Archive September 2019

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Lienholder on Title or Additional Insured on the Insurance Policy?

Just because you are recorded as lienholder on the title, does not grant you any contract rights or otherwise allow you to make claims, inquiries, or possibly receive claim settlement proceeds relating to a customer’s insurance policy.

Export Out of State or Out of Country?

With Texas on the border of 5 states as well as Mexico, we often receive calls regarding vehicles sold out of state as compared to those sold out of country.  The Texas Export Sales Rule, 215.147, is included below as well as the link to the Texas Comptroller "Texas Motor Vehicle Sales Tax Exemption Certificate--For Vehicles Taken Out of State" (Form 14-312).
  1. Identification.  If out of state, then follow the same photo ID requirements for in-state sales.  Out of country sales require ID from the jurisdiction where the buyer resides such as a driver’s license, passport, consular identification document, or other similar document as well as the buyer’s full name, foreign address, etc.
  2. Comptroller form 14-312.  For both out of state and out of country sales.  Give the signed original to the customer and keep a copy for your deal jacket.  DO NOT send to the Comptroller.
  3. Stamp.  For out of country sales, the title must be stamped “FOR EXPORT ONLY” with the dealer’s P number on the front and back of the title where there is any open assignment.  NO stamp required on out of state sales.
  4. Titles:  If vehicles are going out of the country, Customs requires the titles must accompanying the vehicle with a Bill of Lading or other similar sales documents.  If out of state, the title papers must be given to the buyer within 20 days of the sale for registering in another state.
  5. For a wholesale transaction, inform your buyer he needs a tag from his state if he plans on DRIVING the vehicle back.

Bankruptcy Reminders

TIADA's Compliance Consultation Service has recently received several calls regarding consumer bankruptcy filings and creditors' rights in such situations. In particular, lienholders want to know what they can do when a customer files for bankruptcy protection. The two most frequently asked questions are:

1) I repossessed a vehicle, then the customer filed for bankruptcy the next day/week. Do I have to return the vehicle?

The short answer is yes. There are certainly ways for a lien holder to preserve their interest in, and the value of, the collateral. The association recommends that all lien holders make use of all legally available remedies to do so.

To Salvage or Not to Salvage?

Many of you have received emails from Texas DMV noting that as of September 1, 2019 a dealer with a valid GDN can also operate as a salvage dealer.  This was the result of SB 604 during the 86th Texas Legislature.  While that sounds like welcome news, TIADA would advise you to proceed with caution as you can run into unforeseen penalties and complaints.
Whether part time or full time, salvage and rebuild dealers in Texas have a whole other set of laws and forms to deal with.  This includes additional rules that often are very different from your GDN laws, yet often carry the same harsh penalties.  Seemingly innocuous matters such as signage, form submission, and co-mingling inventory may prove problematic. Texas DMV is in the process of finalizing relevant salvage rules in the Texas Administrative Code.

My Customer Died, Now What?

We often receive calls from our dealer members trying to figure out what to do when one of their customers has passed away with a pending retail installment contract. Dealers need to exercise caution when allowing surviving family and friends to attempt to assume ownership roles under the contract or to retain possession of the vehicle.

The usual inquiry is made by a family member such as a child, parent, brother, etc., but can also be a live-in girlfriend or even ex-girlfriend or other unique relationship. Unfortunately, many customers in the BHPH world do not have a will, estate, executor, or army of lawyers to handle their affairs.

How Do Arbitration Agreements Work Anyway

The following article is courtesy of:
Jordan A. Mayfield
Naham Howell Smith & Lee PLLC

Most retail installment contracts for the purchase of a car contain an arbitration clause or the dealership will have a stand-alone arbitration agreement.  I would recommend that the arbitration agreement be part of the retail installment contract if the vehicle is financed since many of these agreements have a clause that states that the retail installment agreement is the entire agreement between the parties.

Be Careful Using Conditional Delivery Agreements

Does your dealership ever sell vehicles on Saturday or Sunday, but your third-party lender is unavailable to confirm underwriting and funding?  What do you do?  Some dealers use what is called a Conditional Delivery Agreement? A CDA is used in situations where the dealer is helping a customer secure financing through a third party that cannot be closed or funded right away for a number of reasons.  A CDA should be signed before the retail installment contract is signed, but make sure your collateral is protected.