« Back to our NMVTIS Solution for California AB 1215

BILL NUMBER: AB 1215	CHAPTERED
	BILL TEXT

	CHAPTER  329
	FILED WITH SECRETARY OF STATE  SEPTEMBER 26, 2011
	APPROVED BY GOVERNOR  SEPTEMBER 26, 2011
	PASSED THE SENATE  AUGUST 30, 2011
	PASSED THE ASSEMBLY  SEPTEMBER 2, 2011
	AMENDED IN SENATE  AUGUST 18, 2011
	AMENDED IN SENATE  AUGUST 15, 2011
	AMENDED IN SENATE  JULY 12, 2011
	AMENDED IN SENATE  JUNE 22, 2011
	AMENDED IN ASSEMBLY  MAY 27, 2011
	AMENDED IN ASSEMBLY  MAY 10, 2011
	AMENDED IN ASSEMBLY  APRIL 28, 2011

INTRODUCED BY   Assembly Member Blumenfield
   (Coauthor: Assembly Member Yamada)

                        FEBRUARY 18, 2011

   An act to amend, repeal, and add Sections 2982 and 2985.8 of the
Civil Code, and to amend, repeal, and add Sections 4456, 5202,
11713.1, and 11713.21 of, and to add Sections 4456.4, 4456.5, and
11713.26 to, the Vehicle Code, relating to vehicles.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1215, Blumenfield. Vehicles: electronic processing of
documents: titling and registration.
   (1) Existing law imposes specified licensing and regulatory
requirements on dealers of motor vehicles and requires that specified
fees and charges be disclosed in a conditional sales contract for
the purchase of a motor vehicle. Existing law also prohibits any
person from driving, moving, or leaving upon a highway any motor
vehicle subject to registration under the Vehicle Code, unless it is
registered and the appropriate fees have been paid under that code,
and existing law authorizes the Department of Motor Vehicles to
establish contracts for electronic programs that allow qualified
industry partners to join the department in providing services that
include processing and payment programs for vehicle registration and
titling transactions.
   Existing law makes it a violation of the Vehicle Code for the
holder of any vehicle dealer's license to commit specified actions,
including, to advertise the total price of a vehicle without
including all costs to the purchaser at the time of sale, except
taxes, vehicle registration fees, the California tire fee, as
defined, emission testing fees not exceeding $50, actual fees charged
for certificates, finance charges, and any dealer document
preparation charge, and prohibits the dealer document preparation
charge from exceeding $55.
   This bill would, beginning July 1, 2012, revise and recast these
provisions and would require a motor vehicle sold or leased by a new
motor vehicle dealer to be registered by the dealer using electronic
programs provided by a qualified private industry partner, would
require the dealer to disclose any document processing charge or
electronic registration or transfer charge, and would establish the
charges that a dealer may charge the purchaser or lessee of a
vehicle.
   The bill would, after October 1, 2012, make it a violation of the
Vehicle Code for the holder of a dealer's license to sell or lease a
new motor vehicle unless the dealer has a contractual agreement with
the department to be a private industry partner, except as specified.
The bill would make other conforming changes to these provisions.
   The bill would, beginning July 1, 2012, prohibit a dealer from
displaying or offering for sale at retail a used vehicle unless the
dealer first obtains a vehicle history report from the National Motor
Vehicle Title Information System (NMVTIS). If the NMVTIS report
indicates that the vehicle is or has been a junk or salvage
automobile, or the vehicle has been reported as such by a junk or a
salvage yard, or an insurance carrier, or the certificate of title
contains a brand, the bill would require the dealer to post a
specified disclosure and provide the retail purchaser with a copy of
the report upon request prior to sale. These requirements associated
with obtaining a NMVTIS vehicle history report would become
inoperative if all NMVTIS data providers cease to make these reports
available to the public.
   (2) Because this bill would create new crimes, the bill would
impose a state-mandated local program.
   (3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  The Legislature finds and declares all of the
following:
   (a) There are more than 30 million vehicles registered in the
State of California. Maintenance by the Department of Motor Vehicles
of accurate registration records for those vehicles is of vital
importance to registered owners, legal owners that hold liens on
vehicles, law enforcement agencies that police vehicles, tax
collection agencies that collect taxes and fees assessed on vehicles,
and pollution control agencies that regulate emissions produced by
vehicles.
   (b) As authorized by the Legislature in 2001, the department
administers the Business Partner Automation Program, pursuant to
Section 1685 of the Vehicle Code, to improve the quality of
registration products and services by licensing qualified private
industry partners to provide secure electronic portals to licensed
dealers and registration services so that they may perform required
registration tasks electronically.
   (c) Electronic vehicle registration under the Business Partner
Automation Program results in multiple benefits. The department
benefits through increased accuracy of records that are recorded and
transmitted electronically and also benefits through processing
efficiencies that reduce wait times in field offices for
nonelectronic transactions. Electronic registration also aids law
enforcement, other government agencies, and consumers by accelerating
the issuance of permanent license plates from a period of weeks or
months to days.
   (d) It is the intent of the Legislature in enacting this act to
further increase the registration benefits and efficiencies of the
department's Business Partner Automation Program by requiring all
eligible vehicles sold or leased by a new motor vehicle dealer to be
registered electronically. It is also the intent of the Legislature
that the department continues to improve and expand the quality and
efficiency of the Business Partner Automation Program to permit
existing department personnel to increase customer service in other
areas without a workforce reduction.
  SEC. 2.  The Legislature finds and declares all of the following:
   (a) The electronic National Motor Vehicle Title Information System
(NMVTIS) is a national federally mandated vehicle history database
maintained by the United States Department of Justice to ensure that
states, law enforcement agencies, and consumers have access to
vehicle titling, branding, and other information that enable them to
verify the accuracy and legality of motor vehicle titles before
transfer or registration of the vehicle occurs.
   (b) According to a cost-benefit analysis commissioned by the
United States Department of Justice, full implementation of NMVTIS
will save the American public between $4.3 billion and $11.7 billion
by helping to curb automobile-related salvage fraud, theft, and
related crimes.
   (c) All automobile insurers, self-insured entities, salvage pools,
automobile auctions, and recyclers, are required to report vehicles
that are deemed a total loss to NMVTIS and update the data at least
every 30 days.
   (d) According to NMVTIS, 87 percent of departments of motor
vehicle titling data from the entire United States, including all of
the California Department of Motor Vehicles titling data, is
currently represented in NMVTIS and the database is expanding daily.
   (e) Federal law provides that NMVTIS must be supported through
user fees from government and private users and may not be dependent
on federal funding. The NMVTIS operator is authorized to assess and
collect user fees not to exceed the cost of operating the system, not
permitting any profits to be made by the operator. Federal funding
and investments by the NMVTIS operator account for over $40 million
in support of operations since 1997. Fees to state government users
are not projected to be adequate to provide sufficient revenue to
defray all anticipated operating costs. It is crucial to the success
of NMVTIS that new applications be developed to generate sufficient
nonstate government user fees so that NMVTIS may continue its
operations.
   (f) It is the intent of the Legislature in enacting Section 17 of
this act to ensure that every motor vehicle dealer licensed in this
state obtain a NMVTIS vehicle history report for every used vehicle
that will be offered for retail sale and that any used vehicle that
has been titled or reported as salvage or junk as indicated by the
NMVTIS vehicle history report be identified as such. By becoming the
first and largest state in the country to require the use of NMVTIS
vehicle history reports by dealers in retail used vehicle
transactions, this act will not only benefit the California consumer,
it will also strengthen and financially support NMVTIS.
  SEC. 3.  Section 2982 of the Civil Code is amended to read:
   2982.  A conditional sale contract subject to this chapter shall
contain the disclosures required by Regulation Z, whether or not
Regulation Z applies to the transaction. In addition, to the extent
applicable, the contract shall contain the other disclosures and
notices required by, and shall satisfy the requirements and
limitations of, this section. The disclosures required by subdivision
(a) may be itemized or subtotaled to a greater extent than as
required by that subdivision and shall be made together and in the
sequence set forth in that subdivision. All other disclosures and
notices may appear in the contract in any location or sequence and
may be combined or interspersed with other provisions of the
contract.
   (a) The contract shall contain the following disclosures, as
applicable, which shall be labeled "itemization of the amount
financed":
   (1) (A) The cash price, exclusive of document preparation fees,
business partnership automation fees, taxes imposed on the sale,
pollution control certification fees, prior credit or lease balance
on property being traded in, the amount charged for a service
contract, the amount charged for a theft deterrent system, the amount
charged for a surface protection product, the amount charged for an
optional debt cancellation agreement, and the amount charged for a
contract cancellation option agreement.
   (B) The fee to be retained by the seller for document preparation.

   (C) The fee charged by the seller for certifying that the motor
vehicle complies with applicable pollution control requirements.
   (D) A charge for a theft deterrent device.
   (E) A charge for a surface protection product.
   (F) Taxes imposed on the sale.
   (G) The amount of any optional business partnership automation fee
to register or transfer the vehicle, which shall be labeled
"Optional DMV Electronic Filing Fee."
   (H) The amount charged for a service contract.
   (I) The prior credit or lease balance remaining on property being
traded in, as required by paragraph (6). The disclosure required by
this subparagraph shall be labeled "prior credit or lease balance
(see downpayment and trade-in calculation)."
   (J) Any charge for an optional debt cancellation agreement.
   (K) Any charge for a used vehicle contract cancellation option
agreement.
   (L) The total cash price, which is the sum of subparagraphs (A) to
(K), inclusive.
   (M) The disclosures described in subparagraphs (D), (E), and (K)
are not required on contracts involving the sale of a motorcycle, as
defined in Section 400 of the Vehicle Code, or on contracts involving
the sale of an off-highway motor vehicle that is subject to
identification under Section 38010 of the Vehicle Code, and the
amounts of those charges, if any, are not required to be reflected in
the total price under subparagraph (L).
   (2) Amounts paid to public officials for the following:
   (A) Vehicle license fees.
   (B) Registration, transfer, and titling fees.
   (C) California tire fees imposed pursuant to Section 42885 of the
Public Resources Code.
   (3) The aggregate amount of premiums agreed, upon execution of the
contract, to be paid for policies of insurance included in the
contract, excluding the amount of any insurance premium included in
the finance charge.
   (4) The amount of the state fee for issuance of a certificate of
compliance, noncompliance, exemption, or waiver pursuant to any
applicable pollution control statute.
   (5) A subtotal representing the sum of the amounts described in
paragraphs (1) to (4), inclusive.
   (6) The amount of the buyer's downpayment itemized to show the
following:
   (A) The agreed value of the property being traded in.
   (B) The prior credit or lease balance, if any, owing on the
property being traded in.
   (C) The net agreed value of the property being traded in, which is
the difference between the amounts disclosed in subparagraphs (A)
and (B). If the prior credit or lease balance of the property being
traded in exceeds the agreed value of the property, a negative number
shall be stated.
   (D) The amount of any portion of the downpayment to be deferred
until not later than the due date of the second regularly scheduled
installment under the contract and that is not subject to a finance
charge.
   (E) The amount of any manufacturer's rebate applied or to be
applied to the downpayment.
   (F) The remaining amount paid or to be paid by the buyer as a
downpayment.
   (G) The total downpayment. If the sum of subparagraphs (C) to (F),
inclusive, is zero or more, that sum shall be stated as the total
downpayment and no amount shall be stated as the prior credit or
lease balance under subparagraph (I) of paragraph (1). If the sum of
subparagraphs (C) to (F), inclusive, is less than zero, then that
sum, expressed as a positive number, shall be stated as the prior
credit or lease balance under subparagraph (I) of paragraph (1), and
zero shall be stated as the total downpayment. The disclosure
required by this subparagraph shall be labeled "total downpayment"
and shall contain a descriptor indicating that if the total
downpayment is a negative number, a zero shall be disclosed as the
total downpayment and a reference made that the remainder shall be
included in the disclosure required pursuant to subparagraph (I) of
paragraph (1).
   (7) The amount of any administrative finance charge, labeled
"prepaid finance charge."
   (8) The difference between the amount described in paragraph (5)
and the sum of the amounts described in paragraphs (6) and (7),
labeled "amount financed."
   (b) No particular terminology is required to disclose the items
set forth in subdivision (a) except as expressly provided in that
subdivision.
   (c) If payment of all or a portion of the downpayment is to be
deferred, the deferred payment shall be reflected in the payment
schedule disclosed pursuant to Regulation Z.
   (d) If the downpayment includes property being traded in, the
contract shall contain a brief description of that property.
   (e) The contract shall contain the names and addresses of all
persons to whom the notice required pursuant to Section 2983.2 and
permitted pursuant to Sections 2983.5 and 2984 is to be sent.
   (f) (1) If the contract includes a finance charge determined on
the precomputed basis, the contract shall identify the method of
computing the unearned portion of the finance charge in the event of
prepayment in full of the buyer's obligation and contain a statement
of the amount or method of computation of any charge that may be
deducted from the amount of any unearned finance charge in computing
the amount that will be credited to the obligation or refunded to the
buyer. The method of computing the unearned portion of the finance
charge shall be sufficiently identified with a reference to the
actuarial method if the computation will be under that method. The
method of computing the unearned portion of the finance charge shall
be sufficiently identified with a reference to the Rule of 78's, the
sum of the digits, or the sum of the periodic time balances method in
all other cases, and those references shall be deemed to be
equivalent for disclosure purposes.
   (2) If the contract includes a finance charge that is determined
on the simple-interest basis but provides for a minimum finance
charge in the event of prepayment in full, the contract shall contain
a statement of that fact and the amount of the minimum finance
charge or its method of calculation.
   (g) (1) If the contract includes a finance charge that is
determined on the precomputed basis and provides that the unearned
portion of the finance charge to be refunded upon full prepayment of
the contract is to be determined by a method other than actuarial,
the contract shall contain a notice, in at least 10-point boldface
type if the contract is printed, reading as follows:  "Notice to
buyer:  (1) Do not sign this agreement before you read it or if it
contains any blank spaces to be filled in.  (2) You are entitled to a
completely filled-in copy of this agreement.  (3) You can prepay the
full amount due under this agreement at any time and obtain a
partial refund of the finance charge if it is $1 or more. Because of
the way the amount of this refund will be figured, the time when you
prepay could increase the ultimate cost of credit under this
agreement.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (2) If the contract includes a finance charge that is determined
on the precomputed basis and provides for the actuarial method for
computing the unearned portion of the finance charge upon prepayment
in full, the contract shall contain a notice, in at least 10-point
boldface type if the contract is printed, reading as follows:
"Notice to buyer:  (1) Do not sign this agreement before you read it
or if it contains any blank spaces to be filled in.  (2) You are
entitled to a completely filled-in copy of this agreement.  (3) You
can prepay the full amount due under this agreement at any time and
obtain a partial refund of the finance charge if it is $1 or more.
(4) If you default in the performance of your obligations under this
agreement, the vehicle may be repossessed and you may be subject to
suit and liability for the unpaid indebtedness evidenced by this
agreement."
   (3) If the contract includes a finance charge that is determined
on the simple-interest basis, the contract shall contain a notice, in
at least 10-point boldface type if the contract is printed, reading
as follows:  "Notice to buyer:  (1) Do not sign this agreement before
you read it or if it contains any blank spaces to be filled in.  (2)
You are entitled to a completely filled-in copy of this agreement.
(3) You can prepay the full amount due under this agreement at any
time.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (h) The contract shall contain a notice in at least 8-point
boldface type, acknowledged by the buyer, that reads as follows:

   "If you have a complaint concerning this sale, you should try to
resolve it with the seller.
   Complaints concerning unfair or deceptive practices or methods by
the seller may be referred to the city attorney, the district
attorney, or an investigator for the Department of Motor Vehicles, or
any combination thereof.
   After this contract is signed, the seller may not change the
financing or payment terms unless you agree in writing to the change.
You do not have to agree to any change, and it is an unfair or
deceptive practice for the seller to make a unilateral change.
-------------------------------
Buyer's Signature''


   (i) (1) The contract shall contain an itemization of any insurance
included as part of the amount financed disclosed pursuant to
paragraph (3) of subdivision (a) and of any insurance included as
part of the finance charge. The itemization shall identify the type
of insurance coverage and the premium charged therefor, and, if the
insurance expires before the date of the last scheduled installment
included in the repayment schedule, the term of the insurance shall
be stated.
   (2) If any charge for insurance, other than for credit life or
disability, is included in the contract balance and disbursement of
any part thereof is to be made more than one year after the date of
the conditional sale contract, any finance charge on the amount to be
disbursed after one year shall be computed from the month the
disbursement is to be made to the due date of the last installment
under the conditional sale contract.
   (j) (1) Except for contracts in which the finance charge or a
portion of the finance charge is determined by the simple-interest
basis and the amount financed disclosed pursuant to paragraph (8) of
subdivision (a) is more than two thousand five hundred dollars
($2,500), the dollar amount of the disclosed finance charge may not
exceed the greater of:
   (A) (i) One and one-half percent on so much of the unpaid balance
as does not exceed two hundred twenty-five dollars ($225), 11/6
percent on so much of the unpaid balance in excess of two hundred
twenty-five dollars ($225) as does not exceed nine hundred dollars
($900) and five-sixths of 1 percent on so much of the unpaid balance
in excess of nine hundred dollars ($900) as does not exceed two
thousand five hundred dollars ($2,500).
   (ii) One percent of the entire unpaid balance; multiplied in
either case by the number of months (computed on the basis of a full
month for any fractional month period in excess of 15 days) elapsing
between the date of the contract and the due date of the last
installment.
   (B) If the finance charge is determined by the precomputed basis,
twenty-five dollars ($25).
   (C) If the finance charge or a portion thereof is determined by
the simple-interest basis:
   (i) Twenty-five dollars ($25) if the unpaid balance does not
exceed one thousand dollars ($1,000).
   (ii) Fifty dollars ($50) if the unpaid balance exceeds one
thousand dollars ($1,000) but does not exceed two thousand dollars
($2,000).
   (iii) Seventy-five dollars ($75) if the unpaid balance exceeds two
thousand dollars ($2,000).
   (2) The holder of the contract shall not charge, collect, or
receive a finance charge that exceeds the disclosed finance charge,
except to the extent (A) caused by the holder's receipt of one or
more payments under a contract that provides for determination of the
finance charge or a portion thereof on the 365-day basis at a time
or times other than as originally scheduled whether or not the
parties enter into an agreement pursuant to Section 2982.3, (B)
permitted by paragraph (2), (3), or (4) of subdivision (c) of Section
226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c)
of Section 2982.8.
   (3) If the finance charge or a portion thereof is determined by
the simple-interest basis and the amount of the unpaid balance
exceeds five thousand dollars ($5,000), the holder of the contract
may, in lieu of its right to a minimum finance charge under
subparagraph (C) of paragraph (1), charge, receive, or collect on the
date of the contract an administrative finance charge not to exceed
seventy-five dollars ($75), provided that the sum of the
administrative finance charge and the portion of the finance charge
determined by the simple-interest basis shall not exceed the maximum
total finance charge permitted by subparagraph (A) of paragraph (1).
Any administrative finance charge that is charged, received, or
collected by a holder shall be deemed a finance charge earned on the
date of the contract.
   (4) If a contract provides for unequal or irregular payments, or
payments on other than a monthly basis, the maximum finance charge
shall be at the effective rate provided for in paragraph (1), having
due regard for the schedule of installments.
   (k) The contract may provide that for each installment in default
for a period of not less than 10 days the buyer shall pay a
delinquency charge in an amount not to exceed in the aggregate 5
percent of the delinquent installment, which amount may be collected
only once on any installment regardless of the period during which it
remains in default. Payments timely received by the seller under an
extension or deferral agreement may not be subject to a delinquency
charge unless the charge is permitted by Section 2982.3. The contract
may provide for reasonable collection costs and fees in the event of
delinquency.
   (  l  ) Notwithstanding any provision of a contract to
the contrary, the buyer may pay at any time before maturity the
entire indebtedness evidenced by the contract without penalty. In the
event of prepayment in full:
   (1) If the finance charge was determined on the precomputed basis,
the amount required to prepay the contract shall be the outstanding
contract balance as of that date, provided, however, that the buyer
shall be entitled to a refund credit in the amount of the unearned
portion of the finance charge, except as provided in paragraphs (3)
and (4). The amount of the unearned portion of the finance charge
shall be at least as great a proportion of the finance charge,
including any additional finance charge imposed pursuant to Section
2982.8 or other additional charge imposed because the contract has
been extended, deferred, or refinanced, as the sum of the periodic
monthly time balances payable more than 15 days after the date of
prepayment bears to the sum of all the periodic monthly time balances
under the schedule of installments in the contract or, if the
contract has been extended, deferred, or refinanced, as so extended,
deferred, or refinanced. If the amount of the refund credit is less
than one dollar ($1), no refund credit need be made by the holder.
Any refund credit may be made in cash or credited to the outstanding
obligations of the buyer under the contract.
   (2) If the finance charge or a portion of the finance charge was
determined on the simple-interest basis, the amount required to
prepay the contract shall be the outstanding contract balance as of
that date, including any earned finance charges that are unpaid as of
that date and, if applicable, the amount provided in paragraph (3),
and provided further that in cases where a finance charge is
determined on the 360-day basis, the payments received under the
contract shall be assumed to have been received on their respective
due dates regardless of the actual dates on which the payments were
received.
   (3) If the minimum finance charge provided by subparagraph (B) or
subparagraph (C) of paragraph (1) of subdivision (j), if either is
applicable, is greater than the earned finance charge as of the date
of prepayment, the holder shall be additionally entitled to the
difference.
   (4) This subdivision shall not impair the right of the seller or
the seller's assignee to receive delinquency charges on delinquent
installments and reasonable costs and fees as provided in subdivision
(k) or extension or deferral agreement charges as provided in
Section 2982.3.
   (5) Notwithstanding any provision of a contract to the contrary,
if the indebtedness created by any contract is satisfied prior to its
maturity through surrender of the motor vehicle, repossession of the
motor vehicle, redemption of the motor vehicle after repossession,
or any judgment, the outstanding obligation of the buyer shall be
determined as provided in paragraph (1) or (2). Notwithstanding, the
buyer's outstanding obligation shall be computed by the holder as of
the date the holder recovers the value of the motor vehicle through
disposition thereof or judgment is entered or, if the holder elects
to keep the motor vehicle in satisfaction of the buyer's
indebtedness, as of the date the holder takes possession of the motor
vehicle.
   (m) Notwithstanding any other provision of this chapter to the
contrary, any information required to be disclosed in a conditional
sale contract under this chapter may be disclosed in any manner,
method, or terminology required or permitted under Regulation Z, as
in effect at the time that disclosure is made, except that permitted
by paragraph (2) of subdivision (c) of Section 226.18 of Regulation
Z, if all of the requirements and limitations set forth in
subdivision (a) are satisfied. This chapter does not prohibit the
disclosure in that contract of additional information required or
permitted under Regulation Z, as in effect at the time that
disclosure is made.
   (n) If the seller imposes a fee for document preparation, the
contract shall contain a disclosure that the fee is not a
governmental fee.
   (o) A seller shall not impose an application fee for a transaction
governed by this chapter.
   (p) The seller or holder may charge and collect a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiated order of withdrawal, or
share draft issued in connection with the contract if the contract
so provides or if the contract contains a generalized statement that
the buyer may be liable for collection costs incurred in connection
with the contract.
   (q) The contract shall disclose on its face, by printing the word
"new" or "used" within a box outlined in red, that is not smaller
than one-half inch high and one-half inch wide, whether the vehicle
is sold as a new vehicle, as defined in Section 430 of the Vehicle
Code, or as a used vehicle, as defined in Section 665 of the Vehicle
Code.
   (r) The contract shall contain a notice with a heading in at least
12-point bold type and the text in at least 10-point bold type,
circumscribed by a line, immediately above the contract signature
line, that reads as follows:
       THERE IS NO COOLING-OFF PERIOD UNLESS
    YOU
    OBTAIN A CONTRACT CANCELLATION
    OPTION.
    California law does not provide for a
    ""cooling-off'' or other cancellation period
    for vehicle sales. Therefore, you cannot
    later cancel this contract simply because you
    change your mind, decide the vehicle costs
    too much, or wish you       had acquired a
    different vehicle. After you sign below, you
    may only cancel this contract with the
    agreement of the seller or for legal cause,
    such as
    fraud.
    However, California law does require a seller
    to offer a 2-day contract cancellation option
    on used vehicles with a purchase price of
    less than $40,000, subject to certain
    statutory conditions. This contract
    cancellation option requirement does not
    apply to the sale of a recreational vehicle,
    a motorcycle, or an off-highway motor vehicle
    subject to identification under California

          law. See the vehicle contract cancellation
    option agreement for details.



   (s) 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.
  SEC. 4.  Section 2982 is added to the Civil Code, to read:
   2982.  A conditional sale contract subject to this chapter shall
contain the disclosures required by Regulation Z, whether or not
Regulation Z applies to the transaction. In addition, to the extent
applicable, the contract shall contain the other disclosures and
notices required by, and shall satisfy the requirements and
limitations of, this section. The disclosures required by subdivision
(a) may be itemized or subtotaled to a greater extent than as
required by that subdivision and shall be made together and in the
sequence set forth in that subdivision. All other disclosures and
notices may appear in the contract in any location or sequence and
may be combined or interspersed with other provisions of the
contract.
   (a) The contract shall contain the following disclosures, as
applicable, which shall be labeled "itemization of the amount
financed":
   (1) (A) The cash price, exclusive of document processing charges,
charges to electronically register or transfer the vehicle, taxes
imposed on the sale, pollution control certification fees, prior
credit or lease balance on property being traded in, the amount
charged for a service contract, the amount charged for a theft
deterrent system, the amount charged for a surface protection
product, the amount charged for an optional debt cancellation
agreement, and the amount charged for a contract cancellation option
agreement.
   (B) The charge to be retained by the seller for document
processing authorized pursuant to Section 4456.5 of the Vehicle Code.

   (C) The fee charged by the seller for certifying that the motor
vehicle complies with applicable pollution control requirements.
   (D) A charge for a theft deterrent device.
   (E) A charge for a surface protection product.
   (F) Taxes imposed on the sale.
   (G) The charge to electronically register or transfer the vehicle
authorized pursuant to Section 4456.5 of the Vehicle Code.
   (H) The amount charged for a service contract.
   (I) The prior credit or lease balance remaining on property being
traded in, as required by paragraph (6). The disclosure required by
this subparagraph shall be labeled "prior credit or lease balance
(see downpayment and trade-in calculation)."
   (J) Any charge for an optional debt cancellation agreement.
   (K) Any charge for a used vehicle contract cancellation option
agreement.
   (L) The total cash price, which is the sum of subparagraphs (A) to
(K), inclusive.
   (M) The disclosures described in subparagraphs (D), (E), and (K)
are not required on contracts involving the sale of a motorcycle, as
defined in Section 400 of the Vehicle Code, or on contracts involving
the sale of an off-highway motor vehicle that is subject to
identification under Section 38010 of the Vehicle Code, and the
amounts of those charges, if any, are not required to be reflected in
the total price under subparagraph (L).
   (2) Amounts paid to public officials for the following:
   (A) Vehicle license fees.
   (B) Registration, transfer, and titling fees.
   (C) California tire fees imposed pursuant to Section 42885 of the
Public Resources Code.
   (3) The aggregate amount of premiums agreed, upon execution of the
contract, to be paid for policies of insurance included in the
contract, excluding the amount of any insurance premium included in
the finance charge.
   (4) The amount of the state fee for issuance of a certificate of
compliance, noncompliance, exemption, or waiver pursuant to any
applicable pollution control statute.
   (5) A subtotal representing the sum of the amounts described in
paragraphs (1) to (4), inclusive.
   (6) The amount of the buyer's downpayment itemized to show the
following:
   (A) The agreed value of the property being traded in.
   (B) The prior credit or lease balance, if any, owing on the
property being traded in.
   (C) The net agreed value of the property being traded in, which is
the difference between the amounts disclosed in subparagraphs (A)
and (B). If the prior credit or lease balance of the property being
traded in exceeds the agreed value of the property, a negative number
shall be stated.
   (D) The amount of any portion of the downpayment to be deferred
until not later than the due date of the second regularly scheduled
installment under the contract and that is not subject to a finance
charge.
   (E) The amount of any manufacturer's rebate applied or to be
applied to the downpayment.
   (F) The remaining amount paid or to be paid by the buyer as a
downpayment.
   (G) The total downpayment. If the sum of subparagraphs (C) to (F),
inclusive, is zero or more, that sum shall be stated as the total
downpayment, and no amount shall be stated as the prior credit or
lease balance under subparagraph (I) of paragraph (1). If the sum of
subparagraphs (C) to (F), inclusive, is less than zero, then that
sum, expressed as a positive number, shall be stated as the prior
credit or lease balance under subparagraph (I) of paragraph (1), and
zero shall be stated as the total downpayment. The disclosure
required by this subparagraph shall be labeled "total downpayment"
and shall contain a descriptor indicating that if the total
downpayment is a negative number, a zero shall be disclosed as the
total downpayment and a reference made that the remainder shall be
included in the disclosure required pursuant to subparagraph (I) of
paragraph (1).
   (7) The amount of any administrative finance charge, labeled
"prepaid finance charge."
   (8) The difference between the amount described in paragraph (5)
and the sum of the amounts described in paragraphs (6) and (7),
labeled "amount financed."
   (b) No particular terminology is required to disclose the items
set forth in subdivision (a) except as expressly provided in that
subdivision.
   (c) If payment of all or a portion of the downpayment is to be
deferred, the deferred payment shall be reflected in the payment
schedule disclosed pursuant to Regulation Z.
   (d) If the downpayment includes property being traded in, the
contract shall contain a brief description of that property.
   (e) The contract shall contain the names and addresses of all
persons to whom the notice required pursuant to Section 2983.2 and
permitted pursuant to Sections 2983.5 and 2984 is to be sent.
   (f) (1) If the contract includes a finance charge determined on
the precomputed basis, the contract shall identify the method of
computing the unearned portion of the finance charge in the event of
prepayment in full of the buyer's obligation and contain a statement
of the amount or method of computation of any charge that may be
deducted from the amount of any unearned finance charge in computing
the amount that will be credited to the obligation or refunded to the
buyer. The method of computing the unearned portion of the finance
charge shall be sufficiently identified with a reference to the
actuarial method if the computation will be under that method. The
method of computing the unearned portion of the finance charge shall
be sufficiently identified with a reference to the Rule of 78's, the
sum of the digits, or the sum of the periodic time balances method in
all other cases, and those references shall be deemed to be
equivalent for disclosure purposes.
   (2) If the contract includes a finance charge that is determined
on the simple-interest basis but provides for a minimum finance
charge in the event of prepayment in full, the contract shall contain
a statement of that fact and the amount of the minimum finance
charge or its method of calculation.
   (g) (1) If the contract includes a finance charge that is
determined on the precomputed basis and provides that the unearned
portion of the finance charge to be refunded upon full prepayment of
the contract is to be determined by a method other than actuarial,
the contract shall contain a notice, in at least 10-point boldface
type if the contract is printed, reading as follows:  "Notice to
buyer:  (1) Do not sign this agreement before you read it or if it
contains any blank spaces to be filled in.  (2) You are entitled to a
completely filled-in copy of this agreement.  (3) You can prepay the
full amount due under this agreement at any time and obtain a
partial refund of the finance charge if it is $1 or more. Because of
the way the amount of this refund will be figured, the time when you
prepay could increase the ultimate cost of credit under this
agreement.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (2) If the contract includes a finance charge that is determined
on the precomputed basis and provides for the actuarial method for
computing the unearned portion of the finance charge upon prepayment
in full, the contract shall contain a notice, in at least 10-point
boldface type if the contract is printed, reading as follows:
"Notice to buyer:  (1) Do not sign this agreement before you read it
or if it contains any blank spaces to be filled in.  (2) You are
entitled to a completely filled-in copy of this agreement.  (3) You
can prepay the full amount due under this agreement at any time and
obtain a partial refund of the finance charge if it is $1 or more.
(4) If you default in the performance of your obligations under this
agreement, the vehicle may be repossessed and you may be subject to
suit and liability for the unpaid indebtedness evidenced by this
agreement."
   (3) If the contract includes a finance charge that is determined
on the simple-interest basis, the contract shall contain a notice, in
at least 10-point boldface type if the contract is printed, reading
as follows:  "Notice to buyer:  (1) Do not sign this agreement before
you read it or if it contains any blank spaces to be filled in.  (2)
You are entitled to a completely filled-in copy of this agreement.
(3) You can prepay the full amount due under this agreement at any
time.  (4) If you default in the performance of your obligations
under this agreement, the vehicle may be repossessed and you may be
subject to suit and liability for the unpaid indebtedness evidenced
by this agreement."
   (h) The contract shall contain a notice in at least 8-point
boldface type, acknowledged by the buyer, that reads as follows:

   "If you have a complaint concerning this sale, you should try to
resolve it with the seller.
   Complaints concerning unfair or deceptive practices or methods by
the seller may be referred to the city attorney, the district
attorney, or an investigator for the Department of Motor Vehicles, or
any combination thereof.
   After this contract is signed, the seller may not change the
financing or payment terms unless you agree in writing to the change.
You do not have to agree to any change, and it is an unfair or
deceptive practice for the seller to make a unilateral change.
-------------------------------
Buyer's Signature''


   (i) (1) The contract shall contain an itemization of any insurance
included as part of the amount financed disclosed pursuant to
paragraph (3) of subdivision (a) and of any insurance included as
part of the finance charge. The itemization shall identify the type
of insurance coverage and the premium charged therefor, and, if the
insurance expires before the date of the last scheduled installment
included in the repayment schedule, the term of the insurance shall
be stated.
   (2) If any charge for insurance, other than for credit life or
disability, is included in the contract balance and disbursement of
any part thereof is to be made more than one year after the date of
the conditional sale contract, any finance charge on the amount to be
disbursed after one year shall be computed from the month the
disbursement is to be made to the due date of the last installment
under the conditional sale contract.
   (j) (1) Except for contracts in which the finance charge or a
portion of the finance charge is determined by the simple-interest
basis and the amount financed disclosed pursuant to paragraph (8) of
subdivision (a) is more than two thousand five hundred dollars
($2,500), the dollar amount of the disclosed finance charge may not
exceed the greater of:
   (A) (i) One and one-half percent on so much of the unpaid balance
as does not exceed two hundred twenty-five dollars ($225), 11/6
percent on so much of the unpaid balance in excess of two hundred
twenty-five dollars ($225) as does not exceed nine hundred dollars
($900) and five-sixths of 1 percent on so much of the unpaid balance
in excess of nine hundred dollars ($900) as does not exceed two
thousand five hundred dollars ($2,500).
   (ii) One percent of the entire unpaid balance; multiplied in
either case by the number of months (computed on the basis of a full
month for any fractional month period in excess of 15 days) elapsing
between the date of the contract and the due date of the last
installment.
   (B) If the finance charge is determined by the precomputed basis,
twenty-five dollars ($25).
   (C) If the finance charge or a portion thereof is determined by
the simple-interest basis:
   (i) Twenty-five dollars ($25) if the unpaid balance does not
exceed one thousand dollars ($1,000).
   (ii) Fifty dollars ($50) if the unpaid balance exceeds one
thousand dollars ($1,000) but does not exceed two thousand dollars
($2,000).
   (iii) Seventy-five dollars ($75) if the unpaid balance exceeds two
thousand dollars ($2,000).
   (2) The holder of the contract shall not charge, collect, or
receive a finance charge that exceeds the disclosed finance charge,
except to the extent (A) caused by the holder's receipt of one or
more payments under a contract that provides for determination of the
finance charge or a portion thereof on the 365-day basis at a time
or times other than as originally scheduled whether or not the
parties enter into an agreement pursuant to Section 2982.3, (B)
permitted by paragraph (2), (3), or (4) of subdivision (c) of Section
226.17 of Regulation Z, or (C) permitted by subdivisions (a) and (c)
of Section 2982.8.
   (3) If the finance charge or a portion thereof is determined by
the simple-interest basis and the amount of the unpaid balance
exceeds five thousand dollars ($5,000), the holder of the contract
may, in lieu of its right to a minimum finance charge under
subparagraph (C) of paragraph (1), charge, receive, or collect on the
date of the contract an administrative finance charge not to exceed
seventy-five dollars ($75), provided that the sum of the
administrative finance charge and the portion of the finance charge
determined by the simple-interest basis shall not exceed the maximum
total finance charge permitted by subparagraph (A) of paragraph (1).
Any administrative finance charge that is charged, received, or
collected by a holder shall be deemed a finance charge earned on the
date of the contract.
   (4) If a contract provides for unequal or irregular payments, or
payments on other than a monthly basis, the maximum finance charge
shall be at the effective rate provided for in paragraph (1), having
due regard for the schedule of installments.
   (k) The contract may provide that for each installment in default
for a period of not less than 10 days the buyer shall pay a
delinquency charge in an amount not to exceed in the aggregate 5
percent of the delinquent installment, which amount may be collected
only once on any installment regardless of the period during which it
remains in default. Payments timely received by the seller under an
extension or deferral agreement may not be subject to a delinquency
charge unless the charge is permitted by Section 2982.3. The contract
may provide for reasonable collection costs and fees in the event of
delinquency.
   (  l  ) Notwithstanding any provision of a contract to
the contrary, the buyer may pay at any time before maturity the
entire indebtedness evidenced by the contract without penalty. In the
event of prepayment in full:
   (1) If the finance charge was determined on the precomputed basis,
the amount required to prepay the contract shall be the outstanding
contract balance as of that date, provided, however, that the buyer
shall be entitled to a refund credit in the amount of the unearned
portion of the finance charge, except as provided in paragraphs (3)
and (4). The amount of the unearned portion of the finance charge
shall be at least as great a proportion of the finance charge,
including any additional finance charge imposed pursuant to Section
2982.8 or other additional charge imposed because the contract has
been extended, deferred, or refinanced, as the sum of the periodic
monthly time balances payable more than 15 days after the date of
prepayment bears to the sum of all the periodic monthly time balances
under the schedule of installments in the contract or, if the
contract has been extended, deferred, or refinanced, as so extended,
deferred, or refinanced. If the amount of the refund credit is less
than one dollar ($1), no refund credit need be made by the holder.
Any refund credit may be made in cash or credited to the outstanding
obligations of the buyer under the contract.
   (2) If the finance charge or a portion of the finance charge was
determined on the simple-interest basis, the amount required to
prepay the contract shall be the outstanding contract balance as of
that date, including any earned finance charges that are unpaid as of
that date and, if applicable, the amount provided in paragraph (3),
and provided further that in cases where a finance charge is
determined on the 360-day basis, the payments received under the
contract shall be assumed to have been received on their respective
due dates regardless of the actual dates on which the payments were
received.
   (3) If the minimum finance charge provided by subparagraph (B) or
subparagraph (C) of paragraph (1) of subdivision (j), if either is
applicable, is greater than the earned finance charge as of the date
of prepayment, the holder shall be additionally entitled to the
difference.
   (4) This subdivision shall not impair the right of the seller or
the seller's assignee to receive delinquency charges on delinquent
installments and reasonable costs and fees as provided in subdivision
(k) or extension or deferral agreement charges as provided in
Section 2982.3.
   (5) Notwithstanding any provision of a contract to the contrary,
if the indebtedness created by any contract is satisfied prior to its
maturity through surrender of the motor vehicle, repossession of the
motor vehicle, redemption of the motor vehicle after repossession,
or any judgment, the outstanding obligation of the buyer shall be
determined as provided in paragraph (1) or (2). Notwithstanding, the
buyer's outstanding obligation shall be computed by the holder as of
the date the holder recovers the value of the motor vehicle through
disposition thereof or judgment is entered or, if the holder elects
to keep the motor vehicle in satisfaction of the buyer's
indebtedness, as of the date the holder takes possession of the motor
vehicle.
   (m) Notwithstanding any other provision of this chapter to the
contrary, any information required to be disclosed in a conditional
sale contract under this chapter may be disclosed in any manner,
method, or terminology required or permitted under Regulation Z, as
in effect at the time that disclosure is made, except that permitted
by paragraph (2) of subdivision (c) of Section 226.18 of Regulation
Z, if all of the requirements and limitations set forth in
subdivision (a) are satisfied. This chapter does not prohibit the
disclosure in that contract of additional information required or
permitted under Regulation Z, as in effect at the time that
disclosure is made.
   (n) If the seller imposes a charge for document processing or to
electronically register or transfer the vehicle, the contract shall
contain a disclosure that the charge is not a governmental fee.
   (o) A seller shall not impose an application fee for a transaction
governed by this chapter.
   (p) The seller or holder may charge and collect a fee not to
exceed fifteen dollars ($15) for the return by a depository
institution of a dishonored check, negotiated order of withdrawal, or
share draft issued in connection with the contract if the contract
so provides or if the contract contains a generalized statement that
the buyer may be liable for collection costs incurred in connection
with the contract.
   (q) The contract shall disclose on its face, by printing the word
"new" or "used" within a box outlined in red, that is not smaller
than one-half inch high and one-half inch wide, whether the vehicle
is sold as a new vehicle, as defined in Section 430 of the Vehicle
Code, or as a used vehicle, as defined in Section 665 of the Vehicle
Code.
   (r) The contract shall contain a notice with a heading in at least
12-point bold type and the text in at least 10-point bold type,
circumscribed by a line, immediately above the contract signature
line, that reads as follows:
       THERE IS NO COOLING-OFF PERIOD UNLESS
    YOU
    OBTAIN A CONTRACT CANCELLATION
    OPTION.
    California law does not provide for a
    ""cooling-off'' or other cancellation period
    for vehicle sales.       Therefore, you
    cannot later cancel this contract simply
    because you change your mind, decide the
    vehicle costs too much, or wish you had
    acquired a different vehicle. After you sign
    below, you may only cancel this contract with
    the agreement of the seller or for legal
    cause, such as
    fraud.
    However, California law does require a seller
    to offer a 2-day contract cancellation option
    on used vehicles with a purchase price of
    less than $40,000, subject to certain
    statutory conditions. This contract
    cancellation option requirement does not
    apply to the sale of a recreational vehicle,
    a motorcycle, or an off-highway motor vehicle
    subject to identification under California
    law. See the vehicle contract cancellation
    option agreement for details.



   (s) This section shall become operative on July 1, 2012.
  SEC. 5.  Section 2985.8 of the Civil Code is amended to read:
   2985.8.  (a) A lease contract shall be in writing and the print
portion of the contract shall be printed in at least 8-point type and
shall contain in a single document all of the agreements of the
lessor and lessee with respect to the obligations of each party.
   (b) At the top of the lease contract, a title that contains the
words "LEASE CONTRACT" or "LEASE AGREEMENT" shall appear in at least
12-point boldface type.
   (c) A lease contract shall disclose all of the following:
   (1) All of the information prescribed by Regulation M set forth in
the manner required or permitted by Regulation M, whether or not
Regulation M applies to the transaction.
   (2) A separate statement labeled "Itemization of Gross Capitalized
Cost" that shall appear immediately following or directly adjacent
to the disclosures required to be segregated by Regulation M. The
Itemization of Gross Capitalized Cost shall include all of the
following and shall be circumscribed by a line:
   (A) The agreed-upon value of the vehicle as equipped at the time
of signing the lease.
   (B) The agreed-upon value and a description of each accessory and
item of optional equipment the lessor agrees to add to the vehicle
after signing the lease.
   (C) The premium for each policy of insurance.
   (D) The amount charged for each service contract.
   (E) Any charge for an optional debt cancellation agreement.
   (F) Any outstanding prior credit or lease balance.
   (G) An itemization by type and agreed-upon value of each good or
service included in the gross capitalized cost other than those items
included in the disclosures required in subparagraphs (A) to (F),
inclusive.
   (3) The vehicle identification number of the leased vehicle.
   (4) A brief description of each vehicle or other property being
traded in and the agreed-upon value of the vehicle or property if the
amount due at the time of signing the lease or upon delivery is paid
in whole or in part with a net trade-in allowance or the
"Itemization of Gross Capitalized Cost" includes any portion of the
outstanding prior credit or lease balance from the trade-in property.

   (5) The fee, if any, to be retained by the lessor for document
preparation, which fee may not exceed forty-five dollars ($45) and
shall not be represented as a governmental fee.
   (6) The amount of any optional business partnership automation
program fee to register or transfer the vehicle, which shall be
labeled "Optional DMV Electronic Filing Fee."
   (d) A lease contract shall contain, in at least 8-point boldface
type, above the space provided for the lessee's signature and
circumscribed by a line, the following notice: "(1) Do not sign this
lease before you read it or if it contains any blank spaces to be
filled in; (2) You are entitled to a completely filled in copy of
this lease; (3) Warning--Unless a charge is included in this lease
for public liability or property damage insurance, payment for that
coverage is not provided by this lease."
   (e) A lease contract shall contain, in at least 8-point boldface
type, on the first page of the contract and circumscribed by a line,
the following notice:
      "THERE IS NO COOLING OFF PERIOD

   California law does not provide for a "cooling off" or other
cancellation period for vehicle leases. Therefore, you cannot later
cancel this lease simply because you change your mind, decided the
vehicle costs too much, or wish you had acquired a different vehicle.
You may cancel this lease only with the agreement of the lessor or
for legal cause, such as fraud."

   (f) A lease contract shall contain, in at least 8-point boldface
type, the following notice: "You have the right to return the
vehicle, and receive a refund of any payments made if the credit
application is not approved, unless nonapproval results from an
incomplete application or from incorrect information provided by you."

   (g) The lease contract shall be signed by the lessor and lessee,
or their authorized representatives, and an exact copy of the fully
executed lease contract shall be provided to the lessee at the time
of signing.
            (h) A motor vehicle shall not be delivered under a lease
contract subject to this chapter until the lessor provides to the
lessee a fully executed copy of the lease contract.
   (i) The lessor shall not obtain the signature of the lessee to a
contract when it contains blank spaces to be filled in after it has
been signed.
   (j) If the lease contract contains a provision that holds the
lessee liable for the difference between (1) the adjusted capitalized
cost disclosed in the lease contract reduced by the amounts
described in subparagraph (A) of paragraph (5) of subdivision (b) of
Section 2987 and (2) the settlement proceeds of the lessee's required
insurance and deductible in the event of theft or damage to the
vehicle that results in a total loss, the lease contract shall
contain the following notice in at least 8-point boldface type on the
first page of the contract:
      "GAP LIABILITY NOTICE

   In the event of theft or damage to the vehicle that results in a
total loss, there may be a GAP between the amount due upon early
termination and the proceeds of your insurance settlement and
deductible. THIS LEASE PROVIDES THAT YOU ARE LIABLE FOR THE GAP
AMOUNT. Optional coverage for the GAP amount may be offered for an
additional price."

   (k) 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.
  SEC. 6.  Section 2985.8 is added to the Civil Code, to read:
   2985.8.  (a) A lease contract shall be in writing, and the print
portion of the contract shall be printed in at least 8-point type and
shall contain in a single document all of the agreements of the
lessor and lessee with respect to the obligations of each party.
   (b) At the top of the lease contract, a title that contains the
words "LEASE CONTRACT" or "LEASE AGREEMENT" shall appear in at least
12-point boldface type.
   (c) A lease contract shall disclose all of the following:
   (1) All of the information prescribed by Regulation M set forth in
the manner required or permitted by Regulation M, whether or not
Regulation M applies to the transaction.
   (2) A separate statement labeled "Itemization of Gross Capitalized
Cost" that shall appear immediately following or directly adjacent
to the disclosures required to be segregated by Regulation M. The
Itemization of Gross Capitalized Cost shall include all of the
following and shall be circumscribed by a line:
   (A) The agreed-upon value of the vehicle as equipped at the time
of signing the lease.
   (B) The agreed-upon value and a description of each accessory and
item of optional equipment the lessor agrees to add to the vehicle
after signing the lease.
   (C) The premium for each policy of insurance.
   (D) The amount charged for each service contract.
   (E) Any charge for an optional debt cancellation agreement.
   (F) Any outstanding prior credit or lease balance.
   (G) An itemization by type and agreed-upon value of each good or
service included in the gross capitalized cost other than those items
included in the disclosures required in subparagraphs (A) to (F),
inclusive.
   (3) The vehicle identification number of the leased vehicle.
   (4) A brief description of each vehicle or other property being
traded in and the agreed-upon value of the vehicle or property if the
amount due at the time of signing the lease or upon delivery is paid
in whole or in part with a net trade-in allowance or the
"Itemization of Gross Capitalized Cost" includes any portion of the
outstanding prior credit or lease balance from the trade-in property.

   (5) The charge, if any, to be retained by the lessor for document
processing authorized pursuant to Section 4456.5 of the Vehicle Code,
which may not be represented as a governmental fee.
   (6) The charge, if any, to electronically register or transfer the
vehicle authorized pursuant to Section 4456.5 of the Vehicle Code,
which shall not be represented as a governmental fee.
   (d) A lease contract shall contain, in at least 8-point boldface
type, above the space provided for the lessee's signature and
circumscribed by a line, the following notice: "(1) Do not sign this
lease before you read it or if it contains any blank spaces to be
filled in; (2) You are entitled to a completely filled in copy of
this lease; (3) Warning--Unless a charge is included in this lease
for public liability or property damage insurance, payment for that
coverage is not provided by this lease."
   (e) A lease contract shall contain, in at least 8-point boldface
type, on the first page of the contract and circumscribed by a line,
the following notice:
      "THERE IS NO COOLING OFF PERIOD

   California law does not provide for a "cooling off" or other
cancellation period for vehicle leases. Therefore, you cannot later
cancel this lease simply because you change your mind, decided the
vehicle costs too much, or wish you had acquired a different vehicle.
You may cancel this lease only with the agreement of the lessor or
for legal cause, such as fraud."

   (f) A lease contract shall contain, in at least 8-point boldface
type, the following notice: "You have the right to return the
vehicle, and receive a refund of any payments made if the credit
application is not approved, unless nonapproval results from an
incomplete application or from incorrect information provided by you."

   (g) The lease contract shall be signed by the lessor and lessee,
or their authorized representatives, and an exact copy of the fully
executed lease contract shall be provided to the lessee at the time
of signing.
   (h) A motor vehicle shall not be delivered under a lease contract
subject to this chapter until the lessor provides to the lessee a
fully executed copy of the lease contract.
   (i) The lessor shall not obtain the signature of the lessee to a
contract when it contains blank spaces to be filled in after it has
been signed.
   (j) If the lease contract contains a provision that holds the
lessee liable for the difference between (1) the adjusted capitalized
cost disclosed in the lease contract reduced by the amounts
described in subparagraph (A) of paragraph (5) of subdivision (b) of
Section 2987 and (2) the settlement proceeds of the lessee's required
insurance and deductible in the event of theft or damage to the
vehicle that results in a total loss, the lease contract shall
contain the following notice in at least 8-point boldface type on the
first page of the contract:
      "GAP LIABILITY NOTICE

   In the event of theft or damage to the vehicle that results in a
total loss, there may be a GAP between the amount due upon early
termination and the proceeds of your insurance settlement and
deductible. THIS LEASE PROVIDES THAT YOU ARE LIABLE FOR THE GAP
AMOUNT. Optional coverage for the GAP amount may be offered for an
additional price."

   (k) This section shall become operative on July 1, 2012.
  SEC. 7.  Section 4456 of the Vehicle Code is amended to read:
   4456.  (a) When selling a vehicle, dealers and lessor-retailers
shall use numbered report-of-sale forms issued by the department. The
forms shall be used in accordance with the following terms and
conditions:
   (1) The dealer or lessor-retailer shall attach for display a copy
of the report of sale on the vehicle before the vehicle is delivered
to the purchaser.
   (2) The dealer or lessor-retailer shall submit to the department
an application accompanied by all fees and penalties due for
registration or transfer of registration of the vehicle within 30
days from the date of sale, as provided in subdivision (c) of Section
9553, if the vehicle is a used vehicle, and 20 days if the vehicle
is a new vehicle. Penalties due for noncompliance with this paragraph
shall be paid by the dealer or lessor-retailer. The dealer or
lessor-retailer shall not charge the purchaser for the penalties.
   (3) As part of an application to transfer registration of a used
vehicle, the dealer or lessor-retailer shall include all of the
following information on the certificate of title, application for a
duplicate certificate of title, or form prescribed by the department:

   (A) Date of sale and report of sale number.
   (B) Purchaser's name and address.
   (C) Dealer's name, address, number, and signature or signature of
authorized agent.
   (D) Salesperson number.
   (4) If the department returns an application and the application
was first received by the department within 30 days of the date of
sale of the vehicle if the vehicle is a used vehicle, and 20 days if
the vehicle is a new vehicle, the dealer or lessor-retailer shall
submit a corrected application to the department within 50 days from
the date of sale of the vehicle if the vehicle is a used vehicle, and
40 days if the vehicle is a new vehicle, or within 30 days from the
date that the application is first returned by the department if the
vehicle is a used vehicle, and 20 days if the vehicle is a new
vehicle, whichever is later.
   (5) If the department returns an application and the application
was first received by the department more than 30 days from the date
of sale of the vehicle if the vehicle is a used vehicle, and 20 days
if the vehicle is a new vehicle, the dealer or lessor-retailer shall
submit a corrected application to the department within 50 days from
the date of sale of the vehicle if the vehicle is a used vehicle, and
40 days if the vehicle is a new vehicle.
   (6) An application first received by the department more than 50
days from the date of sale of the vehicle if the vehicle is a used
vehicle, and 40 days if the vehicle is a new vehicle, is subject to
the penalties specified in subdivisions (a) and (b) of Section
4456.1.
   (7) The dealer or lessor-retailer shall report the sale pursuant
to Section 5901.
   (b) (1) A transfer that takes place through a dealer conducting a
wholesale vehicle auction shall be reported to the department by that
dealer on a single form approved by the department. The completed
form shall contain, at a minimum, all of the following information:
   (A) The name and address of the seller.
   (B) The seller's dealer number, if applicable.
   (C) The date of delivery to the dealer conducting the auction.
   (D) The actual mileage of the vehicle as indicated by the vehicle'
s odometer at the time of delivery to the dealer conducting the
auction.
   (E) The name, address, and occupational license number of the
dealer conducting the auction.
   (F) The name, address, and occupational license number of the
buyer.
   (G) The signature of the dealer conducting the auction.
   (2) Submission of the completed form specified in paragraph (1) to
the department shall fully satisfy the requirements of subdivision
(a) and subdivision (a) of Section 5901 with respect to the dealer
selling at auction and the dealer conducting the auction.
   (3) The single form required by this subdivision does not relieve
a dealer of any obligation or responsibility that is required by any
other provision of law.
   (c) A vehicle displaying a copy of the report of sale may be
operated without license plates or registration card until either of
the following, whichever occurs first:
   (1) The license plates and registration card are received by the
purchaser.
   (2) A six-month period, commencing with the date of sale of the
vehicle, has expired.
   (d) 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.
  SEC. 8.  Section 4456 is added to the Vehicle Code, to read:
   4456.  (a) When selling a vehicle, dealers and lessor-retailers
shall use numbered report-of-sale forms issued by the department. The
forms shall be used in accordance with the following terms and
conditions:
   (1) The dealer or lessor-retailer shall attach for display a copy
of the report of sale on the vehicle before the vehicle is delivered
to the purchaser.
   (2) The dealer or lessor-retailer shall submit to the department
an application accompanied by all fees and penalties due for
registration or transfer of registration of the vehicle within 30
days from the date of sale, as provided in subdivision (c) of Section
9553, if the vehicle is a used vehicle, and 20 days if the vehicle
is a new vehicle. Penalties due for noncompliance with this paragraph
shall be paid by the dealer or lessor-retailer. The dealer or
lessor-retailer shall not charge the purchaser for the penalties.
   (3) As part of an application to transfer registration of a used
vehicle, the dealer or lessor-retailer shall include all of the
following information on the certificate of title, application for a
duplicate certificate of title, or form prescribed by the department:

   (A) Date of sale and report of sale number.
   (B) Purchaser's name and address.
   (C) Dealer's name, address, number, and signature or signature of
authorized agent.
   (D) Salesperson number.
   (4) If the department returns an application and the application
was first received by the department within 30 days of the date of
sale of the vehicle if the vehicle is a used vehicle, and 20 days if
the vehicle is a new vehicle, the dealer or lessor-retailer shall
submit a corrected application to the department within 50 days from
the date of sale of the vehicle if the vehicle is a used vehicle, and
40 days if the vehicle is a new vehicle, or within 30 days from the
date that the application is first returned by the department if the
vehicle is a used vehicle, and 20 days if the vehicle is a new
vehicle, whichever is later.
   (5) If the department returns an application and the application
was first received by the department more than 30 days from the date
of sale of the vehicle if the vehicle is a used vehicle, and 20 days
if the vehicle is a new vehicle, the dealer or lessor-retailer shall
submit a corrected application to the department within 50 days from
the date of sale of the vehicle if the vehicle is a used vehicle, and
40 days if the vehicle is a new vehicle.
   (6) An application first received by the department more than 50
days from the date of sale of the vehicle if the vehicle is a used
vehicle, and 40 days if the vehicle is a new vehicle, is subject to
the penalties specified in subdivisions (a) and (b) of Section
4456.1.
   (7) The dealer or lessor-retailer shall report the sale pursuant
to Section 5901.
   (b) (1) A transfer that takes place through a dealer conducting a
wholesale vehicle auction shall be reported to the department by that
dealer on a single form approved by the department. The completed
form shall contain, at a minimum, all of the following information:
   (A) The name and address of the seller.
   (B) The seller's dealer number, if applicable.
   (C) The date of delivery to the dealer conducting the auction.
   (D) The actual mileage of the vehicle as indicated by the vehicle'
s odometer at the time of delivery to the dealer conducting the
auction.
   (E) The name, address, and occupational license number of the
dealer conducting the auction.
   (F) The name, address, and occupational license number of the
buyer.
   (G) The signature of the dealer conducting the auction.
   (2) Submission of the completed form specified in paragraph (1) to
the department shall fully satisfy the requirements of subdivision
(a) and subdivision (a) of Section 5901 with respect to the dealer
selling at auction and the dealer conducting the auction.
   (3) The single form required by this subdivision does not relieve
a dealer of any obligation or responsibility that is required by any
other provision of law.
   (c) A vehicle displaying a copy of the report of sale may be
operated without license plates or registration card until either of
the following, whichever occurs first:
   (1) The license plates and registration card are received by the
purchaser.
   (2) A 90-day period, commencing with the date of sale of the
vehicle, has expired.
   (d) This section shall become operative on July 1, 2012.
  SEC. 9.  Section 4456.4 is added to the Vehicle Code, to read:
   4456.4.  (a) A motor vehicle sold or leased by a new motor vehicle
dealer shall be registered by the dealer using electronic programs
provided by a qualified private industry partner pursuant to Section
1685 if the department permits the transaction to be processed
electronically.
   (b) This section does not apply to the sale or lease of a
motorcycle or off-highway motor vehicle subject to identification
under Section 38010 or a recreational vehicle as defined in Section
18010 of the Health and Safety Code.
   (c) This section shall become operative on July 1, 2012.
  SEC. 10.  Section 4456.5 is added to the Vehicle Code, to read:
   4456.5.  (a) A dealer may charge the purchaser or lessee of a
vehicle the following charges:
   (1) A document processing charge for the preparation and
processing of documents, disclosures, and titling, registration, and
information security obligations imposed by state and federal law.
The dealer document processing charge shall not be represented as a
governmental fee.
   (A) If a dealer has a contractual agreement with the department to
be a private industry partner pursuant to Section 1685, the document
processing charge shall not exceed eighty dollars ($80).
   (B) If a dealer does not have a contractual agreement with the
department to be a private industry partner pursuant to Section 1685,
the document processing charge shall not exceed sixty-five dollars
($65).
   (2) An electronic filing charge, not to exceed the actual amount
the dealer is charged by a first-line service provider for providing
license plate processing, postage, and the fees and services
authorized pursuant to subdivisions (a) and (d) of Section 1685. The
director may establish, through the adoption of regulations, the
maximum amount that a first-line service provider may charge a
dealer. The electronic filing charge shall not be represented as a
governmental fee.
   (b) As used in this section, the term "first-line service provider"
shall have the same meaning as defined in subdivision (b) of Section
1685.
   (c) This section shall become operative on July 1, 2012.
  SEC. 11.  Section 5202 of the Vehicle Code is amended to read:
   5202.  (a) A license plate issued by this state or any other
jurisdiction within or without the United States shall remain
attached during the period of its validity to the vehicle for which
it is issued while being operated within this state or during the
time the vehicle is being held for sale in this state, or until the
time that a vehicle with special or identification plates is no
longer entitled to those plates; and a person shall not operate, nor
shall an owner knowingly permit to be operated, upon a highway a
vehicle unless the license plate is so attached. Special permits
issued in lieu of plates shall be attached and displayed on the
vehicle for which issued during the period of their validity.
   (b) 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.
  SEC. 12.  Section 5202 is added to the Vehicle Code, to read:
   5202.  (a) A license plate issued by this state or any other
jurisdiction within or without the United States shall be attached
upon receipt and remain attached during the period of its validity to
the vehicle for which it is issued while being operated within this
state or during the time the vehicle is being held for sale in this
state, or until the time that a vehicle with special or
identification plates is no longer entitled to those plates; and a
person shall not operate, and an owner shall not knowingly permit to
be operated, upon any highway, a vehicle unless the license plate is
so attached. A special permit issued in lieu of plates shall be
attached and displayed on the vehicle for which the permit was issued
during the period of the permit's validity.
   (b) This section shall become operative on July 1, 2012.
  SEC. 13.  Section 11713.1 of the Vehicle Code is amended to read:
   11713.1.  It is a violation of this code for the holder of a
dealer's license issued under this article to do any of the
following:
   (a) Advertise a 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. An
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 fifty-five dollars
($55).
   (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
a certificate of compliance or noncompliance pursuant to a statute,
finance charges, and a dealer document preparation charge.
   (2) The obligations imposed by paragraph (1) are 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 an
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 a Web page of a dealer's Internet
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
(f) 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 a 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 a
certificate of compliance or noncompliance pursuant to a statute,
finance charges, mobilehome escrow fees, the amount of a city,
county, or city and county imposed fee or tax for a mobilehome, and a
dealer document preparation charge, which charges shall not exceed
fifty-five dollars ($55) 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 a new
vehicle of a line-make for which the dealer does not hold a
franchise.
   (2) This subdivision does not apply to a transaction involving 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.
   (I) A vehicle acquired in the ordinary course of business as a new
vehicle by a dealer franchised to sell that vehicle, if all of the
following apply:
   (i) The manufacturer or distributor of the vehicle files a
bankruptcy petition.
   (ii) The franchise agreement of the dealer is terminated,
canceled, or rejected by the manufacturer or distributor as part of
the bankruptcy proceedings and the termination, cancellation, or
rejection is not a result of the revocation by the department of the
dealer's license or the dealer's conviction of a crime.
   (iii) The vehicle is held in the inventory of the dealer on the
date the bankruptcy petition is filed.
   (iv) The vehicle is sold by the dealer within six months of the
date the bankruptcy petition is filed.
   (3) Subparagraph (I) of paragraph (2) does not entitle a dealer
whose franchise agreement has been terminated, canceled, or rejected
to continue to perform warranty service repairs or continue to be
eligible to offer or receive consumer or dealer incentives offered by
the manufacturer or distributor.
   (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. "Free" includes
merchandise or services offered for sale at a price less than the
seller's cost of the merchandise or services.
      (i) (1) 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.
   (2) For purposes of this subdivision, in a 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 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 the phrase
shall be disclosed immediately above, below, or beside the advertised
price without intervening words, pictures, marks, or symbols.
   (3) 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 "rebate" or similar words, including, but not limited to,
"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 "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) A 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) A 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 a 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 an 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 a new vehicle a supplemental price sticker containing
a price that represents the dealer's asking price that 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 that 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, the supplemental sticker
price shall set forth that difference and describe it as "added
mark-up."
   (r) Advertise an underselling claim, including, but not limited
to, "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 another 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) (1) Advertise an 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.
   (2) 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 a 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 boldface type on the face of a 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, "make" and "model" have the same
meaning as is provided in Section 565.3 of Title 49 of the Code of
Federal Regulations.
   (z) 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.
  SEC. 14.  Section 11713.1 is added to the Vehicle Code, to read:
   11713.1.  It is a violation of this code for the holder of a
dealer's license issued under this article to do any of the
following:
   (a) Advertise a 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. An
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 charges 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 processing charge or charge to
electronically register or transfer the vehicle.
   (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
a certificate of compliance or noncompliance pursuant to a statute,
finance charges, a charge to electronically register or transfer the
vehicle, and a dealer document processing charge.
   (2) The obligations imposed by paragraph (1) are 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
processing charge, any electronic filing charge, and any emission
testing charge."
   (3) For purposes of paragraph (1), "advertisement" means an
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 a Web page of a dealer's Internet
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
(f) of Section 17538 of the Business and Professions Code.
   (d) Represent the dealer document processing charge, electronic
registration or transfer charge, or emission testing charge, as a
governmental fee.
   (e) Fail to sell a vehicle to a 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 a
certificate of compliance or noncompliance pursuant to a statute,
finance charges, mobilehome escrow fees, the amount of a city,
county, or city and county imposed fee or tax for a mobilehome, a
dealer document processing charge, an electronic registration or
transfer charge, and a charge for emission testing not to exceed
fifty dollars ($50) 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 a new
vehicle of a line-make for which the dealer does not hold a
franchise.
   (2) This subdivision does not apply to a transaction involving 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.
   (I) A vehicle acquired in the ordinary course of business as a new
vehicle by a dealer franchised to sell that vehicle, if all of the
following apply:
   (i) The manufacturer or distributor of the vehicle files a
bankruptcy petition.
   (ii) The franchise agreement of the dealer is terminated,
canceled, or rejected by the manufacturer or distributor as part of
the bankruptcy proceedings and the termination, cancellation, or
rejection is not a result of the revocation by the department of the
dealer's license or the dealer's conviction of a crime.
   (iii) The vehicle is held in the inventory of the dealer on the
date the bankruptcy petition is filed.
   (iv) The vehicle is sold by the dealer within six months of the
date the bankruptcy petition is filed.
   (3) Subparagraph (I) of paragraph (2) does not entitle a dealer
whose franchise agreement has been terminated, canceled, or rejected
to continue to perform warranty service repairs or continue to be
eligible to offer or receive consumer or dealer incentives offered by
the manufacturer or distributor.
   (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. "Free" includes
merchandise or services offered for sale at a price less than the
seller's cost of the merchandise or services.
   (i) (1) 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.
   (2) For purposes of this subdivision, in a 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 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 the phrase
shall be disclosed immediately above, below, or beside the advertised
price without intervening words, pictures, marks, or symbols.
   (3) 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 "rebate" or similar words, including, but not limited to,
"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 "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) A 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) A 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 a 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 an 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 a new vehicle a supplemental price sticker containing
a price that represents the dealer's asking price that 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 that 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, the supplemental sticker
price shall set forth that difference and describe it as "added
mark-up."
   (r) Advertise an underselling claim, including, but not limited
to, "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 another 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) (1) Advertise an 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.
   (2) 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 a 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 boldface type on the face of a 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) Sell or lease a new motor vehicle after October 1, 2012,
unless the dealer has a contractual agreement with the department to
be a private industry partner pursuant to Section 1685. This
subdivision does not apply to the sale or lease of a motorcycle or
off-highway motor vehicle subject to identification under Section
38010 or a recreational vehicle as defined in Section 18010 of the
Health and Safety Code.
   (z) As used in this section, "make" and "model" have the same
meaning as is provided in Section 565.3 of Title 49 of the Code of
Federal Regulations.
   (aa) This section shall become operative on July 1, 2012.
  SEC. 15.  Section 11713.21 of the Vehicle Code is amended 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.
   (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
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.
  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, 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 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 operative on July 1, 2012.
  SEC. 17.  Section 11713.26 is added to the Vehicle Code, to read:
   11713.26.  (a) A dealer shall not display or offer for sale at
retail a used vehicle, as defined in Section 665 and subject to
registration under this code, unless the dealer first obtains a
NMVTIS vehicle history report from a NMVTIS data provider for the
vehicle identification number of the vehicle.
   (b) If a NMVTIS vehicle history report for a used vehicle
indicates that the vehicle is or has been a junk automobile or a
salvage automobile or the vehicle has been reported as a junk
automobile or a salvage automobile by a junk yard, salvage yard, or
insurance carrier pursuant to Section 30504 of Title 49 of the United
States Code, or the certificate of title contains a brand, a dealer
shall do both of the following:
   (1) Post the following disclosure on the vehicle while it is
displayed for sale at retail in at least 14-point bold black type,
except for the title "Warning" which shall be in at least 18-point
bold black type, on at least a 4 x 5.5 inch red background in close
proximity to the Federal Trade Commission's Buyer's Guide:


   "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."

   (2) Provide the retail purchaser with a copy of the NMVTIS vehicle
history report upon request prior to sale.
   (c) Subdivisions (a) and (b) do not apply to a used vehicle for
which NMVTIS does not have a record if the dealer attempts to obtain
a NMVTIS vehicle history report for the vehicle.
   (d) As used in this section the following terms have the following
meanings:
   (1) "NMVTIS" means the National Motor Vehicle Title Information
System established pursuant to Section 30501 et seq. of Title 49 of
the United States Code.
   (2) "NMVTIS vehicle history report" means a report obtained by an
NMVTIS data provider that contains:
   (A) The date of the report.
   (B) Any disclaimer required by the operator of NMVTIS.
   (C) If available from NMVTIS, information establishing the
following:
   (i) Whether the vehicle is titled in a particular state.
   (ii) Whether the title to the vehicle was branded by a state.
   (iii) The validity and status of a document purporting to be a
certificate of title for the vehicle.
   (iv) Whether the vehicle is or has been a junk automobile or a
salvage automobile.
   (v) The odometer mileage disclosure required pursuant to Section
32705 of Title 49 of the United States Code for that vehicle on the
date the certificate of title for that vehicle was issued and any
later mileage information.
   (vi) Whether the vehicle has been reported as a junk automobile or
a salvage automobile pursuant to Section 30504 of Title 49 of the
United States Code.
   (3) "Junk automobile," "operator," and "salvage automobile" shall
have the same meanings as defined in Section 25.52 of Title 28 of the
Code of Federal Regulations.
   (4) "NMVTIS data provider" means a person authorized by the NMVTIS
operator as an access portal provider for NMVTIS.
   (5) "NMVTIS operator" means the individual or entity authorized or
designated as the operator of NMVTIS pursuant to subdivision (b) of
Section 30502 of Title 49 of the United States Code, or the office
designated by the United States Attorney General, if there is no
authorized or designated individual or entity.
   (e) Nothing in this section shall prohibit a NMVTIS data provider
from including, in a NMVTIS vehicle history report containing the
information required by paragraph (2) of subdivision (d), additional
vehicle history information obtained from resources other than
NMVTIS.
   (f) This section shall not create any legal duty upon the dealer
related to the accuracy, errors, or omissions contained in a NMVTIS
vehicle history report that is obtained from a NMVTIS data provider
or any legal duty to provide information added to NMVTIS after the
dealer obtained the NMVTIS vehicle history report pursuant to
subdivision (a).
   (g) (1) In the event that all NMVTIS data providers cease to make
NMVTIS vehicle history reports available to the public, this section
shall become inoperative.
   (2) In the event that all NMVTIS data providers cease to make
NMVTIS vehicle history reports available to the public, it is the
intent of the Legislature that the United States Department of
Justice notify the Legislature and the department.
   (h) This section does not apply to the sale of a recreational
vehicle, a motorcycle, or an off-highway motor vehicle subject to
identification under Section 38010.
   (i) This section shall become operative on July 1, 2012.
  SEC. 18.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.

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