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This entry was published on 2014-09-22
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SECTION 198-C
Automobile trade-in protection
General Business (GBS) CHAPTER 20, ARTICLE 11-A
§ 198-c. Automobile trade-in protection. (a) As used in this section,
"dealer" shall have the same meaning as such term is defined by section
four hundred fifteen of the vehicle and traffic law.

(b) When a dealer purchases or obtains a vehicle in trade in a retail
sale or lease transaction and the vehicle is subject to a prior credit
or lease balance, all of the following apply:

(1) If the dealer agreed to pay a specified amount on the prior credit
or lease balance owing on the vehicle purchased or obtained in trade,
and the agreement to pay the specified amount is contained in a written
agreement documenting the transaction, the dealer shall tender the
agreed upon amount as provided in the written agreement to the lessor,
or to the lien holder, or to the designee of that lessor or lien holder
of the vehicle purchased or obtained in trade within twenty-one calendar
days of purchasing or obtaining the vehicle in trade, provided, however,
that the dealer may rely upon the amount due as stated by the lessor or
lien holder.

(2) If the dealer did not set forth an agreement regarding payment of
a prior credit or lease balance owed on the vehicle purchased or
obtained in trade, in a written agreement documenting the transaction,
the dealer shall tender to the lessor, or to the lien holder, or to the
designee of that lessor or lien holder of the vehicle purchased or
obtained in trade, an amount necessary to discharge the prior credit or
lease balance owing on the vehicle purchased or obtained in trade within
twenty-one calendar days of purchasing or obtaining the vehicle in
trade, provided, however, that the dealer may rely upon the amount due
as stated by the lessor or lien holder.

(3) The time period specified in paragraph one or two of this
subdivision may be shortened if the dealer and consumer agree, in
writing, to a shorter time period.

(4) A dealer shall not sell, consign for sale, or transfer any
ownership interest in the vehicle purchased or obtained in trade until
an amount necessary to discharge the prior credit or lease balance owing
on the vehicle has been tendered to the lessor, or to the lien holder,
or to the designee of that lessor or lien holder of the vehicle
purchased or obtained in trade.

(c) If the agreement gives either party the right to rescind the
entire agreement within a reasonable time period, rescission of the
entire agreement shall effectively rescind the obligations pursuant to
this section without violating this section.

(d) This section shall not apply to agreements or transactions that
involve a state or federal program in which a dealer is issued a voucher
to offset the purchase price or lease price for a qualifying lease of a
new vehicle upon the surrender of an eligible trade-in vehicle to a
dealer participating in the program.

(e) (1) Every violation of this section shall be deemed a deceptive
act and practice subject to enforcement under article twenty-two-A of
this chapter. In addition, the district attorney, county attorney, and
the corporation counsel shall have concurrent authority to seek the
relief in paragraph two of this subdivision, and all civil penalties
obtained in any such action shall be retained by the municipality or
county.

(2) In every case where the court shall determine that a violation of
this section has occurred, it may impose a civil penalty of not more
than five thousand dollars for each violation. Such penalty shall be in
addition to any denial of registration or renewal, suspension of
registration or revocation of registration or assessment of a fine
authorized by subdivision nine of section four hundred fifteen of the
vehicle and traffic law.

(3) Nothing in this section shall be construed to restrict any right
which any person may have under any other statute or the common law.

(4) No dealer shall be deemed to have violated the provisions of this
section if such dealer shows, by a preponderance of the evidence, that
the violation was not intentional and resulted from a bona fide error
made notwithstanding the maintenance of procedures reasonably adopted to
avoid such error.

(f) Any person who is convicted of knowingly violating paragraph four
of subdivision (b) of this section shall be guilty of a class A
misdemeanor.

(g) If any part or provision of this section or the application
thereof to any person or circumstances be adjudged invalid by any court
of competent jurisdiction, such judgment shall be confined in its
operations to the part, provision or application directly involved in
the controversy in which such judgment shall have been rendered and
shall not affect or impair the validity of the remainder of this section
or the application thereof to other persons or circumstances.