SEC. 15. Section 11713.21 of the Vehicle Code is amended to read:
SEC. 16. Section 11713.21 is added to the Vehicle Code, to read:
11713.21. (a) (1) A dealer shall not sell a used vehicle, as
defined in Section 665 and subject to registration under this code,
at retail to an individual for personal, family, or household use
without offering the buyer a contract cancellation option agreement
that allows the buyer to return the vehicle without cause. This
section does not apply to a used vehicle having a purchase price of
forty thousand dollars ($40,000) or more, a motorcycle, as defined in
Section 400, or a recreational vehicle, as defined in Section 18010
of the Health and Safety Code.
(2) The purchase price for the contract cancellation option shall
not exceed the following:
(A) Seventy-five dollars ($75) for a vehicle with a cash price of
five thousand dollars ($5,000) or less.
(B) One hundred fifty dollars ($150) for a vehicle with a cash
price of more than five thousand dollars ($5,000), but not more than
ten thousand dollars ($10,000).
(C) Two hundred fifty dollars ($250) for a vehicle with a cash
price of more than ten thousand dollars ($10,000), but not more than
thirty thousand dollars ($30,000).
(D) One percent of the purchase price for a vehicle with a cash
price of more than thirty thousand dollars ($30,000), but less than
forty thousand dollars ($40,000).
The term “cash price” as used in this paragraph has the same
meaning as described in subparagraph (A) of paragraph (1) of
subdivision (a) of Section 2982 of the Civil Code. “Cash price” also
excludes registration, transfer, titling, license, and California
tire and optional business partnership automation fees.
excludes registration, transfer, titling, and license fees, the
California tire fee, and any charge to electronically register or
transfer the vehicle.
(b) To comply with subdivision (a), and notwithstanding Section
2981.9 of the Civil Code, a contract cancellation option agreement
shall be contained in a document separate from the conditional sales
contract or other vehicle purchase agreement and shall contain, at a
minimum, the following:
(1) The name of the seller and the buyer.
(2) A description and the Vehicle Identification Number of the
vehicle purchased.
(3) A statement specifying the time within which the buyer must
exercise the right to cancel the purchase under the contract
cancellation option and return the vehicle to the dealer. The dealer
shall not specify a time that is earlier than the dealer’s close of
business on the second day following the day on which the vehicle was
originally delivered to the buyer by the dealer.
(4) A statement that clearly and conspicuously specifies the
dollar amount of any restocking fee the buyer must pay to the dealer
to exercise the right to cancel the purchase under the contract
cancellation option. The restocking fee shall not exceed one hundred
seventy-five dollars ($175) if the vehicle’s cash price is five
thousand dollars ($5,000) or less, three hundred fifty dollars ($350)
if the vehicle’s cash price is less than ten thousand dollars
($10,000), and five hundred dollars ($500) if the vehicle cash price
is ten thousand dollars ($10,000) or more. The dealer shall apply
toward the restocking fee the price paid by the buyer for the
contract cancellation option. The price for the purchase of the
contract cancellation option is not otherwise subject to setoff or
refund.
(5) Notwithstanding paragraph (4), when a buyer, who leased the
purchased vehicle immediately preceding the dealer’s sale of the
vehicle to the buyer, exercises the contract cancellation option, the
limit on the amount of a restocking fee required to be paid by the
buyer shall be increased. That increased amount shall be the amount
the buyer would have been obligated to pay the lessor, at the time of
the termination of the lease, for the following charges, as
specified in the lease, and as if the buyer had not purchased the
contract cancellation option:
(A) Excess mileage.
(B) Unrepaired damage.
(C) Excess wear and tear.
(6) A statement specifying the maximum number of miles that the
vehicle may be driven after its original delivery by the dealer to
the buyer to remain eligible for cancellation under the contract
cancellation option. A dealer shall not specify fewer than 250 miles
in the contract cancellation option agreement.
(7) A statement that the contract cancellation option gives the
buyer the right to cancel the purchase and obtain a full refund,
minus the purchase price for the contract cancellation option
agreement; and that the right to cancel will apply only if, within
the time specified in the contract cancellation option agreement, the
following are personally delivered to the selling dealer by the
buyer: a written notice exercising the right to cancel the purchase
signed by the buyer; any restocking fee specified in the contract
cancellation option agreement minus the purchase price for the
contract cancellation option agreement; the original contract
cancellation option agreement and vehicle purchase contract and
related documents, if the seller gave those original documents to the
buyer; all original vehicle titling and registration documents, if
the seller gave those original documents to the buyer; and the
vehicle, free of all liens and encumbrances, other than any lien or
encumbrance created by or incidental to the conditional sales
contract, any loan arranged by the dealer, or any purchase money loan
obtained by the buyer from a third party, and in the same condition
as when it was delivered by the dealer to the buyer, reasonable wear
and tear and any defect or mechanical problem that manifests or
becomes evident after delivery that was not caused by the buyer
excepted, and which must not have been driven beyond the mileage
limit specified in the contract cancellation option agreement. The
agreement may also provide that the buyer will execute documents
reasonably necessary to effectuate the cancellation and refund and as
reasonably required to comply with applicable law.
(8) At the bottom of the contract cancellation option agreement, a
statement that may be signed by the buyer to indicate the buyer’s
election to exercise the right to cancel the purchase under the terms
of the contract cancellation option agreement, and the last date and
time by which the option to cancel may be exercised, followed by a
line for the buyer’s signature. A particular form of statement is not
required, but the following statement is sufficient: “By signing
below, I elect to exercise my right to cancel the purchase of the
vehicle described in this agreement.” The buyer’s delivery of the
purchase cancellation agreement to the dealer with the buyer’s
signature following this statement shall constitute sufficient
written notice exercising the right to cancel the purchase under
paragraph (6). The dealer shall provide the buyer with the statement
written notice exercising the right to cancel the purchase pursuant
to paragraph (6). The dealer shall provide the buyer with the statement
required by this paragraph in duplicate to enable the buyer to return
the signed cancellation notice and retain a copy of the cancellation
agreement.
(9) If, pursuant to paragraph (5), the limit on the restocking fee
is increased by the amount the buyer, who exercises a contract
cancellation option would have been obligated to pay the lessor, upon
termination of the lease, for charges for excess mileage, unrepaired
damage, or excess wear and tear, as specified in the lease, the
dealer shall provide the buyer with a notice of the contents of
paragraph (5), including a statement regarding the increased
restocking fee.
(c) (1) No later than the second day following the day on which
the buyer exercises the right to cancel the purchase in compliance
with the contract cancellation option agreement, the dealer shall
cancel the contract and provide the buyer with a full refund,
including that portion of the sales tax attributable to amounts
excluded pursuant to Section 6012.3 of the Revenue and Taxation Code.

(2) If the buyer was not charged for the contract cancellation
option agreement, the dealer shall return to the buyer, no later than
the day following the day on which the buyer exercises the right to
cancel the purchase, any motor vehicle the buyer left with the seller
as a downpayment or trade-in. If the dealer has sold or otherwise
transferred title to the motor vehicle that was left as a downpayment
or trade-in, the full refund described in paragraph (1) shall
include the fair market value of the motor vehicle left as a
downpayment or trade-in, or its value as stated in the contract or
purchase order, whichever is greater.
(3) If the buyer was charged for the contract cancellation option
agreement, the dealer shall retain any motor vehicle the buyer left
with the dealer as a downpayment or trade-in until the buyer
exercises the right to cancel or the right to cancel expires. If the
buyer exercises the right to cancel the purchase, the dealer shall
return to the buyer, no later than the day following the day on which
the buyer exercises the right to cancel the purchase, any motor
vehicle the buyer left with the seller as a downpayment or trade-in.
If the dealer has inadvertently sold or otherwise transferred title
to the motor vehicle as the result of a bona fide error,
notwithstanding reasonable procedures designed to avoid that error,
the inadvertent sale or transfer of title shall not be deemed a
violation of this paragraph, and the full refund described in
paragraph (1) shall include the retail market value of the motor
vehicle left as a downpayment or trade-in, or its value as stated in
the contract or purchase order, whichever is greater.
(d) If the dealer received a portion of the purchase price by
credit card, or other third-party payer on the buyer’s account, the
dealer may refund that portion of the purchase price to the credit
card issuer or third-party payer for credit to the buyer’s account.
(e) Notwithstanding subdivision (a), a dealer is not required to
offer a contract cancellation option agreement to an individual who
exercised his or her right to cancel the purchase of a vehicle from
the dealer pursuant to a contract cancellation option agreement
during the immediately preceding 30 days. A dealer is not required to
give notice to a subsequent buyer of the return of a vehicle
pursuant to this section. This subdivision does not abrogate or limit
any disclosure obligation imposed by any other law.
(f) This section does not affect or alter the legal rights,
duties, obligations, or liabilities of the buyer, the dealer, or the
dealer’s agents or assigns, that would exist in the absence of a
contract cancellation option agreement. The buyer is the owner of a
vehicle when he or she takes delivery of a vehicle until the vehicle
is returned to the dealer pursuant to a contract cancellation option
agreement, and the existence of a contract cancellation option
agreement shall not impose permissive user liability on the dealer,
or the dealer’s agents or assigns, under Section 460 or 17150 or
otherwise.
(g) This section does not affect the ability of a buyer to rescind
the contract or revoke acceptance under any other law.
(h) This section shall become inoperative on July 1, 2012, and, as
of January 1, 2013, is repealed, unless a later enacted statute that
is enacted before January 1, 2013, deletes or extends the dates on
which it becomes inoperative and is repealed.
(h) This section shall become operative on July 1, 2012.