HOUSE BILL NO. 5984

A bill to give certain rights to consumers of used motor vehicles; to create a contract cancellation option agreement; to provide remedies; and to prescribe requirements for used motor vehicle dealers.

the people of the state of michigan enact:

Sec. 1. This act may be cited as the "used motor vehicle warranty act".

Sec. 2. As used in this act:

(a) "Consumer" means a person that purchases or leases a used motor vehicle for personal, family, or household use and not for the purpose of selling or leasing the used motor vehicle to another person.

(b) "Motor vehicle" means that term as defined in section 33 of the Michigan vehicle code, 1949 PA 300, MCL 257.33, but does not include a bus, a tractor, or farm equipment.

(c) "New motor vehicle" means a motor vehicle that is in the possession of the manufacturer, distributor, or wholesaler, or has been sold only to a new motor vehicle dealer and for which the new motor vehicle dealer has not issued an original title.

(d) "New motor vehicle dealer" means a person that is engaged in the business of purchasing, leasing, selling, exchanging, or dealing in new motor vehicles and that holds a dealer agreement for the sale of new motor vehicles.

(e) "Off-highway vehicle" means a vehicle intended for use on steep or uneven terrain, unpaved ground, or trails, including, but not limited to, any of the following:

(i) A snowmobile or other vehicle specifically designed to travel over snow or ice.

(ii) An all-terrain vehicle.

(iii) A vehicle intended for use in construction.

(iv) A dirt bike.

(f) "Person" means an individual, partnership, corporation, limited liability company, association, trust, estate, or other legal entity.

(g) "Purchase price" means the actual used motor vehicle sales price listed on the consumer's order, including a cash payment by the consumer; the sum equal to an allowance for any trade-in; sales tax; and license and registration fees.

(h) "Used motor vehicle" means a motor vehicle that is purchased or leased in this state and is not a new motor vehicle.

(i) "Used motor vehicle dealer" means a person that is engaged in the business of purchasing, leasing, selling, exchanging, or dealing in used motor vehicles. The term does not include a new motor vehicle dealer purchasing, leasing, selling, exchanging, or dealing in used motor vehicles as part of its business of purchasing, leasing, selling, exchanging, or dealing in new motor vehicles.

Sec. 4. A used motor vehicle dealer shall not sell or lease a used motor vehicle with a purchase price of not more than $50,000.00 to a consumer without offering the consumer the right to purchase a contract cancellation option agreement that allows the consumer to return the used motor vehicle without cause not more than 2 days after purchase.

Sec. 6. (1) A contract cancellation option agreement must be contained in the consumer's order and must include all of the following:

(a) The name of the consumer and the used motor vehicle dealer.

(b) A statement specifying that the consumer has 2 days after purchase to exercise the right to cancel the purchase under the contract cancellation option agreement and return the vehicle to the dealer.

(c) A statement that the consumer has the right to drive the used motor vehicle for not more than 150 miles during the 2-day period under subdivision (b).

(d) A statement that the consumer has the right to have the used motor vehicle inspected by a mechanic of the consumer's choosing during the 2-day period under subdivision (b).

(e) A statement that the consumer has the right to cancel the purchase under the contract cancellation option agreement and return the used motor vehicle for any reason or without cause during the 2-day period under subdivision (b) and receive a full refund of the purchase price, minus a restocking fee.

(f) A statement specifying the dollar amount of the restocking fee the consumer may be charged if the consumer exercises the right to cancel the purchase under the contract cancellation option agreement.

(2) If a consumer decides that the consumer no longer wants to purchase or lease the used motor vehicle and wants to exercise the consumer's right to cancel under the contract cancellation option agreement, the used motor vehicle dealer shall provide the consumer, after the consumer returns the used motor vehicle, with a full refund of the purchase price, minus a restocking fee, not more than 2 days after the date the consumer exercises the right to cancel the purchase.

Sec. 8. (1) A used motor vehicle dealer may charge a consumer a nonrefundable fee for purchasing a contract cancellation option agreement provided under this act.

(2) The price for a contract cancellation option agreement must not exceed the following:

(a) $75.00 for a used motor vehicle with a purchase price of $5,000.00 or less.

(b) $150.00 for a used motor vehicle with a purchase price between $5,001.00 and $10,000.00.

(c) $250.00 for a used motor vehicle with a purchase price between $10,001.00 and $30,000.00.

(d) 1% of the purchase price of a used motor vehicle with a purchase price between $30,001.00 and $50,000.00.

(3) If a consumer decides to exercise the consumer's right to cancel under the contract cancellation option agreement and the consumer returns the used motor vehicle within the time specified under section 6(1)(b), a used motor vehicle dealer may charge a consumer a restocking fee that must not exceed the following:

(a) $175.00 for a used motor vehicle with a purchase price of $5,000.00 or less.

(b) $350.00 for a used motor vehicle with a purchase price between $5,001.00 and $10,000.00.

(c) $500.00 for a used motor vehicle with a purchase price between $10,001.00 and $50,000.00.

Sec. 10. (1) A used motor vehicle dealer is not required to offer a contract cancellation option agreement to a consumer who purchases or leases any of the following:

(a) A motorcycle.

(b) An off-highway vehicle.

(c) A used motor vehicle with a purchase price of more than $50,000.00.

(2) This act does not apply to a sale or lease of a used motor vehicle between private parties.

Sec. 12. A consumer may bring an action to recover actual damages resulting from a violation of this act. A consumer who prevails in an action brought under this section may recover the consumer's costs and expenses, including attorney fees.

Sec. 14. This act applies to any used motor vehicle that is sold or leased to a consumer on or after the effective date of this act.

Enacting section 1. This act takes effect 180 days after the date it is enacted into law.