Complying with the changes of SB 456

Background Information • MADA has tried to pass something on this issue for a number of years. • Coalition of partners led by MADA, including MBA, Missouri Insurance Coalition, MCUA and DOR. • The bill sponsored by Senator Kehoe (Jefferson City- 6) in the Senate, and Rep. T. J. Berry (Kearney - 38) in the House, was a combined lobby effort led by MADA.

• Bill signed on July 13, becomes effective on August 28, 2015. • Effectively changes the way you sell cars. • Allows you to move more inventory than ever; makes Missouri competitive with key competitor states; (Illinois and Kansas).

Bonding Changes • Licensed Dealers must have a surety bond or irrevocable letter of credit in the amount of $100, 000 in order to legally comply with SB 456. • This is optional……can stay at existing bonding level if desired or apply for new bonding and take advantage of the new law.

Bonding Changes • Dealers must contact their bonding companies to increase their amounts and have them in place by August 28, 2015 • 2 scenarios…. . Dealers can add a “Rider” for $75, 000 or they cancel their existing $25, 000 bond apply for a new one in the required $100, 000 amount. • A Dealer can upgrade to the new bonding requirement at any time during the license year.

Bonding Changes • MADA Services Corporation can be your source for bonding and can invoice you annually through your membership. • Bond prices $900 -$1200 depending on dealership type (franchise or independent). • Verification of bonding change must be sent to Missouri DOR, Dealer Licensing Section prior to August 28, 2015.

DOR Requirements • Missouri DOR will require written verification that a vehicle has been delivered to a customer without title. • DOR form 5620 is required to completed and submitted at the time of sale. • Requirements satisfied.

DOR Requirements • All outstanding liens created on the vehicle have been satisfied. • Proof from DOR or other evidence showing that no child support liens exist upon the vehicle at the time of sale. • Proof or other evidence from DOR that all applicable state sales taxes on the sale of the vehicle to the previous owner.

DOR Requirements • Proof of financial responsibility and proof of comprehensive and collision insurance coverage on the vehicle from the purchaser. • Verification from the Dealer indicating they will apply for a duplicate certificate of ownership within 10 days of the sale of the motor vehicle.

DOR Requirements • Dealer will assign and deliver the duplicate certificate of ownership within five business days of receiving the duplicate certificate of ownership.

Dealer Requirements • Dealer must provide the customer with the following required documents. • A copy of the completed written agreement. • A notarized lien release for any lien perfected on the vehicle by the previous owner’s lien holder.

Dealer Requirements • A copy of the contract for the sale of the vehicle. • A copy of the duplicate title application • A copy of the secure power of attorney from the previous owner to the Dealer.

Dealer Requirements • Temporary Tags…. • When a Dealer accesses the DOR System for a temporary tag, the input system will ask the Dealer whether or not a title was delivered at the time of sale. • A non-delivered title will trigger to the DOR system that the purchaser is driving on a 90 day tag.

Dealer Requirements • Once that information is recorded, the 60 day “clock” begins for the dealer to deliver title to the customer. • It is very important that the dealer and the customer understand that title will be delivered upon receipt by the dealer and delivered immediately to the customer.

Dealer Requirements • It would be advised that Dealers develop an internal program among their staff that outlines Title Delivery under this law to ensure that delivery requirements are met. • If Title is not delivered within the allotted time, a customer has a legal right to bring back a vehicle to the selling dealer.

Dealer Requirements • Dealer should educate the customer that once the purchaser receives title, they have 30 days from that delivery date to pay all applicable sales tax and registration fees due to the State of Missouri (this amount of time could be up to 90 days from the original purchase date).

Non-Delivery of Title • If title cannot be delivered, the customer/purchaser has a legal right to bring back the vehicle to selling dealer. • Dealer has the legal responsibility to repay the lien holder and satisfy all payment obligations and applicable fees. • Dealer must comply with this requirement or face legal proceedings as a violation.

Non-Delivery of Title • If a vehicle is returned because of nondelivery, the selling Dealer will use the DOR rescinded sales process for reporting purposes with the Department. • Dealer can also notify the Department that they are trying to resolve the issue, if they are approaching the 60 day deadline.

MADA Title Service • MADA title service fees • “ 48 hour” Title Service; $23. 00 for MADA Members. • Repossessions; $27. 50 for MADA Members. • Information Calls; $7. 00 for record searches; $17. 88 for complete title history for MADA Members.

Additional Information • Bill becomes effective August 28, 2015, per the Missouri Constitution. • Training is a joint effort between MADA and the Missouri Department of Revenue. • Dealers should utilize this option to the best of their ability.