Assembly Bill No. 221–Assemblymen Chowning, Buckley, Collins, Gibbons, McCleary, Anderson, Andonov, Angle, Arberry, Christensen, Claborn, Conklin, Giunchigliani, Goicoechea, Grady, Griffin, Gustavson, Hettrick, Horne, Knecht, Koivisto, Manendo, McClain, Mortenson, Oceguera, Parks, Perkins, Pierce, Sherer, Weber and Williams

 

February 28, 2003

____________

 

Referred to Committee on Commerce and Labor

 

SUMMARY—Revises requirements concerning consignment of vehicles. (BDR 43‑215)

 

FISCAL NOTE:  Effect on Local Government: Yes.

                           Effect on the State: No.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to motor vehicles; requiring the consignee of a vehicle to obtain a signed disclosure statement from the consignor of a vehicle; requiring the consignee to assist the consignor in completing a financing statement to create a purchase-money security interest of the consignor in the vehicle; requiring the consignee to file the financing statement with the Secretary of State; providing a penalty; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1  Section 1. NRS 482.31776 is hereby amended to read as

1-2  follows:

1-3  482.31776  1.  A consignee of a vehicle shall, upon entering

1-4  into a consignment contract or other form of agreement to sell a

1-5  vehicle owned by another person [open] :

1-6  (a) Open and maintain a separate trust account in a federally

1-7  insured bank or savings and loan association that is located in this

2-1  state, into which the consignee shall deposit all money received

2-2  from a prospective buyer as a deposit, or as partial or full payment

2-3  of the purchase price agreed upon, toward the purchase or transfer

2-4  of interest in the vehicle. A consignee of a vehicle shall not:

2-5  [(a)] (1) Commingle the money in the trust account with any

2-6  other money that is not on deposit or otherwise maintained toward

2-7  the purchase of the vehicle subject to the consignment contract or

2-8  agreement; or

2-9  [(b)] (2) Use any money in the trust account to pay his

2-10  operational expenses for any purpose that is not related to the

2-11  consignment contract or agreement.

2-12      (b) Obtain from the consignor, before receiving delivery of the

2-13  vehicle, a signed and dated disclosure statement that is included in

2-14  the consignment contract and provides in at least 10-point bold

2-15  type or font:

2-16  IMPORTANT NOTICE TO VEHICLE OWNERS

2-17  State law (NRS 482.31776) requires that the operator of this

2-18  business file a Uniform Commercial Code 1 (UCC1) form with the

2-19  Office of the Secretary of State on your behalf to protect your

2-20  interest in your vehicle. The form is required to protect your

2-21  vehicle from forfeiture in the event that the operator of this

2-22  business fails to meet his financial obligations to a third party

2-23  holding a security interest in his inventory. The form must be filed

2-24  by the operator of this business before he may take possession of

2-25  your vehicle. If the form is not filed as required, YOU MAY LOSE

2-26  YOUR VEHICLE THROUGH NO FAULT OF YOUR OWN. For

2-27  a copy of the UCC1 form filed on your behalf or for more

2-28  information, please contact:

2-29  The Office of the Secretary of State of Nevada

2-30  Uniform Commercial Code Division

2-31  775.684.5708

2-32  I understand and acknowledge the above disclosure.

2-33  _______________                  _____

2-34  Consignee SignatureDate

2-35      (c) Assist the consignor in completing, with respect to the

2-36  consignor’s purchase-money security interest in the vehicle, a

2-37  financial statement of the type described in subsection 5 of NRS

2-38  104.9317 and shall file the financial statement with the Secretary

2-39  of State on behalf of the consignor. If a consignee has previously

2-40  granted to a third party a security interest with an after-acquired

2-41  property clause in the consignee’s inventory, the consignee

2-42  additionally shall assist the consignor in sending an authenticated

2-43  notification, as described in paragraph (b) of subsection 1 of NRS

2-44  104.9324, to each holder of a conflicting security interest. The

3-1  consignee must not receive delivery of the vehicle until the

3-2  consignee has:

3-3       (1) Filed the financing statement with the Secretary of

3-4  State; and

3-5       (2) If applicable, assisted the consignor in sending an

3-6  authenticated notification to each holder of a conflicting security

3-7  interest.

3-8  2.  Upon the sale or transfer of interest in the vehicle, the

3-9  consignee shall forthwith:

3-10      (a) Satisfy or cause to be satisfied all outstanding security

3-11  interests in the vehicle; and

3-12      (b) Satisfy the financial obligations due the consignor pursuant

3-13  to the consignment contract.

3-14      3.  Upon the receipt of money by delivery of cash, bank check

3-15  or draft, or any other form of legal monetary exchange, or after any

3-16  form of transfer of interest in a vehicle, the consignee shall notify

3-17  the consignor that the money has been received or that a transfer of

3-18  interest in the vehicle has occurred. Notification by the consignee to

3-19  the consignor must be given in person or, in the absence of the

3-20  consignor, by registered or certified mail addressed to the last

3-21  address or residence of the consignor known to the consignee. The

3-22  notification must be made within 3 business days after the date on

3-23  which the money is received or the transfer of interest in the vehicle

3-24  is made.

3-25      4.  The provisions of this section do not apply to [an executor,

3-26  an administrator, a sheriff or any] :

3-27      (a) An executor;

3-28      (b) An administrator;

3-29      (c) A sheriff;

3-30      (d) A salvage pool subject to the provisions of NRS 487.400 to

3-31  487.510, inclusive; or

3-32      (e) Any other person who sells a vehicle pursuant to the powers

3-33  or duties granted to or imposed on him by specific statute.

3-34      5.  Notwithstanding any provision of NRS 482.423 to 482.4247,

3-35  inclusive, to the contrary, a vehicle subject to a consignment

3-36  contract may not be operated by the consignee, an employee or

3-37  agent of the consignee, or a prospective buyer in accordance with

3-38  NRS 482.423 to 482.4247, inclusive, by displaying a temporary

3-39  placard to operate the vehicle unless the operation of the vehicle is

3-40  authorized by the express written consent of the consignor.

3-41      6.  A vehicle subject to a consignment contract may not be

3-42  operated by the consignee, an employee or agent of the consignee,

3-43  or a prospective buyer in accordance with NRS 482.320 by

3-44  displaying a special plate unless the operation of the vehicle is

3-45  authorized by the express written consent of the consignor.

4-1  7.  A consignee shall maintain a written log for each vehicle for

4-2  which he has entered into a consignment contract. The written log

4-3  must include:

4-4  (a) The name and address, or place of residence, of the

4-5  consignor;

4-6  (b) A description of the vehicle consigned, including the year,

4-7  make, model and serial or identification number of the vehicle;

4-8  (c) The date on which the consignment contract is entered into;

4-9  (d) The period that the vehicle is to be consigned;

4-10      (e) The minimum agreed upon sales price for the vehicle;

4-11      (f) The approximate amount of money due any lienholder or

4-12  other person known to have an interest in the vehicle;

4-13      (g) If the vehicle is sold, the date on which the vehicle is sold;

4-14      (h) The date that the money due the consignor and the lienholder

4-15  was paid;

4-16      (i) The name and address of the federally insured bank or

4-17  savings and loan association in which the consignee opened the trust

4-18  account required pursuant to subsection 1; and

4-19      (j) The signature of the consignor acknowledging that the terms

4-20  of the consignment contract were fulfilled or terminated, as

4-21  appropriate.

4-22      8.  A person who:

4-23      (a) Appropriates, diverts or otherwise converts to his own use

4-24  money in a trust account opened pursuant to paragraph (a) of

4-25  subsection 1 or otherwise subject to a consignment contract or

4-26  agreement is guilty of embezzlement and shall be punished in

4-27  accordance with NRS 205.300. The court shall, in addition to any

4-28  other penalty, order the person to pay restitution.

4-29      (b) Violates paragraphs (b) or (c) of subsection 1 is guilty of a

4-30  misdemeanor. The court shall, in addition to any other penalty,

4-31  order the person to pay restitution.

4-32      (c) Violates any other provision of this section is guilty of a

4-33  misdemeanor.

 

4-34  H