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Questions and Answers
Which of the following actions could result in a Dealer license suspension? (Select all that apply)
Which of the following actions could result in a Dealer license suspension? (Select all that apply)
- Misuse of Special (Dealer) Plates (correct)
- Payment of 'Bird Dog' fees (correct)
- Failure to pay Administrative Service Fees when due (correct)
- Selling at licensed locations
Where must the Guide be placed for it to be considered in plain view? (Select all that apply)
Where must the Guide be placed for it to be considered in plain view? (Select all that apply)
- Hung from the rear-view mirror (correct)
- Under the seat
- Under the windshield wiper (correct)
- In the glove compartment
What can the DMV, as well as State and Federal regulatory agencies do?
What can the DMV, as well as State and Federal regulatory agencies do?
Limit, suspend, or revoke a Dealer's license and impose penalties.
What is the required Surety Bond value for a New or Used Auto-Commercial Dealer?
What is the required Surety Bond value for a New or Used Auto-Commercial Dealer?
When should a vehicle be advertised as 'Certified'?
When should a vehicle be advertised as 'Certified'?
What must be done if the odometer cannot register the same mileage as before the repair?
What must be done if the odometer cannot register the same mileage as before the repair?
For how long must Dealers securely store their Reports of Sale?
For how long must Dealers securely store their Reports of Sale?
What is the maximum compensation a Dealer can receive from an institution for financing a vehicle?
What is the maximum compensation a Dealer can receive from an institution for financing a vehicle?
What information must a Dealer provide when selling a Lemon Law buyback vehicle?
What information must a Dealer provide when selling a Lemon Law buyback vehicle?
What must Dealers submit to renew their license? (Select all that apply)
What must Dealers submit to renew their license? (Select all that apply)
Who may operate a vehicle with special plates for any purpose?
Who may operate a vehicle with special plates for any purpose?
What must a Conditional Sales Contract include?
What must a Conditional Sales Contract include?
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Study Notes
Dealer License Suspension
- Actions that may lead to suspension include misuse of special (dealer) plates, bait & switch advertising, failure to pay administrative fees, and submitting dishonored checks.
- Selling vehicles at unlicensed locations, failing to transfer titles, and paying "bird dog" fees are also grounds for suspension.
Guide Display Requirements
- The Dealer Guide must be clearly displayed with both sides visible.
- Acceptable placements include hanging from mirrors, under windshield wipers, or attached to side windows.
- Keeping the Guide in glove compartments or trunks is insufficient as it is not in plain view.
Regulatory Authority
- The DMV and other regulatory agencies can limit, suspend, or revoke a Dealer's license for non-compliance with laws and regulations.
Surety Bond Requirements
- Dealers must maintain a Surety Bond:
- $50,000 for New or Used Auto-Commercial Dealers.
- $10,000 for Motorcycle Dealers and Wholesale-Only Dealers (less than 25 vehicles per year).
Advertising Standards
- Vehicles cannot be advertised as "Certified" if they lack accurate mileage, have been reacquired under "lemon law," or suffered damage unless properly repaired.
- Titles branded as buybacks, salvage, or non-repairable also disallow "Certified" advertising, along with vehicles sold "as is."
Odometer Disclosure
- If an odometer is replaced and cannot register prior mileage, it must be reset to "0" with a notice affixed to the vehicle specifying previous mileage and service date.
Record Storage Requirements
- Dealers must securely store Reports of Sale for 90 days, implementing federal safeguard standards.
- After 90 days, records should be stored offsite or with a third-party vendor for a total of 36 months.
- Digital storage is permitted after the initial 90 days, and records must be available to the DMV within three business days.
Compensation Limits Under AB 68
- Under California's "Car Buyer Bill of Rights," dealer compensation from financing institutions is capped at:
- 2.5% for terms up to 60 months.
- 2.0% for terms longer than 60 months.
- Exceptions exist when the dealer bears the entire financial risk or when the assignment exceeds six months post Conditional Sale Contract.
Lemon Law Buyback Notices
- Dealers selling Lemon Law buyback vehicles must inform buyers in writing about:
- Vehicle details (year, make, model, VIN).
- Title status ("Lemon Law Buyback").
- Nature of nonconformities and any repairs attempted.
License Renewal Process
- To renew a Dealer license, submit:
- Renewal Application (DMV form OL 45).
- Proof of continuing education (every two years).
- Proof of Surety Bond.
- Payment of renewal fees.
Special Plate Operation Rules
- Vehicles with special plates may be operated by individuals such as:
- Sole owners, general partners, LLC managers, or corporate officers actively engaged in operations.
- General or business managers and sales managers under the same conditions.
- Drivers if they are accompanied by an operational manager.
- Unaccompanied adults residing with operational managers for pickups or drop-offs.
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