MOTOR VEHICLE DEALER APPLICANT PROGRAM ADVANCED DEALER TRAINING HANDBOOK

Transcription

1 MOTOR VEHICLE DEALER APPLICANT PROGRAM ADVANCED DEALER TRAINING HANDBOOK 1656 Linda Lou Drive West Palm Beach, FL (561) July 2011 edition

2 A Message to Our Students We would like to thank you for selecting Advanced Dealer Training Institute as your training source for completing your dealer license education requirements. We have attempted to create the best possible training agenda for you. Our textbook was written by industry experts and is presented in a clear and concise manner. Our program is presented at various locations throughout Florida, utilizing the facilities of quality motels. All classes are scheduled for two days, and if you need to make overnight accommodations, we have provided a list of hotels and phone numbers for you. This book is published by the Advanced Dealer Training Institute for the purpose of providing the training for motor vehicle dealer, mobile home dealer, and recreational vehicle dealer applicants, as required by Florida Law. This publication is copyrighted and all rights are reserved including the right for reproduction in whole or in part in any form. We promise to maintain a professional environment for your learning. We will give you extra materials and information to assist you in obtaining your license, obtaining insurance and bonds, satisfying other government agencies, discovering multiple finance sources and understanding lending techniques. There are no gimmicks to our school. We simply provide training. We recognize that many students would not bother to even attend Dealer Training School if the State didn't require it. We see that as a challenge. Our graduates have consistently agreed that once they discovered the variety and quality of our instruction they were glad they enrolled. At the end of your classroom sessions, you will be given a state required examination. It will consist of 50 true/false questions. You will be given plenty of preparation to assure that you can make a passing grade. If anyone were to fail, we would gladly welcome them to attend our next class free of charge. We intend to make sure that you can pass the test and get your approved "Certificate of Attendance". YOU WILL BE ISSUED YOUR CERTIFICATE IMMEDIATELY UPON THE SUCCESSFUL COMPLETION OF YOUR EXAMINATION. THERE IS NO WAIT. Advanced Dealer Training Institute 1656 Linda Lou Drive West Palm Beach, Fl (888)

3 TABLE OF CONTENTS Department of Motor Vehicles Who Must be Licensed DMV 1 When Licensing is Not Required Consequences of Not Obtaining a License When Required DMV 2 Types of Licenses Issued DMV VF Franchise Dealer 2. VI Independent Dealer 3. VW Wholesale Dealer 4. VA Auction House 5. DH Mobile Home Dealer 6. BH Mobile Home Broker 7. RV/RU Recreational Dealer New/Used 8. N (series) Non-resident (NI,NW,NA,NH,NR) 9. DMV issues manufacturers, importers and distributor licenses License Periods DMV 3 Initial Licensing Fees DMV 4 License Requirements DMV 4-8 Processing Initial Application DMV 8 Dealer License DMV 8 Denial of A Dealer License DMV 9-10 Procedure and Rights of Appeal DMV 10 Modifications After License Has Been Issued Keeping and Maintaining A License DMV10-12 DMV13-14 Going Out of Business DMV 14 License Renewals DMV 15 Transfer of Assignment of License DMV15-16 a

4 Florida Certificate of Title DMV 16 Federal Law Revised DMV Title and Registration Forms DMV 18 Processing Title and Lien Work DMV Dealer to apply for title 2. Title in possession 3. Transfer within 30 days 4. Late Penalty 5. Customers who will title and register out of state 6. Proof of insurance 7. Accounts Receivable lot (ACR lot) 8. Lien Recording 9. Wholesale transactions 10. VIN verification 11. Odometer readings 12. Fast title service 13. Services of County tax collectors 14. DMV procedure manual Processing Registrations DMV Applying for registration 2. Transfer of registration 3. Issuance of temporary tags Privileges DMV Purchase and use of dealer plates 2. Purchase and use of temporary tags 3. Accessibility to title and registration records 4. DMV customer service 5. Tax Collector tag talk Record Keeping DMV Requirements 2. Inspections b

5 Handling and Disposition of Consumer Complaints DMV Department philosophy 2. How complaints are received 3. Processing of complaints 4. The investigative process 5. Unresolvable complaints Administrative Disciplinary Actions DMV Division philosophy 2. Sanctions available 3. Examples of administrative action cases Administrative Complaint Process DMV Judicial Actions DMV Chapter 15 c-7 Motor Vehicle Dealers DMV Federal and State Law Federal and State Laws Affecting Dealers LAW 52 Patriot Act LAW Background LAW 55 Federal Anti-Tampering Law LAW Red Flags Rule LAW Gramm-Leach- Bliley LAW Large Cash Reporting LAW N MV T I S LAW State Sales Tax LAW c

6 Banking and Finance Motor Vehicle Retail Installment Sales BANK Regulated by: Florida Department of Financial Services A. Who needs a license B. Licensing by the department C. Powers of the department Retail Installment sales BANK 70 A. Requirements and prohibitions B. Finance charge limitations C. Add-on interest techniques Finance Licenses for Dealer Activities BANK Miscellaneous Finance Laws and Rules BANK Related Finance Companies BANK 75 Economic Reasons BANK 75 Provide credit source for customers Improve the collection of accounts receivable Prevent adverse publicity on repossessions Remove the financial risk of default Diversification of ownership Finance other dealers customers Validity BANK 76 How an RFC is structured and operated Separate legal entity Meet licensing requirements Adequately capitalized Have own employees Maintain all appropriate business licenses Separate address and telephone number Maintain separate set of books Comply with all title, lien, and recordation rule Notify customer of the purchase of their note Purchase contract for the receivables Economic Substance BANK 77 Interest Rates in Auto Finance BANK Finance Related Questions BANK d

7 Department of Financial Services Examinations BANK Chapter 69V-50 - Motor Vehicle Sales Finance BANK Legal Department of Legal Affairs LAW 88 A. Activities B. Remedies Other Regulatory Entities of Interest LAW 88 Area of Major Concern for Dealers LAW 88 A. At time of sale B. Advertising practices C. Warranties Watch Out for Deception LAW 89 Buyers Guide Regulations LAW What is As-Is? LAW Used Car Dealer Advertising Practices LAW Unfair or Deceptive Acts or Practices LAW Independent Motor Vehicle Industry Trends Evolution of the Motor Vehicle Industry TREND History of automobile sales 2. Follow the money 3. Evolved lending techniques 4. Evolved selling techniques 5. Industry Response to Evolution 6. Where are we headed Brief History of Lending in America TREND The Drain on Funds TREND e

8 Alternate Finance Sources TREND Operations Independent Used Car Dealer Operations OPS A. Basic requirements B. Getting started C. Getting third party finance D. Getting started in lending E. Personnel F. Outside services Ways of Getting Financing OPS Buy-Here Pay-Here Market Concepts OPS 117 Repossession Check List OPS A. Forms and paper-work B. Choosing a responsible agent C. Setting-up to do your own repossessions D. Selling on the installment plan A Guide to Repossession Terms OPS f

9 List of Exhibits Exhibit 1 Proof of Surety Bond HSMV Exhibit 2 Irrevocable Letter of Credit HSMV Exhibit 3-8 Application for License HSMV Exhibit 9 Sample Dealer License HSMV Exhibit 10 Sample of License Receipt Exhibit 11 Renewal Application HSMV Exhibit 12 Modification to Dealer License HSMV Exhibit 13 DMV Regional Offices Exhibit 14 Criminal History Certificate Affidavit Exhibit 15 Sample Title Exhibit 16 Sample Title (Back) Exhibit 17 Bank Draft Exhibit 18 Air Pollution Control Statement Exhibit 19 Certification of Pollution Control (Hillsborough County) Exhibit 20 Use of Dealer Plates - Letter Exhibit 21 Consignment Agreement Exhibit Retail Installment Sales Contract Exhibit Complaint Affidavit HSMV84901 Exhibit 28 Application for Off-Premise Sale HSMV Exhibit 29 Notice of Sale HSMV Exhibit 30 Title Clerk Check List Exhibit 31 Florida Insurance Affidavit HSMV Exhibit 32 Odometer Disclosure Statement HSMV Exhibit Buyers Guide Exhibit 35 Title Reassignment Supplement HSMV Exhibit 36 Application for Duplicate or Lost Title HSMV Exhibit 37 Power Of Attorney / Odometer Disclosure HSMV Exhibit 38 Power of Attorney Form HSMV Exhibit Application for Certificate of Title HSMV Exhibit 41 Affidavit for Vehicle Registered in Another State HSMV84061 Exhibit MH & RV/RU License Exhibit 44 Registration MH Dealer Salesperson HSMV84045 Exhibit 45 Discretionary Sales Surtax DR-15DSS Exhibit 46 FL Dept of Revenue Resources Exhibit 47 Affidavit for Partial Exemption of Vehicle Sold DR-123 for Licensing in another State. Exhibit 48 Exhibit 49 Suggested Affidavit Form: Delivery To Out of State Dealer Suggested Affidavit Form: Purchase by Non-resident Dealer for Resale Outside of Florida Exhibit Report Cash Payment Over $10,000 IRS-8300 g

10 WHO MUST BE LICENSED As a Motor Vehicle Dealer Any person engaged in the business of buying, selling or dealing in motor vehicles or offering or displaying motor vehicles for sale at wholesale or retail, is a motor vehicle dealer. A person who buys, sells or deals in three or more motor vehicles in any twelve month period or who offers or displays for sale three or more motor vehicles in a twelve month period is prima facie presumed to be engaged in business as a motor vehicle dealer, and therefore, must be licensed. The terms "selling" and "sale" as used in the law, include lease-purchase transactions. WHEN LICENSING IS NOT REQUIRED As a Motor Vehicle Dealer Any person dealing in motor vehicles under one or more of the circumstances described below, is specifically exempt by law from the necessity of being licensed as a motor vehicle dealer: a. Persons not engaged in the purchase or sale of motor vehicles as a business, but rather, are disposing of their own vehicles or vehicles used in their business. b. Public officers while performing their official duties. This exemption includes such activities as the sale of vehicles owned by a governmental entity or the sale of vehicles seized by public officers while performing their official duties. c. Receivers. d. Trustees, administrators, executors, guardians, or other persons appointed or acting under the judgement of any court. e. Banks, financial companies, or other loan agencies that acquire motor vehicles as an incident to their regular business. f. Motor vehicle brokers. A motor vehicle broker is defined by law as a person engaged in the business of offering to procure or procuring motor vehicles for the general public, or who holds himself out through solicitation, advertisement, or otherwise as one who offers to procure or procures motor vehicles for the general public, and does not store, display, or take ownership of any vehicles for the purpose of selling such vehicles. DMV 1

11 g. Motor vehicle rental and leasing companies that sell motor vehicles to licensed motor vehicle dealers on a wholesale basis. In such cases, the fact of sale indicates that the vehicles being sold are no longer being used as rental or leased vehicles. The exemption applies only if off-lease vehicles are being sold on a wholesale basis. h. A motor vehicle acquired by foreclosure or by operation of law. i. Motor vehicle dealers must have to have a separate license to sell motor homes. Motor homes are actually classified as recreational vehicles. j. The sale of twenty-five or fewer trailers in a twelve month period. CONSEQUENCES OF NOT OBTAINING A MOTOR VEHICLE DEALER LICENSE WHEN REQUIRED Any person dealing in motor vehicles who is required to have a dealer license, but fails to obtain a license, is subject to a number of different penalties. These can include the issuance of an injunction by a court of competent jurisdiction, by the filing of an unfair and deceptive trade practices complaint with the State Attorney or the Attorney General's Office (that may lead to fines of up to five thousand dollars per violation and a cease and desist order), or the filing of criminal charges amounting to a second degree misdemeanor for violation of the licensing requirements. TYPES OF LICENSES ISSUED The Department issues a number of categories of dealer licenses.(exhibit 12). The license prefix designations and descriptions are: 1. VF - This is the prefix for a franchised motor vehicle dealer. This type license allows a licensee to sell new motor vehicles under an established agreement with a manufacturer, importer or distributor. 2. VI - This prefix is for an independent motor vehicle dealer. This license allows a licensee to sell used motor vehicles either at retail or wholesale. 3. VW - A license with this prefix is issued to one who is buying, selling, or dealing in motor vehicles only at wholesale, with other licensed dealers. 4. VA - Auctions that sell motor vehicles and recreational vehicles on behalf of licensed dealers, by the bid process, may obtain a VA license. Auctions that plan to sell motor vehicles at retail are required to be licensed with a VI prefix license. 5. DH - A license with this prefix is issued to one who is buying, selling and dealing in new and used mobile homes. One who is licensed as a mobile home DMV 2

12 dealer may also buy, sell and deal or broker in recreational vehicles. A licensed mobile home dealer may transact business in recreational vehicles with a mobile home auction. Any licensed mobile home dealer dealing exclusively in mobile homes shall not have the benefit of using dealer license plates. 6. BH - A license with this prefix is issued to a mobile home/recreational vehicle broker. Mobile home/recreational vehicle broker means a person engaged in the business of offering to procure or procuring used mobile homes or used recreational vehicles for the general public. A mobile home/recreational vehicle broker may act as an agent or intermediary on behalf of the owner or seller of a used mobile home or used recreational vehicle. 7. RV / RU - A recreational vehicle dealer is engaged in the business of buying, selling and dealing exclusively in new or used recreational vehicles. The term recreational vehicle dealer includes recreational vehicle broker. 8. SD - This prefix is for a salvage dealer dealing in parts, salvage and derelict vehicles. 9. NI - NW - NA - NH - NR - These license prefixes are for applicants who are non-residents of the State of Florida, but otherwise qualify for a motor vehicle dealer license. LICENSING PERIODS All dealer licenses are issued for a maximum period of one year. Because the volume of licenses issued is approaching 13,000 annually, the effective and expiration dates of the various licenses are staggered to provide a more manageable work load for department employees. The licensing periods are as follows: 1. VF - Franchised motor vehicle dealer. January 1 to December VI - Independent motor vehicle dealer May 1 to April VW - Wholesale motor vehicle dealer. May 1 to April VA - Motor vehicle auction. May 1 to April DH - Mobile Home Dealer. October 1 to September BH - Mobile Home Broker October 1 to September RV - New Recreational Vehicle Dealer. October 1 to September 30. RU - Used Recreational Vehicle Dealer. October 1 to September 30. DMV 3

13 8. SD Salvage Dealer May 1 to April NI - NW - NA - NH - NR - Non-resident Dealer January 1 to December 31. Regardless of when a license is issued during the license year, it will expire upon the established expiration date. License fees are not prorated. INITIAL LICENSING FEE The fee for an initial dealer license in any of the motor vehicle license categories previously described, except a non-resident license, is $300. A license fee is nonrefundable unless the Department determines that one of three exceptions exist - either the applicant sent duplicate money in error, an overpayment was made in error, or the fee accompanying an application was submitted for an activity which is not required to be licensed. If a license is denied for any other reason, the fee is not refundable. A license fee may not be prorated for a portion of a licensing period. The fee for all nonresident dealer licenses is $2000 for each county in which they do business. GENERAL LICENSING REQUIREMENTS There are a number of general requirements that every applicant for a dealer's license must satisfy as a prerequisite to having a license issued. Prospective applicants are urged to consider these carefully before making application. Satisfaction of these requirements can be costly and time consuming. 1. Motor Vehicle Dealer Applicants The following items are generally the most difficult or time consuming to obtain: A. Surety Bond or Irrevocable Letter of Credit Applicants are required to provide assurance by obtaining either a surety bond (Exhibit 1) or an irrevocable letter of credit (Exhibit 2) issued by a Florida bank in the amount of $25,000. Although a new bond or a continuation certificate is required each year, the assurance provided by the bond or letter of credit remains in force and effect until the statutes of limitations prohibits claims of any nature from being filed against the instruments. This time may vary anywhere from three to five years following the year for which the bond or letter of credit was issued. If during the licensing year the dealership cancels its surety bond and obtains a replacement bond with another firm, this information must be brought to the attention of the Division of Motor Vehicles regional office IMMEDIATELY. B. Location and Facility Requirements Proposed location and facilities which would house the licensed place of business must conform with statutory (Law book) and rule (Exhibit 3) DMV 4

14 requirements. Prospective applicants are advised to contact the Compliance Examiner, License and Registration Inspector or Regional Office serving that location and ask for a facilities inspection before committing time and money at a location that may not meet state requirements. (Warning), Check with the local zoning office and verify that the specific address is for the type of business you plan to conduct at that location. C. Corporate/LLC/partnership information If a dealership is to be operated by a corporation or LLC it is necessary that a copy of the organizational papers be submitted to DMV along with proof of registration with the Secretary of State of Florida. The corporation or partnership information to be submitted and checked is as follows: a. Articles of incorporation that have been filed with and have been stamped by the Division of Corporations in the Department of State. It is important that the name of the corporation be filed with the Department of State is identical to what appears on the license application. b. If corporate officers have been added or deleted submit minutes of the corporation showing those revised corporate officers or directors held accountable for operation of the corporation by the Department of State. c. If a partnership, although there is no statute that requires a formal written agreement between partners, if one does exist, a true copy shall be submitted with the license application. (Section 15C-7.003, Florida Administrative Code states that a true copy is a complete and accurate photographic copy of a document which reflects all characters, marks and signatures contained in the original.) D. Fictitious Name Registration Florida statutes require that any business operating under a fictitious trade name shall register such fictitious trade name with the Division of Corporations in the Department of State. The registration of a fictitious trade name does not establish proprietary right to the fictitious trade name. Others may use the name. Registration simply documents the name under which a business is operating when it is different from the name(s) of the person(s) responsible for operating the business. Consequently, one can determine the identities of the responsible parties through an inquiry on the fictitious trade name. The fictitious name may be filed and paid for on-line at Florida Department of State, Division of Corporation at The fictitious trade name is only valid for five years and then must be renewed. E. Proof of Ownership or Lease of Business Location Each applicant for a dealer s license must provide proof that the proposed DMV 5

15 location of the dealership can, in fact, be used for that purpose. This requires either proof of ownership of the property, or proof of a lease for the property by the applicant. Such documentation is in addition to the requirement that the applicant indicate the date of acquisition of the property on the license application form. 1. Proof of ownership may be any one of the following: a. Tax statement; or b. Deed 2. With regard to leased property the following requirements must be met: a. A true copy of the lease must be submitted and must contain the signatures of both the lessor and the lessee (i.e., the dealer license applicant). A lease signed by only one party will be rejected. b. There is no specific form required for a lease document as long as it properly describes the property. The address assigned by the U.S. Postal Service is the preferred method of identifying the property, however if an address has not been assigned, a legal description of the property is required. c. The lease must be signed by a person authorized to represent the dealer applicant. Normally, this will be a person identified on the application as an owner, partner, corporate officer or director; however, it is possible that the owner may not be a corporate officer. In any event the authority of the person signing the lease must be clear, i.e. the official title or office held. d. If the dealership is to be a partnership and only one partner owns the property, there must be a lease between the dealership and this partner. e. If the license applicant is a corporation, the lease must be between the property owner and the corporation, not a person who represents the corporation. f. If the dealership is a sole owner who also owns the property with a partner, there must be a lease between the dealership and the partner. F. Fingerprint Cards Fingerprint cards must be submitted for the owner(s) for sole owner companies, all partners for partnerships, and all corporate officers or directors for corporations listed on the application. See Procedure DLR-05, Obtaining and Processing Fingerprint Cards, for a complete explanation regarding the disposition of fingerprint cards. G. Federal Employer s Identification Number (FEIN) State law does not require the Division of Motor Vehicles to obtain a FEIN from dealer license applicants; however, federal law requires that licensing DMV 6

16 agencies be able to identify a license by a FEIN, if such information is requested. Consequently, dealer license applicants are required to provide their FEIN. Any dealer license applicant who is unsure about this matter should be referred to the U.S. Internal Revenue Service. Forms necessary to apply for a FEIN can also be obtained from Post Offices. 1. If the applicant has no employees other than the owner, a statement to that effect must accompany the application. The application form provides a space for such a response. H. Garage Liability Insurance All applicants for licenses as motor vehicle dealers or recreational vehicle dealers must have garage liability insurance in the amount(s) required by law. In addition, any mobile home dealer licensed to sell recreational vehicles must also have garage liability insurance. The garage liability insurance policy should be for the license period, a copy of which must be delivered to the Department at the beginning of each license period; however, we will not reject a garage liability insurance policy that is not for the entire license period. I. Proof of Required Training Each applicant for an initial dealer license must provide proof that they have successfully completed the dealer training required by law within the previous six (6) months unless they currently hold a franchise license and have been in good standing continuously for the past two (2) years. This shall be in the form of a certificate issued by the dealer training school. For mobile home seminars provided by the Department or by a licensed training school, a certificate shall be issued. Every two years an Independent motor vehicle dealers must provide evidence of having completed eight (8) hours of continuing education from a licensed dealer training school. J. Sales Tax Number All applicants for an initial dealer license must provide their sales tax number. Applicants, who are unsure about this matter, should be advised that the sales tax number is issued by the Department of Revenue. K. Documentation of Arrests and/or Convictions If the license applicant including any partner or any corporate officer or director has been arrested and/or convicted of a felony crime, or its equivalent, has been arrested and/or convicted of any crime associated with motor vehicles, or is facing criminal charges anywhere, additional documentation must be submitted with the license application. In the event of a felony conviction, applicants must submit proof that their civil rights DMV 7

17 have been restored in Florida. If the felony conviction occurred out of the state of Florida, proof of civil rights restoration will be required. PROCESSING THE INITIAL APPLICATION Submit the completed application to the examiner/inspector assigned to the area in which your dealership is located. The examiner/inspector will review your application to insure it is complete and all the required supporting documentation is attached. The examiner/inspector will take your application to the regional office where it will again be reviewed and then processed. If everything is in order, a license will be issued. At the same time, the fingerprint card(s) will be processed through the Florida Department of Law Enforcement and the Federal Bureau of Investigation. The Dealer License Section will not give out license numbers over the telephone. If there is an urgent need for the license number you should check with the regional office serving your area. THE DEALER LICENSE A permanent license number is assigned to each licensed dealer along with a secret PIN number that changes annually. As long as there is no change which requires a new application, only the secret pin number will change each time the license is renewed. The pin number does not appear on the dealer license, but is supplied separately to the licensee and must be used by the licensee to process title work at the tax collector's office. Thus, a dealer will not be able to process title work or purchase temporary tags or purchase dealer tags from the tax collector's office unless he produces a correct pin number for the current license period. The pin number is not available to the tax collector on the computer system and cannot be checked or verified by them. The dealer or the dealer representative must present the pin number either verbally or in writing to the tax collector's office. If a pin number is lost, misplaced or forgotten, a dealer may get it from a regional office of the Division of Motor Vehicles, but only if the request is made in writing on the dealer's letterhead, and specifically names the person authorized to obtain the pin number. Since the pin number is a security feature, this procedure is designed to protect the dealer. It is only necessary to provide the pin number at the time work is processed at a tax collector's office. The pin number does not have to be entered on dealer reassignments nor does it have to be put on title work. If the pin number is compromised in any way, and the dealer requires a new one, the dealer will have to apply for a new pin number at the local Regional Office. DMV 8

18 DENIAL OF A DEALER LICENSE The Department may deny a license to any motor vehicle dealer applicant on any of the following grounds: A. Failure to meet the qualifications for holding a license. For example: 1) Failure to answer all applicable questions. 2) Failure to provide legible answers on the application. 3) Failure to sign the application. 4) Failure to include the necessary fees. 5) Failure to provide the required surety bond or irrevocable letter of credit. 6) Failure to provide Garage Liability insurance. 7) Failure to attend training and provide a verification form. 8) Failure to register a fictitious trade name, when required. 9) Failure to provide corporate documents, when required. 10) Failure to obtain a Federal Employer's Identification Number, when required. 11) Failure to obtain a sales tax number. 12) Failure to attach a true copy of a written lease, if applicable. B. Willful violation of any law of this state having to do with dealing in motor vehicles. C. Willful failure to comply with any administrative rule promulgated by the Department. D. Perpetration of a fraud upon any person as a result of dealing in motor vehicles. E. Commission of a fraud or willful misrepresentation in applying for or in obtaining a dealer license. F. A history of bad credit or an unfavorable credit rating as revealed by investigation by the Department. G. Conviction of a felony. DMV 9

19 H. Additional grounds for denying any applicant a license as a motor vehicle dealer: 1) When an applicant has made a material misstatement in an application for a license. 2) When an applicant has failed to comply with any applicable provisions of Chapter 320, Florida Statutes. 3) When an applicant or one or more of the principals has violated any law, rule or regulation relating to the sale of a motor vehicle. 4) When the Department has proof of the unfitness of the applicant. 5) When any applicant has engaged in previous conduct in any state which would be grounds for revocation or suspension of a license in this state. PROCEDURE AND RIGHTS OF APPEAL Anytime the Department denies issuance of a license for any of the grounds stated in the previous section, written notification will be sent to the applicant advising the applicant of the denial and stating the reason(s) for the denial. Further, as required by the state's Administrative Procedures Act, the Division will notify the applicant that the applicant has twenty-one days from the date of receipt of the letter denying the application, to request a hearing to contest the Division's decision. Within the twenty-one days, the applicant must write the director of the Division of Motor Vehicles to request a hearing. If no such request is received, the Division's decision is final. If the applicant decides to request a hearing, such a hearing will be scheduled at the earliest possible time, giving the applicant the opportunity to explain why the Division should reconsider its decision to deny the license. Following the hearing, the Division will either confirm its earlier decision denying the license or will reconsider its position and issue the license, assuming that the application is complete and all attaching documentation and fees are attached. MODIFICATIONS AFTER A LICENSE HAS BEEN ISSUED The following sections briefly describe the action that a licensee should take to process one of the modifications described. The first three sections below are not really changes but are actually new dealer license numbers and involve a restart of licensing. 1. Change of license type. A change of license type involves a change of the type of business operated by the dealership. For example, changing a franchise motor vehicle dealership (VF) to a DMV 10

20 non-franchised dealership that sells used cars (VI), or changing a motor vehicle auction (VA) license to a used car dealership (VI), or any other similar change of license type, requires the applicant to complete a new application, including payment of an original application fee and meeting all requirements for initial If the holder of a license wants to change the type and obtain a franchised dealer license (VF), then the requirements for a franchised dealer must be met. 2. Change of Entity A change of entity of a dealership such as changing a sole ownership to a partnership, a partnership to a corporation, or any other similar change requires an initial application, satisfaction of all requirements and payment of fees. 3. Adding a Supplemental Location To add a supplemental location to an existing license, a dealer must complete certain questions on the Dealer License Application and submit all required documentation with appropriate fees. The location cannot be operated until a license has been issued. 4. Changing a Name Any motor vehicle dealer desiring to change the ownership name or fictitious trade name of a dealership must file an application to change the name, accompanied by a $25.00 fee. Motor vehicle dealers must also submit an affidavit stating that there has been no change in majority ownership. 5. Change of Physical Location A licensed dealer wishing to change the physical address of the dealership must complete an application. The appropriate fee must accompany the application for change of physical location address. 6. Change of Mailing Address Any dealer wishing to notify the Division of a change of mailing address may do so anytime during the year by simply filing a modified application. All dealers are advised to file this form if the mailing address changes, to insure that all communications between the Division and the dealer are received by the dealer. 7. Postal Update A dealer must advise the Division when the post office has changed the address of the dealership, even though no move has taken place. A copy of the letter of notification from the postmaster must be provided. 8. Change of a supplemental location to a new location A change of an additional location to a miain location can be accomplished by completing an application and submitting licenses for both the main location and the additional location. Upon receipt, the Division will cancel both licenses and issue a DMV 11

21 new license, at no charge, reflecting that the new main location is the previous supplemental location. 9. Corporate update When a corporation holding any kind of license has a change in corporate officers, the business must report the change in corporate officers by completing the appropriate section of the dealer application, accompanied by a copy of the minutes of the corporate meeting indicating the corporate update. The corporate minutes must include a copy of the letter(s) of resignation signed by the outgoing officers. A fingerprint card and a fingerprint processing fee must accompany the application, for each new corporate officer listed on the application. Filing the application does not require the payment of any fee and the purpose is to keep the Division notified of current corporate officers. Upon receipt, the Divisions records will be changed accordingly. Failure to provide this information may cause confusion and delay in license renewals. 10. Change of Ownership When the sole ownership of a partnership of a dealership changes, it is required that an initial application for license be filed and the business be re-licensed. In the case of corporations, the ownership of the corporation is not necessarily by the officers. Since a corporation is a legal entity unto itself; corporate officers may change without filing for a new dealer license. A change in the majority ownership of the stock in a corporation, requires the filing for a new dealers license. 11. Change of Bonding Company Anytime a dealership voluntarily changes the bonding company during a licensing period, the dealer is obligated to notify the Division by submitting a replacement bond. In order for a replacement bond to be accepted it must meet all the requirements of a valid surety bond and must have a beginning date that overlaps the ending date if the bond being cancelled to ensure that the dealership is covered at all times. Failure to notify the Division of the voluntary change in bonding companies could result in disciplinary action being taken. 12. Change in Garage Liability Insurance Company Dealers in motor vehicles (including motor homes) are required to have and maintain garage liability insurance coverage during the licensing period. If a dealer voluntarily decides to change companies during a licensing period, the dealer must notify the Division of Motor Vehicles, in writing of the new company and policy number. DMV 12

22 KEEPING AND MAINTAINING A LICENSE 1. Bond Cancellation Occasionally a surety company will cancel a surety bond issued to a dealership. When this happens, the surety company notifies the Department that it will cancel or terminate its liability on a bond on a specific date. The Department then notifies the dealer that the bond will be canceled at the end of a thirty day period. During that time the dealer is given the opportunity to either negotiate with the same bonding company for reinstatement of the bond or to seek a replacement bond from another surety company, or obtain an irrevocable letter of credit from a bank. In any event, by the expiration of the thirty day period, a new bond or the letter of credit must be secured and in force without any time lapse between the termination of the old bond and the effective date of the new bond. If the dealer does not or cannot obtain a replacement bond or reinstatement of the original bond or a letter of credit prior to the expiration, the dealer must cease doing business and the license is revoked. Although the Division does notify the dealer of this procedure, the responsibility is on the dealer to obtain the surety coverage. In the event of license revocation, an initial licensing process, including application, fees, and supporting documentation would be required. 2. Abandoned Location Sometimes a dealership, because of losing a lease or out of a desire to change locations, will close a location for the purpose of looking for a new location. In such instances, the Division of Motor Vehicles must be notified of this activity by the dealership. The Division cannot know, without being told, that a dealer may be looking for a change of location or may simply be on vacation. When a representative of the Division attempts to contact a dealer and finds no business activity at the location, no inventory and no vehicles on display, no personnel available on location to be contacted by the Division, the telephone is either disconnected or not being answered, no response to an inspector's/examiner's business calling card, utilities disconnected, or in some cases, notices are posted on the location that the property is being advertised for sale or rent, or any other facts that would indicate that the dealer has closed and abandoned the location permanently, it may be concluded that the dealer has abandoned the location. In such circumstances, a report will be prepared by an inspector /examiner requesting the license be revoked because the dealership has been closed and the property has been abandoned. It is not the Division's desire DMV 13

23 to put any dealer out of business, but the Division will not allow a license to be retained when there is no dealership at the licensed location. Before a license will be revoked under these circumstances, due process notification will be provided by certified mail. However, if a dealer is not receiving mail, the dealer may not be notified that the Division will revoke the license. It is the dealer's obligation to notify the Division in writing, of any temporary closing or change in address. If a change of address is not properly applied for, a new license applied for, and a new license issued reflecting the new location, it is likely that a dealer's license will be revoked based on the abandoning of the previous location. Should that happen, the dealer will be required to file an initial application for a new license and meet all current qualifications required of a new license. 3. Bankruptcy A dealership undergoing either a Chapter Eleven reorganization proceeding or a Chapter Seven liquidation bankruptcy proceeding, may retain its license during the course of the bankruptcy proceedings and may continue to operate as a licensed dealer. However, the bankruptcy proceedings does not protect a dealer from all of the operations and licensing requirements imposed on any motor vehicle dealer. The bankruptcy proceeding does not protect the dealer from penalties of unlawful conduct nor does it permit a dealer to operate a business in violation of licensing or operational laws. The surety bond or irrevocable letter of credit remains in effect, and claims can validly be made against those bonds or letters of credit, for violations that occur after the petition for bankruptcy has been filed. GOING OUT OF BUSINESS Anytime a dealer intends to voluntarily go out of business, it is the obligation of the dealer to notify the Division, in writing, of the dealer's intent to terminate its business. Such notification must include the date that the licensee intends to terminate its operation. Either at that time, or subsequently, the licensee is obligated to submit its license to the Division for cancellation. The dealer must also submit any dealer tags and temporary tags and temporary tags in its possession for cancellation and refund, where appropriate. Unless and until a dealer notifies the Division in writing and action is taken to actually cancel the license, the Division continues to hold the licensee responsible for activities occurring under the authority of that license. a dealer may not relieve itself of liability by unilaterally deciding its license is no longer to be used. The license remains in force and effect until it is canceled by the Division at its central headquarters in Tallahassee. Once a dealer decides to go out of business, the dealer should dispose of any inventory in a timely fashion, prior to ceasing its operation and return all dealer license plates and temporary tags to the Division of Motor Vehicles. DMV 14

24 LICENSE RENEWALS The one page renewal application form (Exhibit 14) will ordinarily be mailed to each dealer at least sixty days prior to the expiration date of the current license. There is an obligation placed on a licensee to submit the renewal application in a timely fashion to ensure that the new license is issued prior to the expiration date of the current license. All renewal applications must be received in the regional office of the Division of Motor Vehicles on or prior to the expiration date. Postmarks will not be accepted. Independent dealers (VI) must also include a continuing education certificate for a day of study from a certified school every two years as per statute. The renewal application should only be used if there are no changes to be reported to the Division, other than minor things such as a postal update or mailing address change. If any other change is to be reported or noted such as a criminal conviction, a change of physical location, a change in ownership, or a request for a change of license type, the long form application must be used, even at renewal time. When there are no deficiencies or errors in the paperwork submitted, it ordinarily takes just a few days to renew the license. However, to insure that licenses are renewed in a timely manner, the law requires that an application for renewal must be received by the Division thirty days prior to the expiration date of the current license. The law provides for late penalties and delinquent fees for renewal applications submitted past the expiration date of the previous license, but only for forty-five days. In the case of a motor vehicle dealer license, the late penalty is $100 over and above the renewal fee of $75. If the license is not renewed with a delinquent fee within a forty-five day period after the expiration date, a new application is required which must be accompanied by proof of attending a one day training program and the $ initial license fee. The successful processing of a renewal application depends on the completeness of the application including the attachment of all necessary documentation. For example, all dealers must submit continuation certificates or newly issued surety bonds or irrevocable letters of credit, covering the new licensing period and reflecting the effective renewal date, and, where applicable, certification or continuance of garage liability insurance. TRANSFER OR ASSIGNMENT OF LICENSE Dealer licenses issued by the Department are not transferable or assignable. The state issued license may not be considered part of a buy/sell agreement of a franchised dealership. A license does not automatically get transferred by a court order directing the change of ownership of a licensed dealer. In such cases, the transferee, assignee, buyer, or other person(s) receiving the benefits of the dealership, are required to apply for a license in their own individual or business name. DMV 15

25 Prohibition No licensed motor vehicle dealer shall authorize or knowingly permit or allow any person, employee, agent or representative to use the dealer's license identification number to effect a sale of a motor vehicle, a title transfer, or a registration transaction for the sale of a motor vehicle wherein the purchaser of that motor vehicle was not given notice that the sale, transfer or registration was not made by a licensed dealer. The Florida Certificate of Title Certificates of Title were first authorized by the 1923 Florida Legislature and became effective July 1, of that year. Certificates of Title were issued to each owner of a motor vehicle with provisions for showing evidence of any lien. When a person sold his vehicle, the certificate of title was endorsed to the buyer to show transfer of ownership. The title then went to the State Comptroller for a new certificate of title, issued in the name of the new owner. The primary purpose of the certificate of title was for auto theft prevention. The certificate of title fees collected were deposited into an Auto Theft Fund. The certificate of title became the legal document of ownership. On August 1, 1948, a new certificate of title law became effective. This law required that certificates of title issued represent a complete abstract of title, including current mortgage status. To reflect this, every change of ownership and/or change in lien status was recorded in the records of the Motor Vehicle commissioner, with a new certificate of title being issued for each change. Through this law the Florida Legislature mandates that the Division of Motor Vehicles, maintain an accurate record of ownership of all the motor vehicles owned and operated in this state. The certificate of title provides the means by which this information is acquired. In 1957, the Florida legislature revised the Sales Tax Law to include motor vehicles. The law provided that no certificate of title could be issued without evidence of payment of the applicable sales tax, unless the transaction was sales tax exempt. In the case of a retail sale by a licensed motor vehicle dealer, the amount of the sales tax collected on the transaction must be reported in the reassignment section of the title and on every application for certificate of title. Many changes in title laws and rules have occurred over the years, resulting in changes in the appearance of the certificate of title and the procedure of applying for and issuing certificates of title. When certificates of title were first issued in 1923, the entire operation was performed manually in a central location. Accessing information about owners and vehicles was a time consuming process. Today, with he use of modern technology, there are 242 Tag Agencies throughout the state, processing title applications on-line with the state FRVIS computer network, updating records as they are validated. Retrieving information from the system is accomplished in a more timely and accurate manner. DMV 16

26 FEDERAL LAW REVISED In 1987, the Federal Odometer Law was revised, requiring the transferor and lessee of motor vehicles to make written disclosures to transferees and lessors concerning the odometer mileage and its accuracy. In addition, the revised law required all states to issue motor vehicle certificates of titles on secure documents and to incorporate a Federal Odometer Disclosure Statement in each re-assignment section of the title, conforming to the requirements of the Federal Law. The Florida Legislature enacted the Florida Odometer Fraud Prevention and Detection Act in 1989, to become effective as of April 29, Since this date, Florida has been issuing certificates of title that comply with the requirements of the Federal Law. These certificates of title are known as conforming titles. All certificates of title issued by Florida prior to April 29, 1990, do not conform to the requirements of the federal law and they are referred to as non-conforming titles. Florida Odometer Law now parallels the Federal Odometer Law and provides for the following: 1. That certificates of title shall contain warning statements about federal and state law regarding odometer disclosures. 2. That certificates of title shall contain forms for the transfer of certificate of title and forms for odometer disclosure statements which conform to federal rule. 3. That certificates of title shall contain dealer reassignments and odometer disclosure forms and provides that when all reassignment forms on the certificate of title have been used, dealers may use a separate dealer reassignment form which is to have two carbon copies, one of which is to be submitted to the department within five business days after the transfer. This section also provides that dealers maintain odometer disclosure records for a period of five years after the date of sale and furthermore provides that requirements of the subsection apply to certificates of title which do not contain the required forms. 4. That upon transfer or reassignment of a certificate of title, the transferor shall complete the odometer disclosure statement and the transferee shall acknowledge the disclosure by signing and printing their names in the space provided. This section also provides an exemption for motor vehicles which are ten years old and older (on January 1 ), motor vehicles with a gross vehicle weight rating over 16,000 pounds and motor vehicles which are not self propelled. New motor vehicles that have not been sold to the first retail purchaser and are being wholesaled to another new car dealer, are exempt from the odometer disclosure requirements. 5. Florida Law prohibits a person from signing an odometer disclosure statement as both transferor and transferee unless the certificate of title is being physically held by a lienholder or is lost or destroyed and a secure power of attorney is given. In a case like this, a transferor may give a secure power of attorney to his transferee for the purpose of the odometer disclosure. DMV 17