Motor Vehicles

Requires that salesperson's or dealer's contract for sale or
lease of new or used motor vehicles disclose in writing whether
three-day rescission right exists.  Exempts auction sales.
Provides that contracts contingent upon financing are void if
buyer does not qualify. (SD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1        
TWENTIETH LEGISLATURE, 1999                                S.D. 1
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  Chapter 437, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and to
 3 read as follows:
 4      "437-    New or used motor vehicle sales and lease
 5 contracts.  Regardless of whether or not the buyer has taken
 6 possession of the motor vehicle, a new or used motor vehicle
 7 purchase or lease agreement by a salesperson or dealer shall be
 8 void if the agreement is contingent upon the financing of the
 9 purchase and, pursuant to the financing or credit application
10 signed at the time of purchase, the buyer is unable to qualify."
11      SECTION 2.  Section 437-28, Hawaii Revised Statutes, is
12 amended by amending subsection (a) to read as follows:
13      "(a)  In addition to any other actions authorized by law,
14 the board, after notice and hearing as provided in chapter 91,
15 and subject to appeal to the circuit court of the circuit in
16 which the board has jurisdiction under the procedure and rules
17 prescribed by the laws of the State or the applicable rules of
18 the courts pertaining to appeals to circuit courts, may suspend,
19 revoke, fine, or deny the renewal of any license, or prior to

Page 2                                                     411
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 notice and hearing deny the issuance of any license for any cause
 2 authorized by law, including but not limited to circumstances
 3 where the board finds that the applicant or holder, or any
 4 officer, director, general manager, trustee, partner, or
 5 stockholder owning more than ten per cent interest of the
 6 applicant or holder:
 7      (1)  Has intentionally made a false statement of a material
 8           fact in the application for a license or in any other
 9           statement required by this chapter or has obtained or
10           attempted to obtain a license by fraud or
11           misrepresentation;
12      (2)  Has failed to comply, observe, or adhere to any
13           provision of this chapter or any other law relating to
14           the sale, taxing, or licensing of motor vehicles or any
15           rule or order made pursuant to this chapter;
16      (3)  Has committed a fraudulent act in selling, purchasing,
17           or otherwise dealing in motor vehicles or has 
18           misrepresented the terms and conditions of a sale,
19           purchase, or contract for sale or purchase of a motor
20           vehicle or any interest therein including an option to
21           purchase motor vehicles;
22      (4)  Has engaged in business under a past or present license
23           issued pursuant to this chapter, in a manner as to

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1           cause injury to the public or to those with whom one is
 2           dealing;
 3      (5)  Has failed to comply, observe, or adhere to any law in
 4           any other respect on account whereof the board may deem
 5           the applicant or holder to be an unfit or improper
 6           person to hold a license;
 7      (6)  Has failed to meet or maintain the conditions and
 8           requirements necessary to qualify for the issuance of a
 9           license;
10      (7)  Is insolvent or has filed or is the subject of petition
11           for bankruptcy, wage earner's plan, or financial
12           reorganization plan; or has made or proposes to make an
13           assignment for benefit of creditors;
14      (8)  In the case of an individual applicant or holder of a
15           license, if the applicant or holder is not at least
16           eighteen years of age; in the case of a partnership
17           applicant or holder of a license, if any general or
18           limited partner thereof is not at least eighteen years
19           of age;
20      (9)  Has charged more than the legal rate of interest on the
21           sale or purchase or attempted sale or purchase or in
22           arranging the sale or purchase of a motor vehicle or
23           any interest therein including an option to purchase;

Page 4                                                     411
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1     (10)  Has violated any of the laws pertaining to false
 2           advertising or to credit sales in the offering,
 3           soliciting, selling, or purchasing, or arranging to
 4           sell or purchase a motor vehicle or any interest
 5           therein;
 6     (11)  Has wilfully failed or refused to perform any
 7           unequivocal and indisputable obligation under any
 8           written agreement involving the sale or purchase of a
 9           motor vehicle or any interest therein including an
10           option to purchase;
11     (12)  Has been denied the issuance of a license under this
12           chapter for substantial culpable cause or for having
13           had a license issued under this chapter suspended,
14           revoked, or the renewal thereof denied for substantial
15           culpable cause;
16     (13)  Has entered or has attempted to enter or proposes to
17           enter into any contract or agreement contrary to this
18           chapter or any rule adopted thereunder;
19     (14)  Has been or is engaged or proposes to engage in the
20           business of selling new motor vehicles as a dealer or
21           auction without a proper franchise therefor;
22     (15)  Has at any time employed or utilized or attempted or
23           proposed to employ or utilize any person not licensed

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1           under this chapter who is required to be so licensed;
 2     (16)  Has entered or attempted to enter any one-payment
 3           contract, where the contract is required to be signed
 4           by the purchaser prior to removal of the motor vehicle
 5           for test driving from the seller's premises;
 6     (17)  Being a salesperson or dealer:
 7           (A)  Has required a purchaser of motor vehicles as a
 8                condition of sale and delivery thereof to purchase
 9                special features, appliances, accessories, or
10                equipment not desired or requested by the
11                purchaser; provided that this prohibition shall
12                not apply as to special features, appliances,
13                accessories, or equipment which are ordinarily
14                installed on the vehicle when received or acquired
15                by the dealer;
16           (B)  Has represented and sold as an unused motor
17                vehicle any motor vehicle which has been operated
18                as a demonstrator, leased, or U-drive motor
19                vehicle;
20           (C)  Has sold a new motor vehicle without providing or
21                securing for the purchaser the standard factory
22                new car warranty for the vehicle, unless the
23                dealer or salesperson clearly notes in writing on

Page 6                                                     411
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1                the sales contract that the new motor vehicle is
 2                sold without the standard factory warranty;
 3           (D)  Has sold a new motor vehicle covered by a standard
 4                factory warranty without informing the purchaser
 5                in writing that any repairs or other work
 6                necessary on any accessories which were not
 7                installed by the manufacturer of the vehicle may
 8                not be obtainable in a geographic location other
 9                than where the purchase occurred; provided that
10                the notice required by this section shall conform
11                to the plain language requirements of section
12                487A-1, regardless of the dollar amount of the
13                transaction; [or] 
14           (E)  Has engaged in any improper business conduct,
15                including but not limited to employing,
16                contracting with, or compensating consumer
17                consultants; or
18           (F)  Has sold or leased a new or used motor vehicle,
19                other than at auction, without written
20                documentation that contains the following
21                provision printed legibly in at least fourteen
22                point bold typeface print, upon which the
23                salesperson or dealer shall appropriately indicate

Page 7                                                     411
                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1                the type of sale, and upon which both the customer
 2                and salesperson or dealer shall place their
 3                initials in the designated spaces, prior to the
 4                signing of the contract of sale or lease:
 5                "This (IS) (IS NOT) a door-to-door sale.  There
 6                (IS A) (IS NO) 3-DAY RIGHT TO CANCEL on this
 7                purchase.
 8                      Customer's Initials         Salesperson's  
 9                                            or Dealer's Initials";
10     (18)  Being an applicant or holder of a dealer's license:
11           (A)  Has sold or proposed to sell new motor vehicles
12                without providing for the maintenance of a
13                reasonable inventory of parts for new vehicles or
14                without providing and maintaining adequate repair
15                facilities and personnel for new vehicles at
16                either the main licensed premises or at any branch
17                location;
18           (B)  Has employed or proposed to employ any salesperson
19                who is not duly licensed under this chapter; or
20           (C)  Has sold or proposed to sell new motor vehicles
21                without being franchised therefor;
22     (19)  Being an applicant or holder of an auction's license
23           has sold or proposed to sell new motor vehicles without

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1           being franchised therefor; or
 2     (20)  Being an applicant for a salesperson's license:
 3           (A)  Does not intend to be employed as a salesperson
 4                for a licensed motor vehicle dealer; or
 5           (B)  Intends to be employed as a salesperson for more
 6                than one dealer."
 7      SECTION 3.  Statutory material to be repealed is bracketed.
 8 New statutory material is underscored.
 9      SECTION 4.  This Act shall take effect upon its approval.