Bill Text: IL SB1215 | 2013-2014 | 98th General Assembly | Introduced
Bill Title: Amends the Illinois Vehicle Code. Provides that for purposes of the Section concerning the Dealer Recovery Trust Fund, the definition of "dealer" excludes a dealer who sells vehicles to another dealer or auction house.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Failed) 2015-01-13 - Session Sine Die [SB1215 Detail]
Download: Illinois-2013-SB1215-Introduced.html
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1 | AN ACT concerning transportation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Vehicle Code is amended by changing | |||||||||||||||||||
5 | Section 5-102.7 as follows:
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6 | (625 ILCS 5/5-102.7) | |||||||||||||||||||
7 | Sec. 5-102.7. Dealer Recovery Trust Fund. | |||||||||||||||||||
8 | (a) The General Assembly finds that motor vehicle dealers | |||||||||||||||||||
9 | that go out of business without fulfilling agreements to pay | |||||||||||||||||||
10 | off the balance of their customers' liens on traded-in vehicles | |||||||||||||||||||
11 | cause financial harm to those customers by leaving those | |||||||||||||||||||
12 | customers liable for multiple vehicle loans and cause harm to | |||||||||||||||||||
13 | the integrity of the motor vehicle retailing industry. It is | |||||||||||||||||||
14 | the intent of the General Assembly to protect vehicle | |||||||||||||||||||
15 | purchasers by creating a Dealer Recovery Trust Fund to | |||||||||||||||||||
16 | reimburse these consumers. | |||||||||||||||||||
17 | (b) The Dealer Recovery Trust Fund shall be used solely for | |||||||||||||||||||
18 | the limited purpose of
helping victims of dealership closings. | |||||||||||||||||||
19 | Any interest accrued by moneys in the Fund shall be
deposited | |||||||||||||||||||
20 | and become part of the Dealer Recovery Trust Fund and its | |||||||||||||||||||
21 | purpose. The sole beneficiaries of the Dealer Recovery Trust | |||||||||||||||||||
22 | Fund are victims of
dealership closings. | |||||||||||||||||||
23 | (c) Except where the context otherwise requires, the |
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1 | following words and phrases, when used in this Section, have | ||||||
2 | the meanings ascribed to them in this subsection (c): | ||||||
3 | "Applicant" means a person who applies for reimbursement | ||||||
4 | from the Dealer Recovery Trust Fund Board. | ||||||
5 | "Board" means the Dealer Recovery Trust Fund Board created | ||||||
6 | under this Section. | ||||||
7 | "Dealer" means a new vehicle dealer licensed under Section | ||||||
8 | 5-101 or a used vehicle dealer licensed under Section 5-102, | ||||||
9 | excepting a dealer who primarily sells mobile homes, | ||||||
10 | recreational vehicles, or trailers or any dealer who sells 25 | ||||||
11 | vehicles or fewer per calendar year , not counting sales of | ||||||
12 | vehicles to another dealer or auction house . | ||||||
13 | "Fund" means the Dealer Recovery Trust Fund created under | ||||||
14 | this Section. | ||||||
15 | "Fund Administrator" means the private entity, which shall | ||||||
16 | be appointed by the Board, that administers the Dealer Recovery | ||||||
17 | Trust Fund. | ||||||
18 | (d) Beginning October 1, 2011, each application or renewal | ||||||
19 | for a new vehicle dealer's license and each application or | ||||||
20 | renewal for a used vehicle dealer's license shall be | ||||||
21 | accompanied by the applicable Annual Dealer Recovery Fund Fee | ||||||
22 | under Section 5-101 or 5-102 of this Code. The fee shall be in | ||||||
23 | addition to any other fees imposed under this Article, shall be | ||||||
24 | submitted at the same time an application or renewal for a new | ||||||
25 | vehicle dealer's license or used vehicle dealer's license is | ||||||
26 | submitted, and shall be made payable to and remitted directly |
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1 | to the Dealer Recovery Trust Fund, a trust fund outside of the | ||||||
2 | State Treasury which is hereby created. In addition, the Dealer | ||||||
3 | Recovery Trust Fund may accept any federal, State, or private | ||||||
4 | moneys for deposit into the Fund. | ||||||
5 | (e) The Fund Administrator shall maintain a list of all | ||||||
6 | dealers who have paid the fee under subsection (d) of this | ||||||
7 | Section for the current year, which shall be available to the | ||||||
8 | Secretary of State and the Board. The Secretary of State shall | ||||||
9 | revoke the dealer license of any dealer who does not pay the | ||||||
10 | fee imposed under subsection (d) of this Section. The Secretary | ||||||
11 | of State and the Fund Administrator may enter into information | ||||||
12 | sharing agreements as needed to implement this Section. | ||||||
13 | (f) The Fund shall be audited annually by an independent | ||||||
14 | auditor who is a certified public accountant and who has been | ||||||
15 | selected by the Board. The independent auditor shall compile an | ||||||
16 | annual report, which shall be filed with the Board and shall be | ||||||
17 | a public record. The auditor shall be paid by the Fund, | ||||||
18 | pursuant to an order of the Board. | ||||||
19 | (g) The Fund shall be maintained by the Fund Administrator, | ||||||
20 | who shall keep current records of the amounts deposited into | ||||||
21 | the Fund and the amounts paid out of the Fund pursuant to an | ||||||
22 | order of the Board. These records shall be made available to | ||||||
23 | all members of the Board upon reasonable request during normal | ||||||
24 | business hours. The Fund Administrator shall report the balance | ||||||
25 | in the Fund to the Board monthly, by the 15th day of each | ||||||
26 | month. For purposes of determining the amount available to pay |
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1 | claims under this Section at any meeting of the Board, the | ||||||
2 | Board shall use the Fund Administrator's most recent monthly | ||||||
3 | report. The Fund Administrator shall purchase liability | ||||||
4 | insurance to cover management of the Fund at a cost not to | ||||||
5 | exceed 2% of the balance in the Fund as of January 15th of that | ||||||
6 | year. | ||||||
7 | (h) In any year for which the balance in the Fund as of | ||||||
8 | August 31st is greater than $3,500,000, the Fund Administrator | ||||||
9 | shall notify the Secretary of State and the Secretary of State | ||||||
10 | shall suspend collection of the fee for the following year for | ||||||
11 | any dealer who has not had a claim paid from the Fund, has not | ||||||
12 | had his or her license suspended or revoked, and has not been | ||||||
13 | assessed any civil penalties under this Code during the 3 | ||||||
14 | previous years. | ||||||
15 | (i) Moneys in the Dealer Recovery Trust Fund may be paid | ||||||
16 | from the Fund only as directed by a written order of the Board | ||||||
17 | and used only for the following purposes: | ||||||
18 | (i) to pay claims under a written order of the Board as | ||||||
19 | provided in this Section; or | ||||||
20 | (ii) to reimburse the Fund Administrator for its | ||||||
21 | expenses related to the administration of the Fund, | ||||||
22 | provided that the reimbursement to the Fund Administrator | ||||||
23 | in any year shall not exceed 2% of the balance in the Fund | ||||||
24 | as of January 15th of that year. | ||||||
25 | (j) The Dealer Recovery Trust Fund Board is hereby created. | ||||||
26 | The Board shall consist of the Secretary of State, or his or |
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1 | her designee, who shall serve as chair, the Attorney General, | ||||||
2 | or his or her designee, who shall serve as secretary, and one | ||||||
3 | person alternatively representing new and independent Illinois | ||||||
4 | automobile dealers, selected collectively by the Attorney | ||||||
5 | General, or his or her designee, and the Secretary of State, or | ||||||
6 | his or her designee. The Secretary of State may propose | ||||||
7 | procedures and employ personnel as necessary to implement this | ||||||
8 | Section. The Board shall meet quarterly, and as needed, as | ||||||
9 | directed by the chair. The Board may not pay out any claims | ||||||
10 | before the balance deposited into the Fund exceeds $500,000. | ||||||
11 | Board meetings shall be open to the public. The Board has the | ||||||
12 | authority to take any action by at least a two-thirds majority | ||||||
13 | vote. | ||||||
14 | (k) The following persons may apply to the Board for | ||||||
15 | reimbursement from the Dealer Recovery Trust Fund: | ||||||
16 | (i) A retail customer who, on or after October 1, 2011, | ||||||
17 | purchases a vehicle from a dealer who subsequently files | ||||||
18 | for bankruptcy or whose vehicle dealer's license is | ||||||
19 | subsequently revoked by the Secretary of State or otherwise | ||||||
20 | terminated and, as part of the purchase transaction, trades | ||||||
21 | in a vehicle with an outstanding lien to the dealer if lien | ||||||
22 | satisfaction was a condition of the purchase agreement and | ||||||
23 | the retail customer determines that the lien has not been | ||||||
24 | satisfied; | ||||||
25 | (ii) A retail customer who, on or after October 1, | ||||||
26 | 2011, purchases a vehicle with an undisclosed lien from a |
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1 | dealer who subsequently files for bankruptcy or whose | ||||||
2 | vehicle dealer's license is subsequently revoked by the | ||||||
3 | Secretary of State or otherwise terminated; | ||||||
4 | (iii) A dealer who, on or after October 1, 2011, | ||||||
5 | purchases a vehicle with an undisclosed lien from another | ||||||
6 | dealer who subsequently files for bankruptcy or whose | ||||||
7 | vehicle dealer's license is subsequently revoked by the | ||||||
8 | Secretary of State or otherwise terminated. | ||||||
9 | (l) To be considered by the Board, an applicant must submit | ||||||
10 | his or her claim to the Board within 9 months after the date of | ||||||
11 | the transaction that gave rise to the claim. | ||||||
12 | (m) At each meeting of the Board, it shall consider all | ||||||
13 | claims that are properly submitted to it on forms prescribed by | ||||||
14 | the Secretary of State at least 30 days before the date of the | ||||||
15 | Board's meeting. Before the Board may consider a claim against | ||||||
16 | a dealer, it must make a written determination that the dealer | ||||||
17 | has filed for bankruptcy under the provisions of 11 U.S.C. | ||||||
18 | Chapter 7; that the Secretary of State has revoked his or her | ||||||
19 | dealer's license; or that the license has been otherwise | ||||||
20 | terminated. Once the Board has made this determination, it may | ||||||
21 | consider the applicant's claim against the dealer. If a | ||||||
22 | two-thirds majority of the Board determines that the dealer has | ||||||
23 | committed a violation under subsection (k), it shall grant the | ||||||
24 | applicant's claim. Except as otherwise provided in this | ||||||
25 | Section, the maximum amount of any award for a claim under | ||||||
26 | paragraph (i) of subsection (k) of this Section shall be equal |
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1 | to the amount of the unpaid balance of the lien that the dealer | ||||||
2 | agreed to pay off on behalf of the applicant as shown on the | ||||||
3 | bill of sale or the retail installment sales contract. The | ||||||
4 | maximum amount of any claim under paragraph (ii) or (iii) of | ||||||
5 | subsection (k) of this Section shall be equal to the amount of | ||||||
6 | the undisclosed lien. However, no award for a claim under | ||||||
7 | subsection (k) of this Section shall exceed $35,000. | ||||||
8 | (n) If the balance in the Fund at the time of any Board | ||||||
9 | meeting is less than the amount of the total amount of all | ||||||
10 | claims awarded at that meeting, then all awards made at that | ||||||
11 | meeting shall be reduced, pro rata, so that the amount of | ||||||
12 | claims does not exceed the balance in the Fund. Before it | ||||||
13 | reviews new claims, the Board shall issue written orders to pay | ||||||
14 | the remaining portion of any claims that were so reduced, | ||||||
15 | provided that the balance in the Fund is sufficient to pay | ||||||
16 | those claims. | ||||||
17 | (o) Whenever the balance of the Fund falls below $500,000, | ||||||
18 | the Board may charge dealers
an additional assessment of up to | ||||||
19 | $50 to bring the balance to at least $500,000.
Not more than | ||||||
20 | one additional assessment may be made against a dealer in any | ||||||
21 | 12-month period. | ||||||
22 | (p) If the total amount of claims awarded against any | ||||||
23 | dealer exceeds 33% of the balance in the Fund, the Board may | ||||||
24 | permanently reduce the amount of those claims, pro rata, so | ||||||
25 | that those claims do not exceed 33% of the balance in the Fund. | ||||||
26 | (q) The Board shall issue a written order directing the |
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1 | Fund Administrator to pay an applicant's claim to a secured | ||||||
2 | party where the Board has received a signed agreement between | ||||||
3 | the applicant and the secured party holding the lien. The | ||||||
4 | agreement must (i) state that the applicant and the secured | ||||||
5 | party agree to accept payment from the Fund to the secured | ||||||
6 | party as settlement in full of all claims against the dealer; | ||||||
7 | and (ii) release the lien and the title, if applicable, to the | ||||||
8 | vehicle that was the subject of the claim. The written order | ||||||
9 | shall state the amount of the claim and the name and address of | ||||||
10 | the secured party to whom the claim shall be paid. The Fund | ||||||
11 | Administrator shall pay the claim within 30 days after it | ||||||
12 | receives the Board's order. | ||||||
13 | (r) No dealer or principal associated with a dealer's | ||||||
14 | license is eligible for licensure, renewal or relicensure until | ||||||
15 | the full amount of reimbursement for an unpaid claim, plus | ||||||
16 | interest as determined by the Board, is paid to the Fund. | ||||||
17 | Nothing in this Section shall limit the authority of the | ||||||
18 | Secretary of State to suspend, revoke, or levy civil penalties | ||||||
19 | against a dealer, nor shall full repayment of the amount owed | ||||||
20 | to the Fund nullify or modify the effect of any action by the | ||||||
21 | Secretary. | ||||||
22 | (s) Nothing in this Section shall limit the right of any | ||||||
23 | person to seek relief though civil action against any other | ||||||
24 | person as an alternative to seeking reimbursement from the | ||||||
25 | Fund.
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26 | (Source: P.A. 97-480, eff. 10-1-11.)
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