NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

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F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Varela

 

DATE TYPED:

03/06/03

 

HB

31/aHBIC

 

SHORT TITLE:

Misrepresentation of Motor Vehicles

 

SB

 

 

 

ANALYST:

Wilson

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

NFI

 

 

 

 

(Parenthesis ( ) Indicate Expenditure Decreases)

 

Relates to HB225

 

SOURCES OF INFORMATION

LFC Files

 

No Responses Received From

Attorney General

Taxation and Revenue Department

 

SUMMARY

 

     Synopsis of HBIC Amendment

 

The House Business and Industry Committee amendment includes ‘defining the willful misrepresentation in a motor vehicle sale; requiring reasonable inspection and disclosure before making a used motor vehicle sale’ into the heading of the bill.  The amendment also includes a new section that requires a seller of a motor vehicle to conduct a reasonable inspection prior to offering it for sale.  Prior to the sales transaction, the seller is required to disclose to the purchaser in writing, any material mechanical defects discovered that render the vehicle unsound, unsafe or inoperable. 

   

 Synopsis of Original Bill

 

House Bill 31 provides remedy for certain misrepresentations of the condition of a vehicle as a matter of sale and requires disclosure/affidavit of repair of damage.  The legislation pertains more specifically to the alteration of the structure or chassis as a result of a wreck.  An exemption provision to the disclosure is included in the language if the repair cost is less than six percent of the total sales price of the vehicle.  In the event of a private-party sale, the affidavit requirement is at the discretion of the purchaser. This bill offers remedy of an award up to three times actual damages sustained and specific after-sale or repurchase provisions.

 

     Significant Issues

 

  • The new remedy in the amendment simplifies purchaser recourse in the event of willful seller misrepresentation.

 

  • Proper maintenance and disclosure of vehicle condition is important to the

safety and welfare of the public.

 

  • Subsequent education and enforcement of such law could pose a deterrent to fraudulent or unfair trade practices relating to vehicle sales.

 

POSSIBLE QUESTIONS

 

  1. Are there other consumer protection laws that provide similar remedy?

 

  1. Has limiting or prohibiting certificate of title without proper disclosure statement been considered?

 

  1. Have misdemeanor provisions for fraudulent disclosure statements been considered?

 

  1. Which agency will be responsible for proper oversight or enforcement of the proposed law?

 

DW/prr/njw/ls