Insights

California has allowed motor vehicle dealers the option of electronic registration of new motor vehicles through its Business Partner Automation Program for approximately 10 years. Upon determining the multiple benefits of electronic registration, including increased accuracy of records, California passed
Assembly Bill 1215 to require the electronic registration of newly purchased and leased motor vehicles. The new law also requires dealers to obtain a National Motor Vehicle Title Information System (NMVTIS) vehicle history report on used motor vehicles before displaying or offering those vehicles for sale.

Mandatory Electronic Registration

Effective July 1, 2012, all newly purchased and leased motor vehicles must be electronically registered by the dealer. The new law amends California’s Automobile Sales Finance Act and Vehicle Leasing Act to accommodate mandatory electronic registration by providing a specific disclosure requirement for the fee already authorized under California’s Vehicle Code to electronically register the vehicle. AB 1215 also amends these Acts to require a contract disclosure stating that any processing fee charged by the dealer for electronic registration is not a governmental fee.

Used Vehicle Disclosure

Effective July 1, 2012, used motor vehicle dealers may not display or offer a vehicle for sale until an NMVTIS vehicle history report has been obtained. If the vehicle history report indicates that the vehicle has been or is a junk or salvage vehicle or if the title is branded, the dealer must post a disclosure on the vehicle and provide the purchaser with a copy of the NMVTIS report upon request.

The disclosure must be posted on the vehicle while it is being displayed for retail sale in at least 14-point bold black type, except that the title “Warning” must appear in at least 18-point bold black type. The posting must be placed on at least a 4 x 5.5-inch red background in close proximity to the Federal Trade Commission’s Buyer’s Guide and contain the following language:

“WARNING

According to a vehicle history report issued by the National Motor Vehicle Title Information System (NMVTIS), this vehicle has been reported as a total-loss vehicle by an insurance company, has been reported into NMVTIS by a junk or salvage reporting entity, or has a title brand which may materially affect the value, safety, and/or condition of the vehicle. Because of its history as a junk, salvage, or title-branded vehicle, the manufacturer’s warranty or service contract on this vehicle may be affected. Ask the dealer to see a copy of the NMVTIS vehicle history report. You may independently obtain the report by checking NMVTIS online at www.vehiclehistory.gov.”

Dealers should note that neither the NMVTIS report requirement nor the “Warning” disclosure requirement applies to motorcycles, certain off-road motor vehicles, or recreational vehicles.

Lauren E. Ingersoll is an associate in the California office of Hudson Cook, LLP. She can be reached at 714-263-0426 or by email at lingersoll@hudco.com.