Senate File 2228 - Introduced SENATE FILE 2228 BY COMMITTEE ON TRANSPORTATION (SUCCESSOR TO SSB 3078) A BILL FOR An Act relating to the activities of motor vehicle dealers, 1 including the electronic submission of applications for 2 motor vehicle registration and issuance of certificates of 3 title, the furnishing of surety bonds, and the assessment of 4 documentary fees, and making a penalty applicable. 5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 6 TLSB 5657SV (2) 86 ns/nh

S.F. 2228 Section 1. Section 321.20, subsections 2 and 3, Code 2016, 1 are amended to read as follows: 2 2. Notwithstanding contrary provisions of this chapter 3 or chapter 326 regarding titling and registration by means 4 other than electronic means, the department may shall, by 5 January 1, 2018, develop and implement a program to allow for 6 electronic applications, titling, registering, and electronic 7 funds transfer transfers for vehicles subject to registration 8 in order to improve the efficiency and timeliness of the 9 processes and to reduce costs for all parties involved. The 10 program shall also provide for the electronic submission of any 11 statement required by this section, except where prohibited by 12 federal law. 13 3. The department shall adopt rules on the method for 14 providing signatures for applications and statements required 15 by this section that are made by electronic means. 16 Sec. 2. Section 321.20, Code 2016, is amended by adding the 17 following new subsection: 18 NEW SUBSECTION . 4. Notwithstanding this section or any 19 other provision of law to the contrary, if the program required 20 by subsection 2 is not implemented by January 1, 2018, an owner 21 of a vehicle subject to registration may apply to the county 22 treasurer of a county contiguous to the county designated for 23 the owner under subsection 1 for registration and issuance of 24 a certificate of title. 25 Sec. 3. Section 322.4, subsection 1, paragraph g, Code 2016, 26 is amended to read as follows: 27 g. Before the issuance of a motor vehicle dealer’s license 28 to a dealer engaged in the sale of vehicles for which a 29 certificate of title is required under chapter 321 , or the 30 issuance of a temporary permit under section 322.5, subsection 31 6 , paragraph “b” , the applicant shall furnish a surety bond 32 executed by the applicant as principal and executed by a 33 corporate surety company, licensed and qualified to do business 34 within this state, which bond shall run to the state of Iowa, 35 -1- LSB 5657SV (2) 86 ns/nh 1/ 4

S.F. 2228 be in the amount of fifty one hundred thousand dollars and be 1 conditioned upon the faithful compliance by the applicant as 2 a dealer with all of the statutes of this state regulating 3 or applicable to the business of a dealer in motor vehicles, 4 and indemnifying any person who buys a motor vehicle from the 5 dealer from any loss or damage occasioned by the failure of the 6 dealer to comply with any of the provisions of chapter 321 and 7 this chapter , including but not limited to the furnishing of 8 a proper and valid certificate of title to the motor vehicle 9 involved in a transaction. The bond shall also indemnify any 10 motor vehicle purchaser from any loss or damage caused by the 11 failure of the dealer to comply with the odometer requirements 12 in section 321.71 , regardless of whether the motor vehicle was 13 purchased directly from the dealer. The bond shall be filed 14 with the department prior to the issuance of a license or 15 permit. The aggregate liability of the surety, however, shall 16 not exceed the amount of the bond. 17 Sec. 4. NEW SECTION . 322.19A Documentary fee. 18 1. For purposes of this section, “documentary fee” means a 19 fee that may be charged to a customer by a motor vehicle dealer 20 for the preparation of documents related to an application for 21 motor vehicle registration and issuance of a certificate of 22 title, and the performance of other related services for the 23 customer. “Documentary fee” does not include any costs or fees 24 charged to a motor vehicle dealer or a dealer’s customer by a 25 third party. 26 2. A motor vehicle dealer may charge a documentary fee not 27 to exceed one hundred eighty dollars for each motor vehicle 28 sold in a transaction. 29 3. After the department has implemented a statewide 30 program pursuant to section 321.20, subsection 2, the maximum 31 documentary fee permitted by subsection 2 shall be reduced by 32 twenty-five dollars. 33 4. A motor vehicle dealer who charges a documentary fee 34 to a customer shall include the fee in the price of the motor 35 -2- LSB 5657SV (2) 86 ns/nh 2/ 4

S.F. 2228 vehicle. The dealer shall disclose the full amount of the fee 1 in any price of a motor vehicle advertised by the dealer and 2 when making or accepting an offer to sell a motor vehicle. The 3 dealer shall provide the following notice to the customer, 4 which notice shall be included in any retail installment 5 contract with the customer: 6 DOCUMENTARY FEE. A DOCUMENTARY FEE IS NOT AN OFFICIAL FEE. 7 A DOCUMENTARY FEE IS NOT REQUIRED BY LAW, BUT MAY BE CHARGED TO 8 A BUYER FOR THE PREPARATION OF DOCUMENTS AND THE PERFORMANCE OF 9 RELATED SERVICES. THE MAXIMUM AMOUNT THAT MAY BE CHARGED FOR 10 A DOCUMENTARY FEE IS DETERMINED BY IOWA CODE SECTION 322.19A. 11 THIS NOTICE IS REQUIRED BY LAW. 12 5. A violation of this section is a violation of section 13 714.16, subsection 2, paragraph “a” . The provisions of section 14 714.16, including but not limited to provisions relating to 15 investigation, injunctive relief, and penalties, shall apply to 16 this section. 17 EXPLANATION 18 The inclusion of this explanation does not constitute agreement with 19 the explanation’s substance by the members of the general assembly. 20 Current law permits, but does not require, the department 21 of transportation (DOT) to develop and implement a program 22 allowing for the electronic submission of applications and the 23 electronic transfer of funds for motor vehicle registration 24 and issuance of certificates of title. This bill requires 25 the DOT to develop and implement the program by January 1, 26 2018. The bill also requires the program to provide for the 27 electronic submission of related statements required by law. 28 If the program is not implemented by January 1, 2018, an owner 29 of a vehicle subject to registration may apply to the county 30 treasurer of a county contiguous to the county designated for 31 the owner by current law for registration and issuance of a 32 certificate of title. 33 Code section 322.4 sets forth certain application 34 requirements for a motor vehicle dealer’s license. One such 35 -3- LSB 5657SV (2) 86 ns/nh 3/ 4

S.F. 2228 requirement is that the applicant furnish a surety bond. The 1 bill increases the required amount of the surety bond from 2 $50,000 to $100,000. 3 The bill provides that a motor vehicle dealer may charge 4 a documentary fee not to exceed $180 for the preparation 5 of documents related to the application for motor vehicle 6 registration and issuance of a certificate of title and the 7 performance of other related services. The bill provides that 8 the maximum documentary fee shall be reduced by $25 after 9 implementation of the program allowing for the electronic 10 submission of applications and the electronic transfer of funds 11 for motor vehicle registration and issuance of certificates of 12 title. The bill requires a motor vehicle dealer who charges 13 a documentary fee to a customer to include the fee in the 14 price of the vehicle, to disclose the amount of the fee in the 15 advertised price and when making or accepting an offer to sell 16 a vehicle, and to provide the customer a legal notification 17 related to the fee, which notification shall be included in any 18 retail installment contract with the customer. 19 A violation of the documentary fee requirements of the bill 20 is a fraudulent practice punishable by a civil penalty not to 21 exceed $40,000. 22 -4- LSB 5657SV (2) 86 ns/nh 4/ 4