Pub. 7 2017 Issue 4

15 to the dealer’s facility, or any other local factor that may have impacted a dealer’s performance. The Worst of Times Legislation that became effective on July 1, 2017 requires that most used vehicle sales are subject to a Used Veh icle Limited Implied Wa r rant y of Merchantabilit y for Power Train Components (UVLIWMPTC). Vehicles that are subject to the UVLIWMPTC cannot be sold AS IS and must include the ImpliedWarranties version of the FTC Used Car Buyers Guide instead. The only vehicles that are exempt from the UVLIWMPTC are vehicles that are any one of the following: • Vehicles with over 150,000 miles; • Antique Vehicles (over 25 years old); • Vehicles that have been branded as either “FLOOD” or “REBUILT” vehicles; • Vehicles with an 8,000 pound or more Gross Vehicle Weight Rating. If you make a retail sale of a used vehicle that does not meet one of the above exceptions, then you must provide a 15-day/500-mile warranty, whichever is first, for power train components and must provide a statutorily-mandated disclosure of the warranty to your customer. The warranty is met if the vehicle functions for the ordinary purpose of transportation and substantially free of defects in a power train component. For the purpose of the statute, the term “power train component” is broadly defined to include the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, transmission and all internal transmission parts, torque converter, drive shaft, universal joints, rear axle and all rear axle internal parts, and rear wheel bearings. If a repair is needed on a covered power train component during the warranty period, the dealer must cover 50% of the repair cost of each of the first 2 repairs for the first $200 of repair costs plus the entire amount in excess of that. Put another way, the customer must pay 50% of the repair cost, but no more that $100 per repair. If the cost to repair is greater than the value of the vehicle, the dealer can opt to repurchase the vehicle from the customer at the same price that the customer had paid for it. The statute also requires that dealers make the followingwrittendisclosure, either on the buyers order or on a stand-alone disclosure, in at least 10-point type: “Illinois Law requires that this vehicle will be free of a defect in a power train component for 15 days or 500 miles after delivery, whichever is earlier, except with regard to particular defects disclosed on the first page of this agreement. “Power train component” means the engine block, head, all internal engine parts, oil pan and gaskets, water pump, intake manifold, transmission, and all internal transmission parts, torque converter, drive shaft, universal joints, rear axle and all rear axle internal parts, and rear wheel bearings. You (the consumer) will have to pay up to $100 for each of the first 2 repairs if the warranty is violated.”. The seller can disclose one or more specific defects and ask the customer to waive warranty coverage for those components by having the customer sign the following disclosure: “Attention consumer: Sign here only if the seller has told you that this vehicle has the following problem or problems and you agree to buy the vehicle on those terms: 1........................................................ 2........................................................ 3......................................................”. The selling dealer is not required to make the above disclosures if the dealer offers an express warranty that offers equal or greater coverage than the UVLIWMPTC. To avoid the disclosure requirement, the express warranty must be at least equal to the UVLIWMPTC in all respects. A warranty of greater duration, but carrying a $200 deductible, for example, could result in a higher out of pocket cost to the customer if a covered component fails during the 15- day/500 mile period and would not be considered equal or greater coverage. As ment ioned ea rl ie r, veh ic le s subject to the UVLIWMPTC cannot be sold on an AS IS basis and must be accompan ied by t he IMPLIED WARRANTI ES ONLY ve r sion of the Used Car Buyers Guide with a desc r ipt ion of t he UVLIWMPTC. An example of the appropriate Buyers Gu ide and d isclosure as wel l as a UVLIWMPTC disclosure form can be found on IADA’s website at www. illinoisdealers.com. CONCLUSION Although the 2017 legislative session c r eated add it iona l obl igat ions for dealers when they sell used vehicles, it also brought dealers some important safeguards against oppressive facility r emod e l i n g p r og r ams , i mp r o p e r dealership terminations, and ot her heavy-handed manufacturer tactics. If you have any questions about the new legal landscape for dealers, the Illinois Automobile Dealers Association is just a phone call or a click away at (217) 753- 0220 or www.illinoisdealers.com.  Two bills that directly impact motor vehicle dealers were signed into law earlier this year. The first helps to level the playing field between motor vehicle dealers and manufacturers by making several important updates to the Illinois Motor Vehicle Franchise Act. The second creates a new used vehicle warranty and imposes new compliance obligations on motor vehicle dealers.