New Law Will Force Local Businessman to Close Shop
By E.A. Barrera

Garry Saylor has owned Classic Car Co. for twenty-seven years. Garry and his wife Kim are shown with one of their favorites, a Hudson Wasp Custom Sedan. Photo by Darrel Kinney

Garry Saylor has owned his Classic Car Co. for 27 years. He spent 18 years in Poway, but for the last nine years, Saylor's auto business on Main Street in Ramona has sold classic and used vehicles to Ramona customers, under the guiding principle that honest business is always good business.

"I have always followed the Golden Rule in my life. I treat my customers with respect because it is both good business and the right thing to do. When people trust you, they will be steady customers," Saylor said.

But a recent law, which took effect on July 1, was written with another old rule in mind - never trust a used-car salesman.

Assembly Bill 68, written by Los Angeles County Assemblywoman Cindy Montanez, and signed by Gov. Arnold Schwarzenegger, provides for a new three-day cooling off period on the purchase of used automobiles in California. The law was created to protect consumers from unscrupulous car dealers. But for Saylor, the bill will force him to shut down his business.

"I can't afford to stay in business under this new law. There is just too much opportunity now for me to get taken advantage of from dishonest people who want to joy ride one of my cars, or strip them down for the parts," said Saylor.

The law is aimed at temporary parking lot used car sales, set up by companies from out of town who come in on a weekend, sell their cars, and then leave town before anyone can return a potential clunker or lemon. Under the new law, all sales contracts for used motor vehicles will now be conditional for the first three business days.

"Existing law governs motor vehicle conditional sale contracts," said Montanez in her bill. "These provisions require sellers of motor vehicles to make certain disclosures to buyers, including that existing law does not provide for a 'cooling off' period, and to disclose certain information under the label 'itemization of the amount financed.'"

Under the new law, a sale must include a notice to all potential buyers of used vehicles (with a purchase price of less than $40,000) of their right to obtain a contract cancellation option agreement.

The conditional sale contract also must now include the amount charged for any service contracts, any insurance products, a debt cancellation agreement, a theft deterrent device, a surface protection product, and a vehicle contract cancellation option agreement.

A used car dealer must cancel a conditional sales contract if the buyer decides to obtain and exercise the contract cancellation option. The dealer must provide the buyer with a full refund. The dealer must make the refund within two days of the date of cancellation, including sales tax and any registration fees, but excluding the cost of the contract cancellation option, and a restocking fee.

The restocking fee is limited to $175 with a cash price of $5,000 or less; $350 with a cash price of less than $10,000; $500 with a cash price of $10,000 or more.

"The cost of the contract cancellation option fee must be subtracted from the restocking fee," said Montanez. "A definition of "full refund" for the...

purchases includes the return of any trade-in vehicle or, if it has been sold, either the fair market value of the traded in vehicle or its value stated in the contract, whichever is greater."

The California Motor Car Dealers Association (CMCDA) opposed the creation of the new law, stating that AB68 would "stifle the state's robust new- and used-car industry."

"AB68 is an intrusion into the private contract rights of car dealers and consumers," said Peter Welch, CMCDA's president. "The bill's provisions concerning vehicle financing would dramatically alter California's robust auto financing market, by prohibiting the state's 10,000 new and used car dealers from competing on a level playing field with banks and credit unions. The inevitable result will be less competition and higher prices for car buyers," said Welch.

Saylor noted that in any other situations where consumers have a cooling off period, the consumer is usually not allowed to take possession of the property.

"The biggest problem with this new law is that a customer is allowed to take possession of the vehicle and drive it for those three business days up to 250 miles.

They can take the parts, strip them and replace them with older inferior parts, or they can simply do damage to the vehicle and claim the car was sold that way, and unless I can absolutely prove it wasn't, I get stuck with the bill."

"People without a lot of money who can't afford a new car will now have to buy a used car from a private party.

This is the most dangerous news for consumers, since private parties are not subject to any of the rules and laws governing licensed used car dealers," said Saylor.