GENERAL ASSEMBLY OF NORTH CAROLINA
1991 SESSION
CHAPTER 662
AN ACT TO REGULATE THE SALE OF MOTOR VEHICLES BY MOTOR VEHICLE DEALERS.
The General Assembly of North Carolina enacts:
Section 1. G.S. 20-286, as amended by Section 1 of Chapter 527 of the 1991 Session Laws, reads as rewritten:
"§ 20-286. Definitions.
Unless the context otherwise requires, the following words
and terms, for the purpose of this Article, shall have the following meanings: The
following definitions apply in this Article:
(1)(2) Repealed by Session Laws 1973, c. 1330, s. 39.
(2a) "Dealership facilities"means
the Dealership facilities. - The real estate, buildings, fixtures
and improvements which have been devoted to the conduct of business
under the franchise by the new motor vehicle dealer. a franchise.
(2b) "Designated family member"means
the Designated family member. - The spouse, child, grandchild,
parent, brother, or sister of a dealer, who, in the case of a deceased dealer,
is entitled to inherit the dealer's ownership interest in the dealership under
the terms of the dealer's will; or who has otherwise been designated in writing
by a deceased dealer to succeed him in the motor vehicle dealership; or who
under the laws of intestate succession of this State is entitled to inherit the
interest; or who, in the case of an incapacitated dealer, has been appointed by
a court as the legal representative of the dealer's property. The term includes
the appointed and qualified personal representative and testamentary trustee of
a deceased dealer.
(3) "Distributor"and
"wholesaler"mean a Distributor. - A person,
resident or nonresident of this State, who sells or distributes new motor
vehicles to new motor vehicle dealers in this State, or who maintains
a distributor representative in this State, or who controls any person, firm,
association, corporation or trust, resident or nonresident, who in whole or
in part offers for sale, sells or distributes any new motor vehicle to
any motor vehicle dealer in this State.
(4) "Distributor
branch"means a Distributor branch. - A branch office
maintained by a distributor or wholesaler, distributor for the
sale of new motor vehicles to new motor vehicle dealers, or for
directing or supervising its the distributor's representatives in
this State.
(5) "Distributor
representative"means a Distributor representative. - A person
employed by a distributor or wholesaler, or by a distributor branch, branch
for the purpose of making selling or promoting the sale of new
motor vehicles dealt in by it, or for supervising or contacting its
dealers, prospective dealers, or representatives in this State. vehicles
or otherwise conducting the business of the distributor or distributor branch.
(5a) Established office. - An office that meets the following requirements:
a. Contains at least 96 square feet of floor space in a permanent enclosed building.
b. Is a place where the books, records, and files required by the Division under this Article are kept.
(6) 'Established place
of business' means a Established salesroom. - A salesroom that
meets the following requirements:
a. containing
Contains at least 96 square feet of floor space in a permanent
enclosed building; said salesroom shall have displayed thereon or building.
b. Displays,
or is located immediately adjacent thereto a sign, in to, a sign
having block letters not less than three inches in height on contrasting
background, clearly and distinctly designating the trade name of the business
business.
c. Is
a place at which a permanent business of bartering, trading trading,
and selling motor vehicles will be carried on as such in good faith on
an ongoing basis whereby the dealer can be contacted by the public at
reasonable times.
d. and
at which place of business shall be kept and maintained Is a place where
the books, records records, and files as required
by the Division may require necessary to conduct the business at such
place. under this Article are kept.
The term includes the area contiguous to or located within 500 feet of the
premises on which the salesroom is located. The term does not include a
tent, a temporary stand, or other temporary quarters. Provided, however,
the The minimum area requirement provided for in this subdivision
is not applicable does not apply to any established place of
business lawfully in existence and duly licensed on or before January 1, 1978.
(7) "Factory
branch"means a Factory branch. - A branch office,
maintained for the sale of new motor vehicles to new motor
vehicle dealers, or for directing or supervising its the factory
branch's representatives in this State.
(8) "Factory
representative"means a Factory representative. - A person
employed by a person who manufactures or assembles motor vehicles, or by a
factory branch, manufacturer or a factory branch for the purpose of making
selling or promoting the sale of its the manufacturer's motor
vehicles, or for supervising or contacting its dealers, prospective dealers
or representatives in this State. vehicles or otherwise conducting the
business of the manufacturer or factory branch.
(8a) "Franchise"means
the Franchise. - A written agreement or contract between any new
motor vehicle manufacturer, and any new motor vehicle dealer which purports to
fix the legal rights and liabilities of the parties to such agreement or
contract, and pursuant to which the dealer purchases and resells the franchised
product or leases or rents the dealership premises.
(8b) "Good faith"seems
honest Good faith. - Honest in fact and the observation of
reasonable commercial standards of fair dealing in the trade as defined and
interpreted in G.S. 25-2-103(1)(b).
(8c) "Manufacturer"means
any Manufacturer. - A person, resident or nonresident, who
manufactures or assembles motor vehicles, or who imports new motor
vehicles for distribution through distributors of motor vehicles, a
distributor, including any person, partnership, or corporation which person
who acts for and is under the control of such the manufacturer
or assembler in connection with the distribution of said the motor
vehicles. Additionally, the term 'manufacturer' shall include the terms
'distributor' and 'factory branch"which have been defined above.
branch.'
(9) Repealed by Session Laws 1973, c. 1330, s. 39.
(10) "Motor vehicle"means
any Motor vehicle. - Any motor propelled vehicle, trailer or
semitrailer, required to be registered under the laws of this State.
a. 'New motor vehicle' means a motor vehicle which has never been the subject of a sale other than between new motor vehicle dealers, or between manufacturer and dealer of the same franchise.
b. 'Used motor vehicle' means a motor vehicle other than described in paragraph (10)a above.
(11) 'Motor vehicle dealer' and
'dealer' mean any Motor vehicle dealer or dealer. A person who
does any of the following:
a. For commission, money, or other thing of value, buys, sells, or exchanges, whether outright or on conditional sale, bailment lease, chattel mortgage, or otherwise, five or more motor vehicles within any 12 consecutive months, regardless of who owns the motor vehicles.
b. On behalf of another and for commission, money, or other thing of value, arranges, offers, attempts to solicit, or attempts to negotiate the sale, purchase, or exchange of an interest in five or more motor vehicles within any 12 consecutive months, regardless of who owns the motor vehicles.
c. Engages, wholly or in part, in the business of selling new motor vehicles or new or used motor vehicles, or used motor vehicles only, whether or not the motor vehicles are owned by that person, and sells five or more motor vehicles within any 12 consecutive months.
d. Offers to sell, displays, or permits the display for sale for any form of compensation five or more motor vehicles within any 12 consecutive months.
e. Primarily engages in the leasing or renting of motor vehicles to others and sells or offers to sell those vehicles at retail.
The term 'motor vehicle dealer' or 'dealer' does not include any of the following:
a. Receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under the judgment or order of any court.
b. Public officers while performing their official duties.
c. Persons disposing of motor vehicles acquired for their own use or the use of a family member, and actually so used, when the vehicles have been acquired and used in good faith and not for the purpose of avoiding the provisions of this Article.
d. Persons who
sell motor vehicles as an incident to their principal business but who are not
engaged primarily in the selling of motor vehicles. This category includes
financial institutions who sell repossessed motor vehicles and insurance
companies who sell motor vehicles to which they have taken title as an incident
of payments made under policies of insurance and who do not maintain a used car
lot or building with one or more employed motor vehicle salesmen. sales
representatives.
e. Persons manufacturing, distributing or selling trailers and semitrailers weighing not more than 750 pounds and carrying not more than a 1,500 pound load.
f. A licensed real estate broker or salesman who sells a mobile home for the owner as an incident to the sale of land upon which the mobile home is located.
g. An employee of an organization arranging for the purchase or lease by the organization of vehicles for use in the organization's business.
h. Any publication, broadcast, or other communications media when engaged in the business of advertising, but not otherwise arranging for the sale of motor vehicles owned by others.
i. Any person dealing solely in the sale or lease of vehicles designed exclusively for off-road use.
j. Any real property owner who leases any interest in property for use by a dealer.
k. Any person acquiring any interest in a motor vehicle for a family member.
(12) "Motor vehicle salesman"or
"salesman"means any Motor vehicle sales representative
or salesman. - A person who is employed as a salesman sales
representative by, or has an agreement with, a motor vehicle dealer, dealer
or a wholesaler to sell or exchange motor vehicles.
(13) "New motor vehicle dealer"means
a New motor vehicle dealer. - A motor vehicle dealer who buys, sells
or exchanges, or offers or attempts to negotiate a sale or exchange of an
interest in, or who is engaged, wholly or in part, in the business of selling,
new or new and used motor vehicles.
(13a) "Person"means every natural
person, partnership, corporation, association, trust or estate or other legal
entity. Person. - Defined in G.S. 20-4.01.
(13b) "Relevant market area"or
"trade area"means the Relevant market area or trade
area. - The area within a radius of 20 miles around an existing dealer or
the area of responsibility defined in the franchise, whichever is greater;
except that, where a manufacturer is seeking to establish an additional new
motor vehicle dealer the relevant market area shall be as follows:
a. If the population in an area within a radius of 10 miles around the proposed site is 250,000 or more, the relevant market area shall be that area within the 10 mile radius; or
b. If the population in an area within a radius of 10 miles around the proposed site is less than 250,000, but the population in an area within a radius of 15 miles around the proposed site is 150,000 or more, the relevant market area shall be that area within the 15 mile radius; or
c. Except as
defined in subsections (a) and (b) above, subparts a. and b., the
relevant market area shall be the area within a radius of 20 miles around an
existing dealer.
In determining population for this definition the most recent census by the U.S. Bureau of the Census or the most recent population update either from the National Planning Data Corporation or other similar recognized source shall be accumulated for all census tracts either wholly or partially within the relevant market area.
(14) Repealed by Session Laws 1973, c. 1330, s. 39.
(15) "Retail installment sale"means
and includes every Retail installment sale. - A sale of one or more
motor vehicles to a buyer for his the buyer's use and not for
resale, in which the price thereof is payable in one or more installments over
a period of time and in which the seller has either retained title to the goods
or has taken or retained a security interest in the goods under a form
of contract designated either as a conditional sale, bailment lease,
chattel mortgage or otherwise.
(16) "Used motor vehicle
dealer"means a Used motor vehicle dealer. - A motor
vehicle dealer who buys, sells or exchanges, or offers or attempts to negotiate
a sale or exchange of an interest in, or who is engaged, wholly or in part, in
the business of selling, used motor vehicles only.
(17) Wholesaler. - A person who sells or distributes used motor vehicles to motor vehicle dealers in this State, has a sales representative in this State, or controls any person who in whole or in part offers for sale, sells, or distributes any used motor vehicle to a motor vehicle dealer in this State. The provisions of G.S. 20-302, 20-305.1, and 20-305.2 that apply to distributors also apply to wholesalers."
Sec. 2. G.S. 20-287 reads as rewritten:
"§ 20-287. Licenses required.
It shall be unlawful for any new motor vehicle dealer, used
motor vehicle dealer, motor vehicle salesman, sales representative, manufacturer,
factory branch, factory representative, distributor, distributor branch,
factory or distributor representative, or wholesaler to engage in
business as such in this State without first obtaining a license as
provided in this Article. If any motor vehicle dealer acts as a motor vehicle salesman,
he sales representative, the dealer shall obtain a motor vehicle salesman's
sales representative's license in addition to a motor vehicle
dealer's license. A salesman sales representative may have only
one license, and such license. The license shall show the
name of the dealer or dealers each dealer or wholesaler employing
him. A manufacturer or a factory branch or distributor or distributor
branch, licensed as such, may also operate as a motor vehicle dealer without
additional license. the sales representative. The following
license holders may operate as a motor vehicle dealer without obtaining a motor
vehicle dealer's license or paying an additional fee: a manufacturer, a factory
branch, a distributor, and a distributor branch. Any of these license
holders who operates as a motor vehicle dealer may sell motor vehicles at
retail only at an established salesroom."
Sec. 3. G.S. 20-288, as amended by Chapter 495 of the 1991 Session Laws, reads as rewritten:
"§ 20-288.
Application for license; information required and considered; license
requirements; expiration of license; supplemental license; bond.
(a) Application for a license shall be made to the Division at such time, in such form, and contain such information as the Division shall require, and shall be accompanied by the required fee.
(b) The Division shall
require in such application, or otherwise, information relating to matters set
forth in G.S. 20-294 as grounds for the refusing of licenses, and to other
pertinent matter matters commensurate with the safeguarding of the
public interest, all of which shall be considered by the Division in
determining the fitness of the applicant to engage in the business for which he
seeks a license.
(c) All licenses that are granted shall expire unless sooner revoked or suspended, on June 30 of the year following date of issue.
(d) Supplemental
licenses shall be issued for each place of business, operated or proposed to be
operated by the licensee, that is not contiguous to other premises for which a
license is issued. To obtain a license as a wholesaler, the applicant
must have an established office in this State. To obtain a license as a
motor vehicle dealer, an applicant must have an established salesroom in this
State.
An applicant for a license as a manufacturer, a factory branch, a distributor, a distributor branch, a wholesaler, or a motor vehicle dealer must have a separate license for each established office, established salesroom, or other place of business in this State. An application for any of these licenses shall include a list of the applicant's places of business in this State.
(e) Each applicant
approved by the Division for license as a motor vehicle dealer, manufacturer, factory
branch, distributor, distributor branch, or factory branch or
wholesaler shall furnish a corporate surety bond or cash bond or fixed
value equivalent thereof in the principal sum of twenty-five thousand
dollars ($25,000) and an additional principal sum of ten thousand dollars
($10,000) for each additional place of business within this State at which
motor vehicles are sold. of the bond. The amount of the bond for
an applicant for a motor vehicle dealer's license is twenty-five thousand
dollars ($25,000) for one established salesroom of the applicant and ten
thousand dollars ($10,000) for each of the applicant's additional established
salesrooms. The amount of the bond for other applicants required to
furnish a bond is twenty-five thousand dollars ($25,000) for one place of
business of the applicant and ten thousand dollars ($10,000) for each of the
applicant's additional places of business. Each application for a
license or a renewal of a license shall be accompanied by a list of locations
at which the applicant engages in the business of selling motor vehicles in
this State.
A corporate surety bond shall be approved by the Commissioner
as to form and shall be conditioned that the obligor will faithfully conform to
and abide by the provisions of this Article and Article 15. A cash bond or
fixed value equivalent thereof shall be approved by the Commissioner as to form
and terms of deposits as will secure the ultimate beneficiaries of the bond;
and such bond shall not be available for delivery to any person contrary to the
rules of the Commissioner. Any purchaser of a motor vehicle who shall
have suffered any loss or damage by any act of a motor vehicle dealer license
holder subject to this subsection that constitutes a violation of this
Article or Article 15 shall have the right to institute an action to recover
against such motor vehicle dealer the license holder and the
surety. Every licensee license holder against whom such an
action is instituted shall notify the Commissioner of the action within 10
days after process is served on the licensee. served with
process. A corporate surety bond shall remain in force and effect and
may not be canceled by the surety unless the motor vehicle dealer,
manufacturer, distributor branch, or factory branch has terminated the
operations of its business nor unless its bonded person stops engaging
in business or the person's license has been is denied,
suspended, or revoked under G.S. 20-294. Such cancellation may be had only upon
30 days' written notice to the Commissioner and shall not affect any liability
incurred or accrued prior to the termination of such 30-day period. Provided
nothing herein shall apply to a motor vehicle dealer, manufacturer, distributor
branch or factory branch which This subsection does not apply to a
license holder who deals only in trailers having an empty weight of 4,000
pounds or less. This subsection shall does not apply to
manufacturers of, or dealers in, mobile or manufactured homes who furnish a
corporate surety bond, cash bond, or fixed value equivalent thereof, pursuant
to G.S. 143-143.12."
Sec. 4. G.S. 20-289 reads as rewritten:
"§ 20-289. License fees.
(a) The license fee for each fiscal year, or part thereof, shall be as follows:
(1) For motor vehicle
dealers, distributors, distributor branches, and wholesalers, thirty
dollars ($30.00) for each principal place of business, plus eight
dollars ($8.00) for a supplementary license for each car lot not immediately
adjacent thereto; business.
(2) For manufacturers,
seventy-five dollars ($75.00), and for each factory branch in this State,
forty-five dollars ($45.00); ($45.00).
(3) For motor vehicle salesmen,
sales representatives, five dollars ($5.00); ($5.00).
(4) For factory
representatives, or distributor branch representatives, six dollars ($6.00);
($6.00).
(5) Manufacturers,
wholesalers, and distributors may operate as a motor vehicle dealer, without
any additional fee or license.
(b) The fees and
licenses collected under this section shall be placed in credited
to the Highway Fund. Provided, that nothing contained in this
section or in any other section of this Article shall be construed as exempting
any person from any license tax or fee imposed by any other provision of the
law. These fees are in addition to all other taxes and fees."
Sec. 5. G.S. 20-290(a) reads as rewritten:
"(a) The licenses The
license of a motor vehicle dealer shall list each of the dealer's established
salesrooms in this State. A license of new motor vehicle dealers,
used motor vehicle dealers, manufacturers, factory branches, distributors, and
distributor branches a manufacturer, factory branch, distributor,
distributor branch, or wholesaler shall specify the location of each
place of business or branch or other location occupied or to be occupied by the
licensee in conducting his business as such, and the license or supplementary
license issued therefor list each of the license holder's places of
business in this State. A license shall be conspicuously displayed on
at each of such premises. place of business. In the
event any such location is changed, the location of a business
changes, the Division shall endorse the change of location on the license,
without charge."
Sec. 6. G.S. 20-291 reads as rewritten:
"§ 20-291. Salesman,
etc., Representatives to carry license and display it on
request; license to name employer.
Every salesman, person to whom a sales
representative, factory representative and distributor representative representative,
or distributor representative license is issued shall carry his the
license when engaged in his business, and shall display the same it
upon request. The licensee license shall name his
employer, and in the event of a change of employer, he state the name of
the representative's employer. If the representative changes employers,
the representative shall immediately mail his the license to
the Division, which shall endorse such the change on the license
without charge."
Sec. 7. G.S. 20-292 reads as rewritten:
"§ 20-292. Use
of unimproved lots and premises. Dealers may display motor vehicles for
sale at retail only at established salesrooms.
A licensed motor vehicle dealer may use vacant lots and
premises for the sale and display of motor vehicles: Provided, that if such
lots and premises are not immediately adjacent to the dealer's established
place of business, a supplementary license shall be obtained for each lot or
premises. A new or used motor vehicle dealer may display a motor vehicle
for sale at retail only at the dealer's established salesroom, unless the
display is of a motor vehicle that meets any of the following descriptions:
(1) Contains the dealer's name or other sales information and is used by the dealer as a 'demonstrator' for transportation purposes.
(2) Is displayed at a trade show or exhibit at which no selling activities relating to the vehicle take place.
(3) Is displayed at the home or place of business of a customer at the request of the customer.
This section does not apply to recreational vehicles, house trailers, or boat, animal, camping, or other utility trailers."
Sec. 8. This act becomes effective October 1, 1991. A supplemental license issued to a motor vehicle dealer before the effective date of this act shall expire, if not sooner upon its own terms, 120 days after the effective date of this act.
In the General Assembly read three times and ratified this the 12th day of July, 1991.
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James C. Gardner
President of the Senate
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Daniel Blue, Jr.
Speaker of the House of Representatives