no downpayment," "zero
down delivers," or similar terms shall not be advertised unless the
vehicle will be sold to any qualified purchaser without a prior
payment of any kind or trade-in.
(l) Participate in the sale of a vehicle required to be reported
to the Department of Motor Vehicles under Section 5900 or 5901
without making the return and payment of the full sales tax due and
required by Section 6451 of the Revenue and Taxation Code.
(m) Permit the use of the dealer's license, supplies, or books by
any other person for the purpose of permitting that person to engage
in the purchase or sale of vehicles required to be registered under
this code, or permit the use of the dealer's license, supplies, or
books to operate a branch location to be used by any other person,
whether or not the licensee has any financial or equitable interest
or investment in the vehicles purchased or sold by, or the business
of, or branch location used by, the other person.
(n) Violate any provision of Article 10 (commencing with Section
28050) of Chapter 5 of Division 12.
(o) Sell a previously unregistered vehicle without disclosing in
writing to the purchaser the date on which any manufacturer's or
distributor's warranty commenced.
(p) Accept a purchase deposit relative to the sale of a vehicle,
unless the vehicle is present at the premises of the dealer or
available to the dealer directly from the manufacturer or distributor
of the vehicle at the time the dealer accepts the deposit. Purchase
deposits accepted by an autobroker when brokering a retail sale
shall be governed by Sections 11736 and 11737.
(q) Consign for sale to another dealer a new vehicle.
(r) Display a vehicle for sale at a location other than an
established place of business authorized by the department for that
dealer or display a new motor vehicle at the business premises of
another dealer registered as an autobroker. This subdivision does
not apply to the display of a vehicle pursuant to subdivision (b) of
Section 11709 or the demonstration of the qualities of a motor
vehicle by way of a test drive.
(s) Use a picture in connection with any advertisement of the
price of a specific vehicle or class of vehicles, unless the picture
is of the year, make and model being offered for sale. The picture
shall not depict a vehicle with optional equipment or a design not
actually offered at the advertised price.
(t) Advertise a vehicle for sale that was used by the selling
licensee in its business as a demonstrator, executive vehicle,
service vehicle, rental, loaner, or lease vehicle, unless the
advertisement clearly and conspicuously discloses the previous use
made by that licensee of the vehicle. An advertisement shall not
describe any of those vehicles as "new."
11713.1. It is a violation of this code for the holder of any
dealer's license issued under this article to do any of the
following:
(a) Advertise any specific vehicle for sale without identifying
the vehicle by its model, model-year, and either its license number
or that portion of the vehicle identification number that
distinguishes the vehicle from all other vehicles of the same make,
model, and model-year. Model-year is not required to be advertised
for current model-year vehicles. Year models are no longer current
when ensuing year models are available for purchase at retail in
California. Any advertisement that offers for sale a class of new
vehicles in a dealer's inventory, consisting of five or more
vehicles, that are all of the same make, model, and model-year is not
required to include in the advertisement the vehicle identification
numbers or license numbers of those vehicles.
(b) Advertise the total price of a vehicle without including all
costs to the purchaser at time of sale, except taxes, vehicle
registration fees, the California tire fee, as defined in Section
42885 of the Public Resources Code, emission testing fees not
exceeding fifty dollars ($50), actual fees charged for certificates
pursuant to Section 44060 of the Health and Safety Code, finance
charges, and any dealer document preparation charge. The dealer
document preparation charge shall not exceed forty-five dollars
($45).
(c) (1) Exclude from an advertisement of a vehicle for sale that
there will be added to the advertised total price at the time of
sale, charges for sales tax, vehicle registration fees, the
California tire fee, the fee charged by the state for the issuance of
any certificate of compliance or noncompliance pursuant to any
statute, finance charges, and any dealer document preparation charge.
(2) The obligations imposed by paragraph (1) shall be satisfied by
adding to the advertisement a statement containing no abbreviations
and that is worded in substantially the following form: "Plus
government fees and taxes, any finance charges, any dealer document
preparation charge, and any emission testing charge."
(3) For purposes of paragraph (1), "advertisement" means any
advertisement in a newspaper, magazine, or direct mail publication
that is two or more columns in width or one column in width and more
than seven inches in length, or on any Web page of a dealer's Web
site that displays the price of a vehicle offered for sale on the
Internet, as that term is defined in paragraph (6) of subdivision (e)
of Section 17538 of the Business and Professions Code.
(d) Represent the dealer document preparation charge or
certificate of compliance or noncompliance fee, as a governmental
fee.
(e) Fail to sell a vehicle to any person at the advertised total
price, exclusive of taxes, vehicle registration fees, the California
tire fee, the fee charged by the state for the issuance of any
certificate of compliance or noncompliance pursuant to any statute,
finance charges, mobilehome escrow fees, the amount of any city,
county, or city and county imposed fee or tax for a mobilehome, and
any dealer document preparation charge, which charges shall not
exceed forty-five dollars ($45) for the document preparation charge
and not to exceed fifty dollars ($50) for emission testing plus the
actual fees charged for certificates pursuant to Section 44060 of the
Health and Safety Code, while the vehicle remains unsold, unless the
advertisement states the advertised total price is good only for a
specified time and the time has elapsed. Advertised vehicles shall
be sold at or below the advertised total price, with statutorily
permitted exclusions, regardless of whether the purchaser has
knowledge of the advertised total price.
(f) (1) Advertise for sale, sell, or purchase for resale any new
vehicle of a line-make for which the dealer does not hold a
franchise.
(2) This subdivision does not apply to any transaction involving
any of the following:
(A) A mobilehome.
(B) A recreational vehicle as defined in Section 18010 of the
Health and Safety Code.
(C) A commercial coach, as defined in Section 18001.8 of the
Health and Safety Code.
(D) An off-highway motor vehicle subject to identification as
defined in Section 38012.
(E) A manufactured home.
(F) A new vehicle that will be substantially altered or modified
by a converter prior to resale.
(G) A commercial vehicle with a gross vehicle weight rating of
more than 10,000 pounds.
(H) A vehicle purchased for export and exported outside the
territorial limits of the United States without being registered with
the department.
(g) Sell a park trailer, as specified in Section 18009.3 of the
Health and Safety Code, without disclosing in writing to the
purchaser that a park trailer is required to be moved by a
transporter or a licensed manufacturer or dealer under a permit
issued by the Department of Transportation or a local authority with
respect to highways under their respective jurisdictions.
(h) Advertise free merchandise, gifts, or services provided by a
dealer contingent on the purchase of a vehicle. The term "free"
includes merchandise or services offered for sale at a price less
than the seller's cost of the merchandise or services.
(i) Advertise vehicles, and related goods or services, at a
specified dealer price, with the intent not to supply reasonably
expectable demand, unless the advertisement discloses the number of
vehicles in stock at the advertised price. In addition, whether or
not there are sufficient vehicles in stock to supply a reasonably
expectable demand, when phrases such as "starting at," "from,"
"beginning as low as," or words of similar import are used in
reference to an advertised price, the advertisement shall disclose
the number of vehicles available at that advertised price.
For purposes of this subdivision, in any newspaper advertisement
for a vehicle that is two model-years old or newer, the actual phrase
that states the number of vehicles in stock at the advertised price
shall be (1) printed in a type size that is at least equal to
one-quarter of the type size, and in the same style and color of
type, used for the advertised price, however, in no case shall the
phrase be printed in less than 8-point type size, and (2) be
disclosed immediately above, below, or beside the advertised price
without any intervening words, pictures, marks, or symbols.
The disclosure required by this subdivision is in addition to any
other disclosure required by this code or any regulation regarding
identifying vehicles advertised for sale.
(j) Use the term "rebate" or similar words such as "cash back" in
advertising the sale of a vehicle unless the rebate is expressed in a
specific dollar amount and is in fact a rebate offered by the
vehicle manufacturer or distributor directly to the retail purchaser
of the vehicle or to the assignee of the retail purchaser.
(k) Require a person to pay a higher price for a vehicle and
related goods or services for receiving advertised credit terms than
the cash price the same person would have to pay to purchase the same
vehicle and related goods or services. For the purpose of this
subdivision, "cash price" has the meaning as defined in subdivision
(e) of Section 2981 of the Civil Code.
(l) Advertise a guaranteed trade-in allowance.
(m) Misrepresent the authority of a salesperson, representative,
or agent to negotiate the final terms of a transaction.
(n) (1) Use the terms "invoice," "dealer's invoice," "wholesale
price," or similar terms that refer to a dealer's cost for a vehicle
in an advertisement for the sale of a vehicle or advertise that the
selling price of a vehicle is above, below, or at either of the
following:
(A) The manufacturer's or distributor's invoice price to a dealer.
(B) A dealer's cost.
(2) This subdivision does not apply to either of the following:
(A) Any communication occurring during face-to-face negotiations
for the purchase of a specific vehicle if the prospective purchaser
initiates a discussion of the vehicle's invoice price or the dealer's
cost for that vehicle.
(B) Any communication between a dealer and a prospective
commercial purchaser that is not disseminated to the general public.
For purposes of this subparagraph, a "commercial purchaser" means a
dealer, lessor, lessor-retailer, manufacturer, remanufacturer,
distributor, financial institution, governmental entity, or person
who purchases 10 or more vehicles during a year.
(o) Violate any law prohibiting bait and switch advertising,
including, but not limited to, the guides against bait advertising
set forth in Part 238 (commencing with Section 238) of Title 16 of
the Code of Federal Regulations, as those regulations read on January
1, 1988.
(p) Make any untrue or misleading statement indicating that a
vehicle is equipped with all the factory installed optional equipment
the manufacturer offers, including, but not limited to, a false
statement that a vehicle is "fully factory equipped."
(q) Affix on any new vehicle a supplemental price sticker
containing a price that represents the dealer's asking price which
exceeds the manufacturer's suggested retail price unless all of the
following occur:
(1) The supplemental sticker clearly and conspicuously discloses
in the largest print appearing on the sticker, other than the print
size used for the dealer's name, that the supplemental sticker price
is the dealer's asking price, or words of similar import, and that it
is not the manufacturer's suggested retail price.
(2) The supplemental sticker clearly and conspicuously discloses
the manufacturer's suggested retail price.
(3) The supplemental sticker lists each item which is not included
in the manufacturer's suggested retail price, and discloses the
additional price of each item. If the supplemental sticker price is
greater than the sum of the manufacturer's suggested retail price and
the price of the items added by the dealer, then the supplemental
sticker price shall set forth that difference and describe it as
"added mark-up."
(r) Advertise any underselling claim, such as "we have the lowest
prices" or "we will beat any dealer's price," unless the dealer has
conducted a recent survey showing that the dealer sells its vehicles
at lower prices than any other licensee in its trade area and
maintains records to adequately substantiate the claims. The
substantiating records shall be made available to the department upon
request.
(s) Advertise any incentive offered by the manufacturer or
distributor if the dealer is required to contribute to the cost of
the incentive as a condition of participating in the incentive
program, unless the dealer discloses in a clear and conspicuous
manner that dealer participation may affect consumer cost.
For purposes of this subdivision, "incentive" means anything of
value offered to induce people to purchase a vehicle, including, but
not limited to, discounts, savings claims, rebates, below-market
finance rates, and free merchandise or services.
(t) Display or offer for sale any used vehicle unless there is
affixed to the vehicle the Federal Trade Commission's Buyer's Guide
as required by Part 455 of Title 16 of the Code of Federal
Regulations.
(u) Fail to disclose in writing to the franchisor of a new motor
vehicle dealer the name of the purchaser, date of sale, and the
vehicle identification number of each new motor vehicle sold of the
line-make of that franchisor, or intentionally submit to that
franchisor a false name for the purchaser or false date for the date
of sale.
(v) Enter into a contract for the retail sale of a motor vehicle
unless the contract clearly and conspicuously discloses whether the
vehicle is being sold as a new vehicle or a used vehicle, as defined
in this code.
(w) Use a simulated check, as defined in subdivision (a) of
Section 22433 of the Business and Professions Code, in an
advertisement for the sale or lease of a vehicle.
(x) Fail to disclose, in a clear and conspicuous manner in at
least 10-point bold type on the face of any contract for the retail
sale of a new motor vehicle that this transaction is, or is not,
subject to a fee received by an autobroker from the selling new motor
vehicle dealer, and the name of the autobroker, if applicable.
(y) As used in this section, the terms "make" and "model" have the
same meaning as is provided in Section 565.3 of Title 49 of the Code
of Federal Regulations.
11713.2. It shall be unlawful and a violation of this code for any
manufacturer, manufacturer branch, distributor, or distributor branch
licensed under this code to coerce or attempt to coerce any dealer
in this state:
(a) To order or accept delivery of any motor vehicle, part or
accessory thereof, appliance, equipment or any other commodity not
required by law which shall not have been voluntarily ordered by the
dealer.
(b) To order or accept delivery of any motor vehicle with special
features, appliances, accessories or equipment not included in the
list price of such motor vehicles as publicly advertised by the
manufacturer or distributor.
(c) To order for any person any parts, accessories, equipment,
machinery, tools, appliances, or any commodity whatsoever.
(d) To participate in an advertising campaign or contest, any
promotional campaign, promotional materials, training materials,
showroom or other display decorations or materials at the expense of
the dealer.
(e) To enter into any agreement with the manufacturer,
manufacturer branch, distributor, or distributor branch, or to do any
other act prejudicial to the dealer by threatening to cancel a
franchise or any contractual agreement existing between the dealer
and manufacturer, manufacturer branch, distributor, or distributor
branch. Notice in good faith to any dealer of the dealer's violation
of any terms or provisions of such franchise or contractual
agreement shall not constitute a violation of this article.
11713.3. It is unlawful and a violation of this code for any
manufacturer, manufacturer branch, distributor, or distributor branch
licensed under this code to do any of the following:
(a) To refuse or fail to deliver in reasonable quantities and
within a reasonable time after receipt of an order from a dealer
having a franchise for the retail sale of any new vehicle sold or
distributed by the manufacturer or distributor, any new vehicle or
parts or accessories to new vehicles as are covered by the franchise,
if the vehicle, parts, or accessories are publicly advertised as
being available for delivery or actually being delivered. This
subdivision is not violated, however, if the failure is caused by
acts or causes beyond the control of the manufacturer, manufacturer
branch, distributor, or distributor branch.
(b) To prevent or require, or attempt to prevent or require, by
contract or otherwise, any change in the capital structure of a
dealership or the means by or through which the dealer finances the
operation of the dealership, provided that the dealer at all times
meets any reasonable capital standards agreed to by the dealer and
the manufacturer or distributor, and also provided that no change in
capital structure shall cause a change in the principal management or
have the effect of a sale of the franchise without the consent of
the manufacturer or distributor.
(c) To prevent or require, or attempt to prevent or require, a
dealer to change the executive management of a dealership, other than
the principal dealership operator or operators if the franchise was
granted the dealer in reliance upon the personal qualifications of
such person or persons.
(d) (1) Except as provided in subdivision (t), to prevent or
require, or attempt to prevent or require, by contract or otherwise,
any dealer, or any officer, partner, or stockholder of any
dealership, the sale or transfer of any part of the interest of any
of them to any other person or persons. No dealer, officer, partner,
or stockholder shall, however, have the right to sell, transfer, or
assign the franchise, or any right thereunder, without the consent of
the manufacturer or distributor except that the consent shall not be
unreasonably withheld.
(2) (A) For the transferring franchisee to fail, prior to the
sale, transfer, or assignment of a franchisee or the sale,
assignment, or transfer of all or substantially all of the assets of
the franchised business or a controlling interest in the franchised
business to another person, to notify the manufacturer or distributor
of the franchisee's decision to sell, transfer, or assign the
franchise. The notice shall be in writing and shall include all of
the following:
(i) The proposed transferee's name and address.
(ii) A copy of all of the agreements relating to the sale,
assignment, or transfer of the franchised business or its assets.
(iii) The proposed transferee's application for approval to become
the successor franchisee. The application shall include forms and
related information generally utilized by the manufacturer or
distributor in reviewing prospective franchisees, if those forms are
readily made available to existing franchisees. As soon as
practicable after receipt of the proposed transferee's application,
the manufacturer or distributor shall notify the franchisee and the
proposed transferee of any information needed to make the application
complete.
(B) For the manufacturer or distributor, to fail on or before 60
days after the receipt of all of the information required pursuant to
subparagraph (A), or as extended by a written agreement between the
manufacturer or distributor and the franchisee, to notify the
franchisee of the approval or the disapproval of the sale, transfer,
or assignment of the franchise. The notice shall be in writing and
shall be personally served or sent by certified mail, return receipt
requested, or by guaranteed overnight delivery service that provides
verification of delivery and shall be directed to the franchisee.
Any proposed sale, assignment, or transfer shall be deemed approved,
unless disapproved by the franchisor in the manner provided by this
subdivision. If the proposed sale, assignment, or transfer is
disapproved, the franchisor shall include in the notice of
disapproval a statement setting forth the reasons for the
disapproval.
(3) In any action in which the manufacturer's or distributor's
withholding of consent under this subdivision or subdivision (e) is
an issue, whether the withholding of consent was unreasonable is a
question of fact requiring consideration of all the existing
circumstances.
(e) To prevent, or attempt to prevent, a dealer from receiving
fair and reasonable compensation for the value of the franchised
business. There shall be no transfer or assignment of the dealer's
franchise without the consent of the manufacturer or distributor,
which consent shall not be unreasonably withheld or conditioned upon
the release, assignment, novation, waiver, estoppel, or modification
of any claim or defense by the dealer.
(f) To obtain money, goods, service, or any other benefit from any
other person with whom the dealer does business, on account of, or
in relation to, the transaction between the dealer and that other
person, other than for compensation for services rendered, unless the
benefit is promptly accounted for, and transmitted to, the dealer.
(g) To require a dealer to prospectively assent to a release,
assignment, novation, waiver, or estoppel which would relieve any
person from liability to be imposed by this article or to require any
controversy between a dealer and a manufacturer, distributor, or
representative, to be referred to any person other than the board, if
the referral would be binding on the dealer. This subdivision does
not, however, prohibit arbitration before an independent arbitrator.
(h) To increase prices of motor vehicles which the dealer had
ordered for private retail consumers prior to the dealer's receipt of
the written official price increase notification. A sales contract
signed by a private retail consumer is evidence of each such order.
In the event of manufacturer price reductions, the amount of the
reduction received by a dealer shall be passed on to the private
retail consumer by the dealer if the retail price was negotiated on
the basis of the previous higher price to the dealer. Price
reductions apply to all vehicles in the dealer's inventory which were
subject to the price reduction. Price differences applicable to new
model or series motor vehicles at the time of the introduction of
new models or series shall not be considered a price increase or
price decrease. Price changes caused by either (1) the addition to a
motor vehicle of required or optional equipment pursuant to state or
federal law, or (2) revaluation of the United States dollar in the
case of foreign-make vehicles, are not subject to this subdivision.
(i) To fail to pay to a dealer, within a reasonable time following
receipt of a valid claim by a dealer thereof, any payment agreed to
be made by the manufacturer or distributor to the dealer by reason of
the fact that a new vehicle of a prior year model is in the dealer's
inventory at the time of introduction of new model vehicles.
(j) To deny the widow or heirs designated by a deceased owner of a
dealership, the opportunity to participate in the ownership of the
dealership or successor dealership under a valid franchise for a
reasonable time after the death of the owner.
(k) To offer any refunds or other types of inducements to any
person for the purchase of new motor vehicles of a certain line-make
to be sold to the state or any political subdivision thereof without
making the same offer to all other dealers in the same line-make
within the relevant market area.
(l) To modify, replace, enter into, relocate, terminate or refuse
to renew a franchise in violation of Article 4 (commencing with
Section 3060) of Chapter 6 of Division 2.
(m) To employ a person as a representative who has not been
licensed pursuant to Article 3 (commencing with Section 11900) of
Chapter 4 of Division 5.
(n) To deny any dealer the right of free association with any
other dealer for any lawful purpose.
(o) (1) To compete with a dealer in the same line-make operating
under an agreement or franchise from a manufacturer or distributor in
the relevant market area.
(2) A manufacturer, branch, or distributor or any entity that
controls or is controlled by, a manufacturer, branch, or distributor,
shall not, however, be deemed to be competing in the following
limited circumstances:
(A) Owning or operating a dealership for a temporary period, not
to exceed one year. However, after a showing of good cause by a
manufacturer, branch, or distributor that it needs additional time to
operate a dealership in preparation for sale to a successor
independent franchisee, the board may extend the time period. The
board shall extend the time period until December 31, 2002, for any
manufacturer that meets all of the following requirements:
(i) The manufacturer has no more than 25 franchisees in the state
and those franchisees collectively operate dealership facilities in
at least 15 counties of the state.
(ii) All of the dealership facilities operated by the manufacturer'
s franchisees in the state trade exclusively in the manufacturer's
line-make.
(iii) No fewer than one-half of the manufacturer's franchisees in
the state own and operate two or more dealership facilities in their
assigned areas of responsibility.
(iv) The manufacturer holds a temporary ownership interest in no
more than two dealerships in the state that are located in the
relevant market area of any other franchisee of the same line-make
not owned, in whole or part, by the manufacturer.
(B) Owning an interest in a dealer as part of a bona fide dealer
development program that satisfies all of the following requirements:
(i) The sole purpose of the program is to make franchises
available to persons lacking capital, training, business experience,
or other qualities ordinarily required of prospective franchisees and
the dealer development candidate is an individual who is unable to
acquire the franchise without assistance of the program.
(ii) The dealer development candidate has made a significant
investment subject to loss in the franchised business of the dealer.
(iii) The program requires the dealer development candidate to
manage the day-to-day operations and business affairs of the dealer
and to acquire, within a reasonable time and on reasonable terms and
conditions, beneficial ownership and control of a majority interest
in the dealer and disassociation of any direct or indirect ownership
or control by the manufacturer, branch, or distributor.
(C) Owning a wholly owned subsidiary corporation of a distributor
that sells motor vehicles at retail, if, for at least three years
prior to January 1, 1973, the subsidiary corporation has been a
wholly owned subsidiary of the distributor and engaged in the sale of
vehicles at retail.
(3) (A) Every manufacturer, branch, and distributor that owns or
operates a dealership in the manner described in subparagraph (A) of
paragraph (2) shall give written notice to the board, within 10 days,
each time it commences or terminates operation of a dealership and
each time it acquires or divests itself of an ownership interest.
(B) Every manufacturer, branch, and distributor that owns an
interest in a dealer in the manner described in subparagraph (B) of
paragraph (2) shall give written notice to the board, annually, of
the name and location of each dealer in which it has an ownership
interest.
(p) To unfairly discriminate among its franchisees with respect to
warranty reimbursement or authority granted its franchisees to make
warranty adjustments with retail customers.
(q) To sell vehicles to persons not licensed under this chapter
for resale.
(r) To fail to affix an identification number to any park trailer,
as described in Section 18009.3 of the Health and Safety Code, that
is manufactured on or after January 1, 1987, and which does not
clearly identify the unit as a park trailer to the department. The
configuration of the identification number shall be approved by the
department.
(s) To dishonor a warranty, rebate, or other incentive offered to
the public or a dealer in connection with the retail sale of a new
motor vehicle, based solely upon the fact that an autobroker arranged
or negotiated the sale. This subdivision shall not prohibit the
disallowance of that rebate or incentive if the purchaser or dealer
is ineligible to receive the rebate or incentive pursuant to any
other term or condition of a rebate or incentive program.
(t) To exercise a right of first refusal or any other right
requiring a franchisee or any owner thereof to sell, transfer, or
assign to the franchisor, or to any nominee of the franchisor, all or
any material part of the franchised business or of the assets
thereof unless all of the following requirements are met:
(1) The franchise authorizes the franchisor to exercise a right of
first refusal to acquire the franchised business or assets thereof
in the event of a proposed sale, transfer or assignment.
(2) The franchisor gives written notice of its exercise of the
right of first refusal no later than 45 days after the franchisor
receives all of the information required pursuant to subparagraph (A)
of paragraph (2) of subdivision (d).
(3) The sale, transfer, or assignment being proposed relates to
not less than all or substantially all of the assets of the
franchised business or to a controlling interest in the franchised
business.
(4) The proposed transferee is neither a family member of an owner
of the franchised business, nor a managerial employee of the
franchisee owning 15 percent or more of the franchised business, nor
a corporation, partnership, or other legal entity owned by the
existing owners of the franchised business. For purposes of this
paragraph, a "family member" means the spouse of an owner of the
franchised business, the child, grandchild, brother, sister, or
parent of an owner, or a spouse of one of those family members.
Nothing contained in this paragraph limits the rights of the
franchisor to disapprove a proposed transferee as provided in
subdivision (d).
(5) Upon the franchisor's exercise of the right of first refusal,
the consideration paid by the franchisor to the franchisee and owners
of the franchised business shall equal or exceed all consideration
that each of them were to have received under the terms of, or in
connection with, the proposed sale, assignment, or transfer, and the
franchisor shall comply with all the terms and conditions of the
agreement or agreements to sell, transfer, or assign the franchised
business.
(6) The franchisor shall reimburse the proposed transferee for any
expenses paid or incurred by the proposed transferee in evaluating,
investigating, and negotiating the proposed transfer to the extent
those expenses do not exceed the usual, customary, and reasonable
fees charged for similar work done in the area in which the
franchised business is located. These expenses include, but are not
limited to, legal and accounting expenses, and expenses incurred for
title reports and environmental or other investigations of any real
property on which the franchisee's operations are conducted. The
proposed transferee shall provide the franchisor a written
itemization of those expenses, and a copy of all nonprivileged
reports and studies for which expenses were incurred, if any, within
30 days of the proposed transferee's receipt of a written request
from the franchisor for that accounting. The franchisor shall make
payment within 30 days of exercising the right of first refusal.
(u) (1) To unfairly discriminate in favor of any dealership owned
or controlled, in whole or part, by a manufacturer or distributor or
an entity that controls or is controlled by the manufacturer or
distributor. Unfair discrimination includes, but is not limited to,
the following:
(A) The furnishing to any franchisee or dealer that is owned or
controlled, in whole or part, by a manufacturer, branch or
distributor of any of the following:
(i) Any vehicle that is not made available to each franchisee
pursuant to a reasonable allocation formula that is applied
uniformly, and any part or accessory that is not made available to
all franchisees on an equal basis when there is no reasonable
allocation formula that is applied uniformly.
(ii) Any vehicle, part, or accessory that is not made available to
each franchisee on comparable delivery terms, including time of
delivery after placement of order. Differences in delivery terms due
to geographic distances or other factors beyond the control of the
manufacturer, branch, or distributor shall not constitute unfair
competition.
(iii) Any information obtained from a franchisee by the
manufacturer, branch, or distributor concerning the business affairs
or operations of any franchisee in which the manufacturer, branch, or
distributor does not have an ownership interest. The information
includes, but is not limited to, information contained in financial
statements and operating reports, the name, address, or other
personal information or buying, leasing, or service behavior of any
dealer customer, and any other information which if provided to a
franchisee or dealer owned or controlled by a manufacturer or
distributor would give that franchisee or dealer a competitive
advantage. This clause does not apply if the information is provided
pursuant to a subpoena or court order, or to aggregated information
made available to all franchisees.
(B) Referring a prospective purchaser or lessee to a dealer in
which a manufacturer, branch, or distributor has an ownership
interest unless the prospective purchaser or lessee resides in the
area of responsibility assigned to that dealer or the prospective
purchaser or lessee requests to be referred to that dealer.
(2) Nothing in this subdivision shall be interpreted to prohibit a
franchisor from granting a franchise to prospective franchisees or
assisting those franchisees during the course of the franchise
relationship as part of a program or programs to make franchises
available to persons lacking capital, training, business experience,
or other qualifications ordinarily required of prospective
franchisees.
(v) As used in this section, "area of responsibility" is a
geographic area specified in a franchise that is used by the
franchisor for the purpose of evaluating the franchisee's performance
of its sales and service obligations.
11713.4. If a purchaser of a vehicle pays to the dealer an amount
for the licensing or transfer of title of the vehicle, which amount
is in excess of the actual fees due for such licensing or transfer,
or which amount is in excess of the amount which has been paid, prior
to the sale, by the dealer to the state in order to avoid penalties
that would have accrued because of late payment of such fees, the
dealer shall return such excess amount to the purchaser, whether or
not such purchaser requests the return of the excess amount.
11713.5. (a) It is unlawful and a violation of this code for the
holder of any license issued under this article to display for sale,
offer for sale, or sell, a motor vehicle, representing the motor
vehicle to be of a year model different from the year model
designated at the time of manufacture or first assembly as a
completed vehicle.
(b) It is unlawful and a violation of this code for the holder of
any license issued under this article to directly or indirectly
authorize or advise another holder of a license issued under this
article to change the year model of a motor vehicle in the inventory
of the other holder.
(c) It is unlawful and a violation of this code for the holder of
any license issued under this article to display for sale, offer for
sale, or sell, a housecar which has been manufactured in two or more
stages, unless the licensee informs the buyer that the housecar has
been so manufactured and the licensee provides the buyer with a form,
approved by the department, which sets forth the date of chassis and
engine manufacture and the date and model year of the other stages
of the vehicle. The licensee shall retain a copy of the form, which
shall be signed by the purchaser prior to entering into any sales
contract, indicating that the purchaser has received a copy of the
form.
(d) This section does not apply to the displaying or offering for
sale, or selling, of any new motortruck or truck tractor weighing
over 10,000 pounds.
(e) This section does not apply to a vehicle which has been
remanufactured by a licensed remanufacturer. The year model of a
remanufactured vehicle will be the year the vehicle was
remanufactured.
11713.6. (a) It is unlawful and a violation of this code for the
holder of any dealer's license issued under this article to fail to
disclose in writing to the buyer or lessee of a new motor vehicle,
that the vehicle, as equipped, may not be operated on a highway
signed for the requirement of tire chains if the owner's manual or
other material provided by the manufacturer states that the vehicle,
as equipped, may not be operated with tire chains.
(b) The disclosure required under subdivision (a) shall meet both
of the following requirements:
(1) The disclosure shall be printed in not less than 14-point
boldface type on a single sheet of paper that contains no information
other than the disclosure.
(2) The disclosure shall include the following language in
capital letters: "AS EQUIPPED, THIS VEHICLE MAY NOT BE OPERATED WITH
TIRE CHAINS BUT MAY ACCOMMODATE SOME OTHER TYPE OF TIRE TRACTION
DEVICE. SEE THE OWNER'S MANUAL FOR DETAILS."
(c) Prior to the sale or lease, the dealer shall present the
disclosure statement for the buyer's or lessee's signature and then
shall provide the buyer or lessee with a copy of the signed
disclosure.
11713.7. Disclosure to a buyer that a vehicle has been
remanufactured is required. Disclosure shall be accomplished by all
of the following:
(a) Oral notification to the buyer.
(b) The statement "THIS VEHICLE HAS BEEN REMANUFACTURED AND
CONTAINS USED OR RECONDITIONED PARTS" shall appear in a type size at
least the same as the bulk of the text on the purchase order or
conditional sales contract signed by the buyer.
(c) The statement that the vehicle is remanufactured and contains
used or reconditioned parts shall appear in any advertisement
pertaining to remanufactured vehicles.
(d) Remanufactured vehicles displayed for retail purposes shall be
clearly designated as remanufactured. The disclosure statement
required in subdivision (b) shall appear on the vehicle or at the
location where the vehicles are displayed.
11713.8. It is unlawful and a violation of this code for a
remanufacturer licensed under this code to fail to do any of the
following:
(a) Report to the department an existing vehicle identification
number when a used frame is utilized.
(b) Die stamp the vehicle identification number to the frame of
the vehicle when a new vehicle identification number is assigned.
(c) Disclose that a vehicle is remanufactured and contains used or
reconditioned parts as required by Section 11713.7.
(d) Remove the trade name of the original manufacturer from the
vehicle, unless the remanufacturer and the original manufacturer are
same.
(e) Maintain for three years bills of sale or invoices for used
parts utilized in a remanufactured vehicle.
(f) Maintain for three years proof that the vehicle was reported
dismantled, as required by Section 5500 or 11520, when a used frame
is utilized in a remanufactured vehicle.
(g) Disclose, on the vehicle identification number plate or label,
that the vehicle is remanufactured and includes used parts.
(h) Disclose to the dealer on a document signed by the dealer that
the vehicle is remanufactured and contains used parts.
11713.9. (a) It is unlawful and a violation of this code for the
holder of a dealer's license to knowingly display for sale or offer
for sale any new motor vehicle specified in subdivision (b) with an
engine manufactured by a manufacturer that is not the same as the
vehicle manufacturer, as defined in Section 9980, unless the vehicle
is prominently labeled as specified in Section 9981.
(b) This section applies only to new passenger vehicles and to new
motortrucks with an unladen weight under 6,000 pounds, except
housecars.
11713.10. It is unlawful and a violation of this code to sell a
low-speed vehicle, as defined in Section 385.5, without disclosing to
the buyer the vehicle's maximum speed and the potential risks of
driving a low-speed vehicle.
11713.11. No holder of a dealer's license shall do any of the
following when conducting an auction of vehicles to the public:
(a) Advertise that a vehicle will be auctioned to the public
unless all of the following information is clearly and conspicuously
disclosed in the advertisement:
(1) The date or the day of the week of the public auction, or if
subdivision (b) applies to the auction, the date of the public
auction.
(2) The location of the public auction.
(3) Whether a fee will be charged to attend the auction and the
amount of that fee.
(4) The name and dealer number of the auctioning dealer.
(5) Whether a buyer's fee will be charged to a purchaser, in
addition to the accepted auction bid price, and, if the fee is a set
amount, the dollar amount of that fee. If the buyer's fee is not a
set amount, the advertisement shall state the formula or percentage
used to calculate the fee.
(b) If vehicles seized by a federal, state, or local public agency
or authority are being advertised, advertise that a vehicle will be
auctioned to the public unless, in addition to the information
required by subdivision (a), the following information is clearly and
conspicuously disclosed in the advertisement:
(1) A good faith estimate of the number of vehicles to be
auctioned at that date.
(2) A good faith estimate of the number of vehicles seized by a
federal, state, or local public agency or authority to be auctioned
at that date.
(c) Fail, on the day of auction, to identify each vehicle seized
by a federal, state, or local public agency or authority, either in a
printed catalog or orally, before bidding begins on the vehicle.
(d) Include in the total price of an auctioned vehicle any costs
to the purchaser at the completion of the sale, except the accepted
auction bid price, taxes, vehicle registration fees, any charge for
emission testing, not to exceed fifty dollars ($50), plus the actual
fees charged to a consumer for a certificate pursuant to Section
44060 of the Health and Safety Code, any dealer document preparation
charge not exceeding forty-five dollars ($45), and any buyer's fee.
(e) Charge a buyer's fee, unless the dealer conducting the auction
delivers to any person permitted to submit bids, and at a time prior
to accepting any bids from that person, a disclosure statement
required by this subdivision and signed by that person. The
disclosure statement, if the buyer's fee is a set amount, shall
disclose the amount of the fee, or if the buyer's fee is not a set
amount, disclose the formula or percentage used to calculate the fee.
The disclosure statement shall be on a separate 81/2 x 11 inch
sheet of paper. Except for the information set forth in this
subdivision, the disclosure statement shall not contain any other
text, except as necessary to identify the dealer conducting the
auction sale and to disclose the amount, percentage, or formula used
to calculate the buyer's fee, and to provide for the date and the
person's acknowledgment of receipt. The heading shall be printed in
no smaller than 24-point bold type and the text of the statement
shall be printed in no smaller than 12-point type and shall read
substantially as follows:
BUYER'S FEE REQUIRED
A buyer's fee is an amount charged by the auctioning
dealer for conducting the auction sale. If your bid price
is accepted as the winning bid on any vehicle, you will be
charged a buyer's fee in addition to the accepted bid price.
The buyer's fee that will be added to your accepted bid
price is $ ___________________________.
OR
The buyer's fee that will be added to your accepted bid
price will be calculated as follows (insert percentage or
other formula for calculating the buyer's fee):
The buyer's fee is part of the purchase price and is
subject to sales tax.
Date: ____________ Signature of Bidder _____________________
(f) Fail to comply with or violate this chapter, Title 2.95
(commencing with Section 1812.600) of Part 4 of Division 3 of the
Civil Code, Section 2328 of the Commercial Code, or Section 535 of
the Penal Code, or any law administered by the State Board of
Equalization, relating to the auctioneering business, including, but
not limited to, sales and the transfer of title of goods.
(g) For purposes of this section, a "buyer's fee" is any amount
that is in addition to the accepted auction bid price, taxes, vehicle
registration fees, certificate of compliance or noncompliance fee,
or any dealer document preparation charge, which is charged to a
purchaser by an auctioning dealer.
11713.12. (a) The decal required by subdivision (c) of Section
1793.23 of the Civil Code to be affixed by a manufacturer to a motor
vehicle, shall be affixed to the left front doorframe of the vehicle,
or, if the vehicle does not have a left front doorframe, it shall be
affixed in a location designated by the department. The decal shall
specify that title to the motor vehicle has been inscribed with the
notation "Lemon Law Buyback" and shall be affixed to the vehicle in a
manner prescribed by the department.
(b) No person shall knowingly remove or alter any decal affixed to
a vehicle pursuant to subdivision (a), whether or not licensed under
this code.
11713.14. (a) Notwithstanding any other provision of law, a person
who purchases a vehicle that is sold through a dealer at an auction
of vehicles open to the general public shall have the same rights and
remedies against the dealer who conducts the auction sale as if that
dealer were the owner and seller of the auctioned vehicle. The
purchaser's rights and remedies are in addition to any right or
remedy he or she may have against an owner of a vehicle sold at a
public auto auction.
(b) If any claim or action is filed against a dealer pursuant to
subdivision (a) and the vehicle that is the subject of the claim or
action was owned by a person other than the dealer at the time of
sale by auction, the owner of the vehicle that consigned it to the
dealer shall indemnify the dealer for any liability resulting from
misrepresentations or other misconduct by the consignor.
(c) A purchaser's rights and remedies under this section may not
be waived or modified by an agreement or by a recharacterization of
the sales transaction.
11713.15. (a) (1) Prior to being issued a temporary branch license
for selling new recreational vehicles, as defined in Section 18010 of
the Health and Safety Code, at a show, a dealer shall submit to the
department a manufacturer's written authorization for the sale
specifying the dates of the show, the location of the show, and the
makes of those new recreational vehicles being offered for sale.
(2) If nine or fewer dealers are participating in the show, a
temporary branch license may only be issued to a dealer under this
subdivision if the location of the show is 50 miles or less from that
dealer's established place of business or permanent branch location.
Each dealer described in this paragraph shall certify in his or
her application for a temporary branch license that the show location
is 50 miles or less from his or her established place of business or
permanent branch location.
(3) A temporary branch license may be issued to a dealer for
purposes of participating in a show if all of the following
conditions exist:
(A) The location of the show is 50 miles or more from the dealer's
place of business or that dealer's branch locations, or both.
(B) Ten or more dealers apply for temporary branch licenses for
purposes of participating in that show.
(C) Not less than 10 days prior to the conduct of the show, the
department receives at least 10 applications for temporary branch
licenses together at one of the department's field offices.
(b) (1) Any advertising and promotional materials designed to
attract the public to attend a show of recreational vehicles where
there are nine or fewer dealers participating shall include the
business name of each participating dealer and that dealer's
established place of business in a type size that is equivalent to
the second largest type used in the advertisement or promotional
materials. This information shall be placed at the top of any
advertisement or promotional materials.
(2) If the recreational vehicles being offered for sale are used,
the word "used" shall immediately precede the identification of the
make of the vehicle or be immediately adjacent to the depiction of
any used vehicles.
(3) In addition, the promoters of the show shall cause a sign to
be conspicuously displayed at the major, public entrance leading
directly to the show, printed in 50-point type, containing the
information required in paragraph (1).
(c) A recreational vehicle dealer participating in a show for
which a temporary branch license is required shall provide each
buyer, prior to the sale of any vehicle at the show, a written
statement disclosing the identity and the established business
location of the dealer that has agreed to render service or warranty
work with respect to the vehicle being purchased by the buyer, and if
there is no agreement with any dealer to render the service or
warranty, to state that fact.
(d) Paragraphs (2) and (3) of subdivision (a) and subdivision (b)
do not apply to a dealer participating in an annual show sponsored by
a national trade association of recreational vehicle manufacturers,
the show is located in a county with a population of 6,000,000 or
more persons, and at least 25 manufacturers are participating in the
show, and, if the dealer is otherwise eligible to participate in the
show, the department shall issue a temporary branch license if all
the following occur:
(1) A national trade association of recreational vehicle
manufacturers submits a letter to the department that certifies its
status as a national trade association of recreational vehicle
manufacturers and specifies the dates and location of the show.
(2) Upon receipt of the letter from a national trade association
described in paragraph (1) notifying the department of the dates and
location of the show, the department provides written acknowledgement
to the national trade association submitting the letter.
(3) Each dealer participating in the show attaches a copy of the
department letter described in paragraph (2) to the application for a
temporary branch license submitted to the department.
11713.16. It is a violation of this code for the holder of any
dealer's license issued under this article to do any of the
following:
(a) Advertise any used vehicle of the current or prior model-year
without expressly disclosing the vehicle as "used," "previously
owned," or a similar term that indicates that the vehicle is used, as
defined in this code.
(b) Use the terms "on approved credit" or "on credit approval" in
an advertisement for the sale of a vehicle unless those terms are
clearly and conspicuously disclosed and unabbreviated.
(c) Advertise an amount described by terms such as "unpaid balance"
or "balance can be financed" unless the total sale price is clearly
and conspicuously disclosed and in close proximity to the advertised
balance.
(d) Advertise credit terms that fail to comply with the disclosure
requirements of Section 226.24 of Title 12 of the Code of Federal
Regulations. Advertisements of terms that include escalated
payments, balloon payments, or deferred downpayments shall clearly
and conspicuously identify those payments as to amounts and time due.
(e) Advertise as the total sales price of a vehicle an amount that
includes a deduction for a rebate. However, a dealer may advertise
a separate amount that includes a deduction for a rebate provided
that the advertisement clearly and conspicuously discloses, in close
proximity to the amount advertised, the price of the vehicle before
the rebate deduction and the amount of the rebate, each so
identified.
(f) Advertise claims such as "everyone financed," "no credit
rejected," or similar claims unless the dealer is willing to extend
credit to any person under any and all circumstances.
(g) Advertise the amount of any downpayment unless it represents
the total payment required of a purchaser prior to delivery of the
vehicle, including any payment for sales tax or license. Statements
such as "$_____ delivers," "$____ puts you in a new car" are examples
of advertised downpayments.
(h) Advertise the price of a new vehicle or class of new vehicles
unless the vehicle or vehicles have all of the equipment listed as
standard by the manufacturer or distributor or the dealer has
replaced the standard equipment with equipment of higher value.
(i) Fail to clearly and conspicuously disclose in an advertisement
for the sale of a vehicle any disclosure required by this code or
any qualifying term used in conjunction with advertised credit terms.
Unless otherwise provided by statute, the specific size of
disclosures or qualifying terms is not prescribed.
11714. (a) The department, upon granting a license, shall issue to
the applicant a license containing the applicant's name and address
and the general distinguishing number assigned to the applicant.
(b) A dealer shall not sell any vehicle at retail at a location
that is not posted pursuant to Section 11709.
(c) A dealer who is authorized by the department to sell motor
vehicles only at wholesale shall not sell any vehicle at retail and
shall report every sale to the department on the wholesale report of
sale form prescribed by the department.
(d) When the department has issued a license pursuant to
subdivision (a), the licensee may apply for and the department shall
issue special plates which shall have displayed thereon the general
distinguishing number assigned to the applicant. Each plate so
issued shall also contain a number or symbol identifying the plate
from every other plate bearing a like general distinguishing number.
(e) The department shall also furnish books and forms as it may
determine necessary. Such books and forms are and shall remain the
property of the department and may be taken up at any time for
inspection.
11715. (a) A manufacturer, remanufacturer, distributor, or dealer
owning or lawfully possessing any vehicle of a type otherwise
required to be registered under this code may operate or move the
vehicle upon the highways without registering the vehicle upon
condition that the vehicle displays special plates issued to the
owner as provided in this chapter, in addition to other license
plates or permits already assigned and attached to the vehicle in the
manner prescribed in Sections 5200 to 5203, inclusive. A vehicle
for sale or lease by a dealer may also be operated or moved upon the
highways without registration for a period not to exceed seven days
by a prospective buyer or lessee who is test-driving the vehicle for
possible purchase or lease, if the vehicle is in compliance with this
condition. The vehicle may also be moved or operated for the
purpose of towing or transporting by any lawful method other
vehicles.
(b) A transporter may operate or move any owned or lawfully
possessed vehicle of like type by any lawful method upon the highways
solely for the purpose of delivery, upon condition that there be
displayed upon each vehicle in contact with the highway special
license plates issued to the transporter as provided in this chapter,
in addition to any license plates or permits already assigned and
attached to the vehicle in the manner prescribed in Sections 5200 to
5203, inclusive. The vehicles may be used for the purpose of towing
or transporting by any lawful method other vehicles when the towing
or transporting vehicle is being delivered for sale or to the owner
thereof.
(c) This section does not apply to any manufacturer,
remanufacturer, transporter, distributor, or dealer operating or
moving a vehicle as provided in Section 11716.
(d) This section does not apply to work or service vehicles owned
by a manufacturer, remanufacturer, transporter, distributor, or
dealer. This section does not apply to vehicles owned and leased by
dealers, except those vehicles rented or leased to vehicle
salespersons in the course of their employment for purposes of
display or demonstration, nor to any unregistered vehicles used to
transport more than one load of other vehicles for the purpose of
sale.
(e) This section does not apply to vehicles currently registered
in this state that are owned and operated by a licensed dealer when
the notice of transfer has been forwarded to the department by the
former owner of record pursuant to Section 5900 and when a copy of
the notice is displayed as follows:
(1) For a motorcycle or motor-driven cycle, the notice is
displayed in a conspicuous manner upon the vehicle.
(2) For a vehicle other than a motorcycle or motor-driven cycle,
the notice is displayed in the lower right-hand corner of the
windshield of the vehicle, as specified in paragraph (3) of
subdivision (b) of Section 26708.
(f) Every owner, upon receipt of a registration card issued for
special plates, shall maintain the same or a facsimile copy thereof
with the vehicle bearing the special plates.
11716. A manufacturer, remanufacturer, transporter, distributor, or
dealer, in the course of business, may operate or move any vehicle
of a type otherwise required to be registered under this code without
registering the vehicle, and without license or special plates
attached thereto, from a vessel, railroad depot, or warehouse over
the highways to a warehouse or salesroom upon first having obtained a
written permit from the department authorizing that operation.
11717. (a) Every occupational license and special plate issued
under this article shall be valid for a period of one year from
midnight of the last day of the month of issuance. Except as
provided in subdivision (c), renewal of the occupational license and
special plates for the ensuing year may be obtained by the person to
whom the occupational license and special plates were issued upon
application to the department and payment of the fee provided in this
code.
(b) Every application for the renewal of an occupational license
and special plates which expire pursuant to this section shall be
made by the person to whom issued not more than 90 days prior to the
expiration date, and shall be made by presenting the completed
application form provided by the department and by payment of the
full annual renewal fee for the occupational license and special
plates.
(c) If the application for renewal of the occupational license and
special plates is not made by midnight of the expiration date, the
application may be made within 30 days following expiration of the
license by paying the annual renewal fee and a penalty fee equal to
the amount of the original application fee for each occupational
license held. A penalty as specified in Sections 9553 and 9554 shall
also be added to each special plate renewed during the 30-day period
following expiration of the special plates.
(d) In no event may the licensee renew the occupational license or
special plates after the expiration of the 30-day period authorized
in subdivision (c).
11718. Except where the provisions of this code require the refusal
to issue a license, the department may issue a probationary license
subject to conditions to be observed by the licensee in the exercise
of the privilege granted. The conditions to be attached to the
exercise of the privilege shall not appear on the face of the license
but shall be such as may, in the judgment of the department, be in
the public interest and suitable to the qualifications of the
applicant as disclosed by the application and investigation by the
department of the information contained therein.
11719. Pending the satisfaction of the department that the
applicant has met the requirements under this article, it may issue a
temporary permit to any person applying for a manufacturer's,
manufacturer's branch, remanufacturer's, remanufacturer's branch,
distributor's, distributor's branch, transporter's, or dealer's
license and special plates. The temporary permit shall permit the
operation by the manufacturer, manufacturer branch, remanufacturer,
remanufacturer branch, distributor, distributor branch, transporter,
or dealer for a period not to exceed 120 days while the department is
completing its investigation and determination of all facts relative
to the qualifications of the applicant to the license and special
plates. The department may cancel the temporary permit when it has
determined, or has reasonable cause to believe, that the application
is incorrect or incomplete or the temporary permit was issued in
error. The temporary permit is invalid when canceled or when the
applicant's license has been issued or refused.
11720. The department may issue a certificate of convenience to the
executor, executrix, administrator or administratrix of the estate
of a deceased holder of validly outstanding special plates and
license issued under this article, or if no executor, executrix,
administrator or administratrix has been appointed, and until a
certified copy of an order making such appointment is filed with the
department, to the surviving spouse or other heir otherwise entitled
to conduct the business of the deceased, permitting such person to
exercise the privileges granted by such special plates and license
for a period of one year from and after the date of death and
necessary one-year renewals thereafter, pending, but not later than,
disposal of the business and qualification of the vendee of the
business or such surviving spouse, heir or other persons for such
special plates and license under the provisions of this article. The
department may restrict or condition the license and attach to the
exercise of the privileges thereunder such terms and conditions as in
its judgment the protection of the public requires.
11721. The special plates and licenses provided for in this article
shall be automatically canceled upon the happening of any of the
following:
(a) The abandonment of the established place of business of the
dealer or the change thereof without notice to the department as
provided in Section 11712.
(b) The failure of the licensee to maintain an adequate bond or to
procure and file another bond as provided in Section 11710 prior to
the effective date of the termination by the surety of any existing
bond.
(c) The voluntary or involuntary surrender for any cause by the
licensee of the special plates and license, except that the surrender
of the special plates and license, the cessation of business by the
licensee, or the suspension or revocation of the corporate status of
the licensee, does not preclude the filing of an accusation for
revocation or suspension of the surrendered license as provided in
Section 11705, does not affect the department's decision to suspend
or revoke the license. The department's determination to suspend or
revoke the license may be considered in issuing or refusing to issue
any subsequent license authorized by this division to that licensee
or to a business representative of that prior licensee.
(d) Notification to the department that the person designated as
licensee has changed, except that the special plates issued to the
original licensee may be transferred and the newly designated
licensee as transferee shall succeed to the privileges evidenced by
the plates until their expiration.
(e) The suspension or revocation of the corporate status of the
licensee.
(f) The suspension or revocation of the seller's permit of the
licensee by the State Board of Equalization.
11722. Claims, against the surety upon a dealer's bond, of a
financing agency that has loaned money to a licensee or assignee
thereof shall be allowed only to the extent that the claims of any
other person or entity with respect to the bond under Section 11711
shall be satisfied first and entitled to preference over the claims
of the financing agency with respect to the bond ; provided, however,
that as to any conditional sales contract as defined in Section 2981
of the Civil Code, acquired by way of purchase or pledge, a
financing agency shall be entitled to protection under the bond with
the same preference set forth under Section 11711 if the financing
agency is defrauded by a licensee.
11723. The board may require that fees shall be paid to the
department for the issuance or renewal of a license to do business as
a new motor vehicle dealer, dealer branch, manufacturer,
manufacturer branch, distributor, distributor branch, or
representative. The fees shall be to reimburse the department for
costs incurred in licensing those dealers, manufacturers,
distributors, branches, and representatives and for related
administrative costs incurred on behalf of the board. The board may
also require that an additional fee be paid to the department when
the licensee has failed to pay the fee authorized by Section 3016
prior to the expiration of its occupational license and special
plates and the licensee utilizes the 30-day late renewal period
authorized by subdivision (c) of Section 11717.
This section shall not apply to dealers, manufacturers,
distributors, or representatives of vehicles not subject to
registration under this code, except dealers, manufacturers,
manufacturer branches, distributors, distributor branches, or
representatives of off-highway motorcycles, as defined in Section
436.
11725. (a) No person shall transport or drive any motor vehicle
from this state outside of the United States with the intent to
register or sell such vehicle in a foreign jurisdiction, without
first removing the license plates and delivering them to the
department. Such person may obtain a permit from the department
authorizing the operation of the unlicensed motor vehicle on the
public highways of this state in order to reach such foreign
jurisdiction. Failure to deliver the license plates as required by
this subdivision shall be a misdemeanor.
(b) No holder of any license, or any temporary permit for such
license issued under this division, shall deliver any vehicle
following sale without first removing all license plates from such
vehicle when it is known by the licensee that the vehicle is to be
exported to a foreign jurisdiction outside of the United States.
11726. Any licensee suffering pecuniary loss because of any willful
failure by any other licensee to comply with any provision of
Article 1 (commencing with Section 11700) or 3 (commencing with
Section 11900) of Chapter 4 of Division 5 or Article 3 (commencing
with Section 3052) of Chapter 6 of Division 2 or with any regulation
adopted by the department or any rule adopted or decision rendered by
the board under authority vested in them may recover damages and
reasonable attorney fees therefor in any court of competent
jurisdiction. Any such licensee may also have appropriate injunctive
relief in any such court.
11727. The revocation or suspension of a license of a manufacturer,
manufacturer branch, distributor, distributor branch, or
representative may be limited to one or more municipalities or
counties or any other defined area, or may be revoked or suspended in
a defined area only as to certain aspects of its business, or as to
a specified dealer or dealers.
11728. As part of a compromise settlement agreement entered into
pursuant to Section 11707 or 11808.5, the department may assess a
monetary penalty of not more than two thousand five hundred dollars
($2,500) per violation and impose a license suspension of not more
than 30 days for any dealer who violates subdivision (r) of Section
11713. The extent of the penalties shall be based on the nature of
the violation and effect of the violation on the purposes of this
article. Except for the penalty limits provided for in Sections
11707 and 11808.5, all the provisions governing compromise settlement
agreements for dealers, salespersons, and wholesalers apply to this
section, and Section 11415.60 of the Government Code does not apply.
11729. (a) Except as provided in subdivision (b), any dealer
engaging in a consignment with an owner not licensed as a dealer,
manufacturer, manufacturer branch, distributor, or a distributor
branch licensed under this code, and the consignment is not otherwise
prohibited by this code, shall execute a consignment agreement as
prescribed by Section 11730. The failure of a dealer, when required
under this section, to complete and comply with the terms of the
prescribed consignment agreement for any vehicle which the dealer
agrees to accept on consignment, or to pay the agreed amount to the
consignor or his or her designee within 20 days after the date of
sale of the vehicle, is cause for suspending or revoking the license
of the dealer under paragraph (10) of subdivision (a) of Section
11705.
(b) (1) A dealer conducting retail auction sales on behalf of a
fleet owner shall execute a consignment agreement applicable to all
vehicles consigned for sale during the term of the agreement which
contains, at a minimum, substantially all of the terms, phrases,
conditions, and disclosures required by Section 11730, except the
following are not required:
(A) The description of a specific vehicle by year, make,
identification number, license, state, or mileage.
(B) The information contained in paragraph (4) of subdivision (b)
of Section 11730.
(2) If mutually agreeable, in lieu of the requirements of
paragraph (7) of subdivision (b) of Section 11730, the consignor may
provide the documents necessary to transfer the ownership of the
vehicle to the consignee prior to the auction being held.
(3) For purposes of this subdivision, "fleet owner" is either of
the following:
(A) A person who is the registered or legal owner of 25 or more
vehicles registered in this state and is the owner, as recorded in
the department's records, of the vehicles consigned for sale to the
dealer.
(B) A bankruptcy trustee who owns or has legal control of the
vehicles consigned for sale to the dealer, government agency, or
financial institution.
11730. The consignment agreement required by Section 11729 shall
contain all the following terms, phrases, conditions, and
disclosures:
(a) The date the agreement is executed.
(b) All of the following statements:
(1) "I (We), the undersigned consigner(s), hereby consign and
deliver possession of my(our) vehicle, which is a (Year) ____ (Make)
____ (ID#) ____ (License) ____ (State) ____ (Mileage) ____, to
(Consignee) _____ (Dealer #) ____ for the sole purpose of selling the
vehicle and paying, to the consignor or his or her designee from the
proceeds of the sale of the vehicle, the amount agreed upon under
terms of this agreement. This agreement is effective and valid only
for a period of ____ days from this date."
(2) "At the termination of this agreement, the consignee shall
return the vehicle to the consignor, or, at the option of both the
consignor and consignee, enter into a new agreement."
(3) "If the vehicle is sold by the consignee during the term of
this agreement, the money due the consignor shall be disbursed within
20 days after the date of sale in accordance with the terms of this
agreement. As used in this agreement, a "sale" occurs when the
consignee either (A) receives the purchase price or its equivalent or
executes a conditional sales contract for the vehicle, or (B) when
the purchaser takes delivery of the vehicle, whichever occurs first."
(4) "The following information shall be completed prior to the
signing of this agreement:
Current market value: $____ Source: ____.
Outstanding liens: $____ Lienholder: ____.
(Any difference between the outstanding amount shown and the
actual payoff to the lienholder will be credited to the consignor.)
Repairs to be made: $____ Work Order #____.
Moneys to the consignor: ____ percent of sale price, flat fee of
$____ or the following specific formula: ____."
(5) "Within 20 days after sale, the consignee shall make an
accounting to the consignor of all of the following: date of sale,
repairs authorized by consignor (supported by work records), exact
amount of any liens payable to lienholders, evidence of payment of
any liens, and the total sales price."
(6) "The consigned vehicle is delivered to the consignee in trust
for the exact terms set forth in this agreement. The consignee
agrees to receive this vehicle in trust and not to permit its use for
any other purpose other than contained in this agreement without the
express written consent of the consignor."
(7) "Upon payment of the moneys due the consignor, the consignor
agrees to furnish the consignee those documents necessary to transfer
the ownership of the vehicle to the purchaser.
Signatures:
________________________________________________________________
Consignor Date
________________________________________________________________
Address
________________________________________________________________
Consignee Date
________________________________________________________________
Address
"
(8) "NOTICE TO CONSIGNOR: Failure of the consignee to comply with
the terms of this agreement may be a violation of statute which
could result in criminal or administrative sanctions, or both. If
you feel the consignee has not complied with the terms of this
agreement, please contact an investigator of the Department of Motor
Vehicles."
11735. (a) No dealer shall engage in brokering a retail sales
transaction without first paying the fee required by subdivision (d)
of Section 9262 and obtaining from the department an autobroker's
endorsement to the dealer's license. An autobroker's endorsement
shall be automatically cancelled upon the cancellation, suspension,
revocation, surrender, or expiration of a dealer's license.
(b) Upon the issuance of an autobroker's endorsement to a dealer's
license, the department shall furnish the dealer with an autobroker'
s log. The autobroker's log shall remain the property of the
department and may be taken up at any time for inspection.
(c) The autobroker's log shall contain spaces sufficient for the
dealer to record the following information with respect to each
retail sale brokered by that dealer:
(1) Vehicle identification number of brokered vehicle.
(2) Date of brokering agreement.
(3) Selling dealer's name, address, and dealer number.
(4) Name of consumer.
(5) Brokering dealer's name and dealer number.
(d) Nothing in this code prohibits a dealer who has been issued an
autobroker's endorsement to his or her dealer's license from
delivering, with the selling dealer's written approval, motor
vehicles that have been sold pursuant to a duly executed motor
vehicle purchase agreement or obtaining a consumer's signature on a
selling dealer's motor vehicle purchase agreement that has already
been executed by the selling dealer.
(e) When brokering a retail sale as an agent of the consumer,
selling dealer, or both, the brokering dealer owes a fiduciary duty
of utmost care, integrity, honesty, and loyalty in dealings with its
principal or principals.
(f) For purposes of this section and Sections 11736, 11737, and
11738, "consumer" means any person who retains a dealer to perform
brokering services in connection with a retail sale.
11736. It is unlawful for any dealer licensed under this article to
do any of the following when brokering a retail sale:
(a) Fail to execute a written brokering agreement, as described in
Section 11738, and provide a completed copy to both of the
following:
(1) Any consumer entering into the brokering agreement. The
completed copy shall be provided prior to the consumer's signing of
an agreement for the purchase of the vehicle described in the
brokering agreement or, prior to accepting one hundred dollars ($100)
or more from that consumer, whichever occurs first.
(2) The selling dealer. The completed copy shall be provided
prior to the selling dealer's entering into a purchase agreement with
the consumer.
(b) Accept a purchase deposit from any consumer that exceeds 2.5
percent of the selling price of the vehicle described in the
brokering agreement.
(c) Fail to refund any purchase money, including purchase
deposits, upon demand by a consumer at any time prior to the consumer'
s signing of a vehicle purchase agreement with a selling dealer and
taking delivery of the vehicle described in the brokering agreement.
(d) Fail to cancel a brokering agreement and refund, upon demand,
any money paid by a consumer, including any brokerage fee, under any
of the following circumstances:
(1) When the final price of the brokered vehicle exceeds the
purchase price listed in the brokering agreement.
(2) When the vehicle delivered is not as described in the
brokering agreement.
(3) When the brokering agreement expires prior to the customer
being presented with a purchase agreement from a selling dealer
arranged through the brokering dealer that contains a purchase price
at or below the price listed in the brokering agreement.
(e) Act as a seller and provide brokering services, both in the
same transaction.
(f) Fail to disclose to the consumer and selling dealer, as soon
as practicable, whether the autobroker receives or does not receive a
fee or other compensation, regardless of the form or time of
payment, from the selling dealer and the dollar amount of any fee
that the consumer is obligated to pay to the autobroker. This
arrangement shall be confirmed in a brokering agreement.
(g) Fail to record in the dealer's autobroker log, for each
brokered sale, all of the information specified in subdivision (c) of
Section 11735.
(h) Fail to maintain for a minimum of three years a copy of the
executed brokering agreement and other notices and documents related
to each brokered transaction.
(i) Fail to advise the consumer, prior to accepting any money,
that a full refund will be given if the motor vehicle ordered through
the autobroker is not obtained for the consumer or if the service
orally contracted for is not provided.
11737. (a) A dealer who brokers a motor vehicle sale shall deposit
directly into a trust account any purchase money, including purchase
deposits, it receives from a consumer or a consumer's lender. This
subdivision does not require a separate trust account for each
brokered transaction.
(b) The brokering dealer shall not in any manner encumber the
corpus of the trust account except as follows:
(1) In partial or full payment to a selling dealer for a vehicle
purchased by the brokering dealer's consumer.
(2) To make refunds.
(c) Subdivision (b) shall not prevent payment of the interest
earned on the trust account to the brokering dealer.
(d) The brokering dealer shall serve as trustee of the trust
account required by this section. If the brokering dealer is a
partnership or a corporation, the managing partner of the partnership
or the chief executive officer of the corporation shall be the
trustee. The trustee may designate in writing that an officer or
employee may manage the trust account if that officer or employee is
under the trustee's supervision and control, and the original of that
writing is on file with the department.
(e) All trust accounts required by this section shall be
maintained at a branch of a bank, savings and loan association, or
credit union regulated by the state or the government of the United
States.
(f) The brokering dealer has a fiduciary responsibility with
respect to all purchase money received from a consumer or consumer's
lender relative to a brokered sale transaction.
(g) The following are deemed to be held in trust for consumers who
have paid purchase money to a brokering dealer:
(1) All sums received by the brokering dealer whether or not
required to be deposited in an actual trust account and regardless of
whether any of these sums were required to be deposited or actually
were deposited in a trust account.
(2) All property with which any of the sums described in paragraph
(1) has been commingled if any of these sums cannot be identified
because of the commingling.
(h) Upon any judicially ordered distribution of any money or
property required to be held in trust and after all expenses of
distribution approved by the court have been paid, every consumer of
a brokering dealer has a claim on the trust for purchase money
payments made to the brokering dealer. Unless a consumer can
identify his or her funds in the trust within the time established by
the court, each consumer shall receive a proportional share based on
the amount paid.
11738. The brokering agreement required by Section 11736 shall be
printed in no smaller than 10-point type and shall contain not less
than the following terms, conditions, requirements, and disclosures:
(a) The name, address, license number, and telephone number of the
autobroker.
(b) A complete description, including line-make, model, year
model, and color, of the vehicle and the desired options.
(c) The following statement: "The following information shall be
completed prior to the signing of this brokering agreement:
Dollar Purchase Price of Vehicle: ______.
Date this agreement will expire if a purchase agreement from a
selling dealer is not presented for your signature: __________.
Fee that you will be obligated to pay us, if any: __________."
(d) One of the following notices, as appropriate, printed in at
least 10-point bold type and placed immediately below the statement
required by subdivision (c): (1) "We do not receive a fee from the
selling dealer." (2) "We receive a fee from the selling dealer."
(e) The following notice on the face of the brokering agreement
with a heading in at least 14-point bold type and the text in at
least 10-point bold type, circumscribed by a line, that reads as
follows:
______________________________________________________________________
______
'
'
' NOTICE
'
'
'
' This is an agreement to provide services; it is not an
'
' agreement for the purchase of a vehicle. California law gives you
'
' the following rights and protection:
'
' Once you have signed this agreement, you have the right to
cancel it '
' and receive a full refund of any money paid, including any
brokerage '
' fee you may have paid, under any of the following circumstances:
'
' (1) The final price of the vehicle exceeds the purchase price
'
' listed above.
'
' (2) The vehicle is not as described above upon delivery.
'
' (3) This agreement expires prior to your being presented
'
' with a selling dealer's purchase agreement.
'
' If you have paid a purchase deposit, you have the right to
receive a '
' refund of that deposit at any time prior to your signing a vehicle
'
' purchase agreement with a selling dealer. Purchase deposits are
'
' limited by law to no more than 2.5 percent of the purchase price
of a '
' vehicle and must be deposited by an autobroker or auto buying
service '
' in a federally insured trust account. If you are unable to
resolve a '
' dispute with your autobroker or auto buying service, please
contact '
' an investigator of the Department of Motor Vehicles
'
'
'
______________________________________________________________________
____
(f) The date the agreement is executed.
(g) The signature of the autobroker and consumer.
11739. For purposes of title registration, warranties, rebates, and
incentives, in a brokered retail new motor vehicle sale, the
selling, franchised new car dealer, and not the autobroker, is
responsible to apply for title in the name of the purchaser, to
secure vehicle registration and the license plates for the purchaser,
to secure the manufacturer's warranty in the name of the purchaser,
and to make all applications for any manufacturer's rebates and
incentives due the purchaser. If there is a manufacturer's recall,
the consumer shall be notified directly by the manufacturer.
11740. The remedies and penalties provided in this code for a
violation of this article are cumulative to the remedies and
penalties provided by other laws.
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