MTV-25-13-00004-P Enforcement of Dealer Related Regulations

6/19/13 N.Y. St. Reg. MTV-25-13-00004-P

NEW YORK STATE REGISTER

VOLUME XXXV, ISSUE 25

June 19, 2013

RULE MAKING ACTIVITIES

DEPARTMENT OF MOTOR VEHICLES

PROPOSED RULE MAKING

NO HEARING(S) SCHEDULED

 

I.D No. MTV-25-13-00004-P

Enforcement of Dealer Related Regulations

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following proposed rule:

Proposed Action:

Amendment of section 78.32 of Title 15 NYCRR.

Statutory authority:

Vehicle and Traffic Law, sections 215(a) and 415(9)(d)

Subject:

Enforcement of dealer related regulations.

Purpose:

To authorize DMV to take action against dealers who file misleading or false statements in relation to lien satisfaction filing.

Text of proposed rule:

Subdivision (a) of section 78.32 is amended to read as follows:

(a) Violation of any of the provisions of Section 415 of the Vehicle and Traffic Law or of any of the regulations herein or the submission of false or misleading information to the Commissioner pursuant to 15 NYCRR § 20.17 may result in a hearing which may lead to the suspension or revocation of the dealer's registration and any or all of the number plates.

Text of proposed rule and any required statements and analyses may be obtained from:

Heidi Bazicki, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 522A, Albany, NY 12228, [phone], email: [e-mail]

Data, views or arguments may be submitted to:

Ida L. Traschen, Department of Motor Vehicles, 6 Empire State Plaza, Rm. 522A, Albany, NY 12228, [phone], email: [e-mail]

Public comment will be received until:

45 days after publication of this notice.

Regulatory Impact Statement

1. Statutory authority: Vehicle and Traffic Law (VTL) section 215(a) provides that the Commissioner of Motor Vehicles may enact rules and regulations that regulate and control the exercise of the powers of the Department. Section 2121(a) of the VTL requires the Commissioner of the Department of Motor Vehicles to provide a procedure for the release of a security interest in a motor vehicle. VTL Section 2121(b) permits registered dealers to provide the Commissioner with proof that a lien on a vehicle has been satisfied, and authorizes the Commissioner to promulgate regulations setting forth the types of acceptable proof in order to issue a title that discloses no lien. VTL section 415(9)(d) authorizes the Commissioner to suspend or revoke a dealer’s registration for failure to comply with the Commissioner’s regulations or with any provision of the VTL that is applicable thereto. Thus, the Commissioner is authorized to take action against a dealer who makes a false or misleading statement when submitting proof of satisfaction of a lien, pursuant to 15 NYCRR 20.17.

2. Legislative objectives: Section 2121(b) of the VTL, as added by Chapter 493 of the Laws of 2012, authorizes registered automobile dealers to arrange for the satisfaction of a security interest in a vehicle the dealer receives for the purpose of resale, and provides that the Department shall issue a duplicate or original title without a lien thereon for such vehicles upon the receipt of certain evidence of lien satisfaction, along with a proper application and fee. This proposed rule is in accordance with the legislative objective by establishing those proofs of satisfaction of a lien that are acceptable to the Commissioner.

3. Needs and benefits: The Department of Motor Vehicles is required by law to issue a clear title when it is presented with a proper application, the requisite statutory fee and acceptable proof of lien satisfaction from the lender acknowledging that its security interest has been released. Occasionally, a lender may take several weeks to provide a written lien release to a vehicle owner after satisfaction of the lien. Chapter 493 of the Laws of 2012 was enacted to expedite the issuance of a no-lien title, in order to facilitate the resale of a motor vehicle that was traded to a dealer with a lien at the time of the trade. The new VTL section 2121(b) will expedite this process by offering dealers who arrange for the satisfaction of a lien a procedure to demonstrate to the Department that a clean title should be issued and, consequently, such clear title shall be issued more quickly. The amendments to Section 20.17 are necessary to apprise both lenders and dealers about those proofs of lien satisfaction that the Commissioner deems acceptable. The amendments to Section 78.32 makes clear that if a dealer abuses the process by submitting false or misleading information to the Commissioner regarding the satisfaction of a lien, the dealer could face the suspension or revocation of the dealer’s license.

4. Costs: There are no costs to the regulated parties other than the fee that registered dealers must pay for a duplicate title certificate. There are no costs to State agencies or local governments.

5. Local government mandates: None.

6. Paperwork: The process established by Section 20.17(b) will require dealers to provide written notice to a lienholder and to submit sufficient evidence that the dealer has tendered payment to the lienholder in an amount necessary to satisfy the lien on a vehicle.

7. Duplication: This proposal does not duplicate any law, regulation or procedure.

8. Alternatives: The Department consulted with several automobile dealer associations and representatives of the automobile lending industry about the proposed rule. The Department received written comments from the American Financial Services Association (AFSA), which represents many lenders, and a joint letter from the Greater New York Automobile Dealers Association and the New York State Automobile Dealers Association. While the Department has incorporated many of the comments into the proposed rule, not all were deemed feasible.

The lenders expressed concern that notices sent by dealers may not be addressed to the appropriate department of a lending institution, which would potentially give a lender a short time frame in which to review records necessary to verify the status of a security interest. AFSA suggested that the Department create a database that the lenders could populate with the proper addresses to which dealers should send notices under the rule. The Department lacks the resources to create such a database and believes that lenders are able to provide the proper notice address with the payoff statement. The rule requires that dealers seeking to have a lien removed from a vehicle must submit a copy of a payoff statement obtained from the lender. The Department believes that lenders could include the proper notice address on or with the payoff statement sent to the dealer.

The dealer associations objected to recording the Vehicle Identification Number (VIN) on receipts for interbank or electronic funds transfers as part of the proof of payment. The Department strongly believes that including the VIN on the receipt is necessary so that the Department may ensure that the payment is associated with the specific motor vehicle for which the lien is to be satisfied.

A no action alternative was not considered.

9. Federal standards: This rule does not exceed any minimum standards of the federal government.

10. Compliance schedule: Upon adoption of the regulation.

Regulatory Flexibility Analysis

1. Effect of rule: This proposed regulation would affect only motor vehicle dealers who seek to arrange for the release of liens on motor vehicles they obtain in a trade, by demonstrating to the Commissioner that such dealer has satisfied the lien. There are approximately 10,000 car dealers in New York State. The proposed rule has no impact on local governments.

2. Compliance requirements: Those motor vehicle dealers who wish to arrange for the release of a motor vehicle lien would be required to provide the Commissioner with certain documents within a certain time period in accordance with the Commissioner’s procedures. The documents would demonstrate that the dealer has satisfied the lien.

3. Professional services: This regulation would not require new professional services.

4. Compliance costs: The regulation would not impose any extra costs on the dealers who choose to participate in the process.

5. Economic and technological feasibility: This proposal adds no new economic or technological requirements on motor vehicle dealers.

6. Minimizing adverse impact: This proposal has no adverse impact on motor vehicle dealers. In fact, it will help such dealers to more expeditiously obtain clear titles to vehicles they take in trade. In addition, as noted below, the Department consulted with several dealer associations to obtain their input on the proposed rules.

7. Small business and local government participation: As noted in the Regulatory Impact Statement, the Department consulted with representatives of the automobile lending industry and several dealer associations about the proposed rule and incorporated their comments into the rule where feasible.

Rural Area Flexibility Analysis

A Rural Area Flexibility Analysis is not attached because this rule will not impose any adverse economic impact or reporting, recordkeeping or other compliance requirements on public or private entities in rural areas.

Job Impact Statement

A Job Impact Statement is not submitted with this rule because it will not have an adverse impact on job creation or development.