SB-1321, As Passed Senate, September 30, 2004

SENATE BILL No. 1321

June 24, 2004, Introduced by Senators ALLEN, McMANUS, OLSHOVE, SANBORN, JACOBS, PRUSI and BISHOP and referred to the Committee on Economic Development, Small Business and Regulatory Reform.

                                                                             A bill to amend 1950 (Ex Sess) PA 27, entitled                                    

"Motor vehicle sales finance act,"                                          

by amending section 2 (MCL 492.102), as amended by 1995 PA 166.             

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 2.  Except where the context indicates otherwise, as                   

2   used in this act:                                                           

3   (a)  1.  "Motor vehicle" means a self-propelled device  by                  

4   which a person used to transport people or property  may be                

5   transported upon on a public highway,  .  Motor vehicle but

6   does not include tractors,  motorcycles,  trailers, semitrailers,           

7   power shovels, road machinery, agricultural machinery, and other            

8   machinery not designed primarily for highway transportation but             

9   which incidentally transports  persons people or property on a             

10  public highway.  Motor vehicle also does not include  devices               

11  that move upon or are a device that moves on or is guided by a             

1   track or  travel travels through the air.                                  

2   (b)  2.  "Person" means an individual, partnership,                         

3   association, corporation, limited liability company, governmental           

4   entity, or any other legal entity.                                          

5   (c)  3.  "Installment buyer" or "buyer" means a person who                  

6   buys, hires, or leases a motor vehicle for personal, family, or             

7   household use and not for commercial, business, or agricultural             

8   use, under an installment sale contract or a legal successor in             

9   interest to that person.  , and shall continue to designate The            

10  term continues to refer to that person  notwithstanding that

11  even if he or she  may have entered enters into 1 or more                  

12  extensions, deferments, renewals, or other revisions of the                 

13  original contract.                                                          

14  (d)  4.  "Installment seller" or "seller" means a person                    

15  engaged in the business of selling, offering for sale, hiring, or           

16  leasing motor vehicles under installment sale contracts or a                

17  legal successor in interest to that person.  As used in this                

18  subdivision, "business" does not include an isolated sale.                  

19  (e)  5.  "Holder" means a seller or other person  , including               

20  a seller,  who is currently entitled to the rights of a seller              

21  under an installment sale contract.                                         

22  (f)  6.  "Sales finance company" means a person engaged as a

23  principal, agent, or broker in the business of financing or                 

24  soliciting the financing of installment sale contracts made                 

25  between other parties, and includes a person engaged in the                 

26  business of acquiring, investing in, or lending money or credit             

27  on the security of the retail seller's interest in  such those

1   contracts whether by discount, purchase, or assignment of those             

2   contracts, or otherwise.  The term includes a licensee or other             

3   person who as a seller finances installment sale contracts for              

4   other sellers or sales finance companies.  The term includes a              

5   financial institution. The term does not include  a any of the             

6   following:                                                                  

7                                                                                (i) A person, financial institution, or sales finance company                       

8   that takes  assignments an assignment of  ,  or an interest in             

9   ,  an aggregation of installment sale contracts only as security           

10  for bona fide commercial loans under which, in the absence of               

11  default or other bona fide breach of the loan contract, ownership           

12  of the contracts remains vested in the assignor and collection of           

13  payments on the contracts is made by the assignor.  , nor a

14  (ii) A person who purchases installment sale contracts from a                

15  sales finance company or a financial institution.   The term                

16  includes a person, whether or not licensed under this act, who as           

17  a seller finances installment sale contracts for other sellers or           

18  sales finance companies.  The term includes a financial                     

19  institution.

20  (g)  7.  "Financial institution" means a  state or national                 

21  chartered  bank,  a state or federal chartered  savings and loan            

22  association, or  state or federal chartered  credit union                   

23  chartered by a state or the United States that elects to come               

24  under the provisions of this act.                                           

25  (h)  8.  "Retail sale" means  the a sale of a motor vehicle                

26  for use by  the a buyer or for the benefit or satisfaction                 

27  which that the buyer  may derive derives from the use of the             

1   motor vehicle by another.                                                   

2   (i)  9.  "Installment sale contract" or "contract" means  a                 

3   contract an agreement for the retail sale of a motor vehicle, or           

4   which that has a similar purpose or effect, under which part or           

5   all of the price is payable in 2 or more scheduled payments                 

6   subsequent to the making of the contract  , or as to or under

7   which the obligor undertakes to make 2 or more scheduled payments           

8   or deposits that can be used to pay part or all of the purchase             

9   price, whether or not the seller has retained a security interest           

10  in the motor vehicle or has taken collateral security for the               

11  buyer's obligation, and  includes any extension, deferment,                

12  renewal, or other revision of an agreement described in this                

13  subdivision.  The terms include a loan, mortgage, conditional               

14  sale contract, purchase-money chattel mortgage, hire-purchase               

15  agreement, or  contract agreement for the bailment or leasing of           

16  a motor vehicle under which the hire-purchaser, the bailee, or              

17  the lessee  contracts agrees to pay as compensation a sum                  

18  substantially equivalent to or in excess of the value of the                

19  motor vehicle, and any other form of  contract agreement that              

20  has a similar purpose or effect.  The terms do not include a sale           

21  or contract for sale upon an open book account in which the                 

22  seller has not retained or taken a security interest in the motor           

23  vehicle sold or collateral security for the buyer's obligation,             

24  the buyer is not required to pay any sum other than the cash                

25  price of the motor vehicle sold in connection with the sale or              

26  extension of credit, and the buyer is obligated to pay for the              

27  motor vehicle in full within 90 days after the time the sale or             

1   contract for sale  was is made.   These terms also mean and                

2   apply to any extension, deferment, renewal, or other revision of            

3   an installment sale contract.

4   (j)  10.  "Cash price" means the price  measured  in dollars                

5   at which  the a seller of a motor vehicle would in good faith              

6   sell to the buyer or to any other buyer under like circumstances,           

7   and the buyer would in good faith buy from the seller, the motor            

8   vehicle that is the subject matter of the installment sale                  

9   contract if the sale were a sale for cash instead of an                     

10  installment sale.                                                           

11  (k)  11.  "Down payment" means all partial payments, whether                

12  made in cash or otherwise, received by or for the benefit of the            

13  seller before or substantially contemporaneous with either the              

14  execution of the installment sale contract or the delivery of the           

15  goods motor vehicle sold under that contract, whichever occurs            

16  later.                                                                      

17  (l)  12.  "Principal amount financed" means the unpaid cash                          

18  price balance after deducting the down payment, adding the cost             

19  of any insurance premiums required or obtained as security for or           

20  by reason of the sale of a motor vehicle under an installment               

21  sale contract, and adding other costs necessary or incidental to            

22  the sale of the motor vehicle under the contract  which that the           

23  seller contracts to pay on behalf of the buyer and for the amount           

24  of which the seller agrees to extend credit to the buyer and for            

25  which the buyer contracts voluntarily.                                      

26  (m)  13.  "Finance charge" means that term as defined in                    

27  section 106 of chapter 1 of the truth in lending act,  title I of           

Senate Bill No. 1321 as amended September 29, 2004                          

1   the consumer credit protection act, Public Law 90-321, 15 U.S.C.

2   15 USC 1605.                                                                

3   (n)  14.  "Time balance" means the sum of the principal                     

4   amount financed and the finance charge.                                     

5   (o)  15.  "Security interest" means a property right in  the

6   a motor vehicle that is the subject of an installment sale                  

7   contract, if the right is retained to secure performance of an              

8   obligation of the buyer under that contract.  and an extension,             

9   deferment, renewal, or other revision of that contract.  The term           

10  includes a lien or encumbrance against  that the motor vehicle,            

11  a mortgage interest in  that the motor vehicle, and a                      

12  reservation of title to  that the motor vehicle, whether or not            

13  expressed to be absolute, if the title is in substance retained             

14  only for security.                                                          

15  (p)  16.  "Collateral security" means security, other than a                

16  security interest in a motor vehicle that is the subject of an              

17  installment sale contract,  which that is given to secure                  

18  performance of an obligation of the buyer, or of any surety or              

19  guarantor for the buyer, under an installment sale contract.  or            

20  an extension, deferment, renewal, or other revision of that                 

21  contract.  The term includes the undertakings of any surety or              

22  guarantor for the buyer and any interest in, encumbrance on, or             

23  pledge of real or personal property other than the motor vehicle            

24  which that is the subject of the installment sale contract.               

25  (q)  17.  "Administrator" means the commissioner of the                     

26  financial institutions bureau, department of commerce office of           

27  financial and insurance services, department of <<labor and

Senate Bill No. 1321 as amended September 29, 2004

1   economic growth>>.                                                          

2   (r)  18.  "Licensee" means a person issued a license under                  

3   this act as an installment seller or a sales finance company  ,             

4   which and whose license has not expired or  has not  been                  

5   surrendered or revoked, and  ,  in the plural  ,  means a person            

6   or persons licensed under 1 or both of these 2 classifications.             

7   The term includes a financial institution.  as defined in this              

8   section.

9   (s)  19.  "Public sale" means a public sale after                           

10  advertisement of each motor vehicle in at least 2 successive                

11  publications in a newspaper having general circulation in the               

12  village, city, or township in which the sale is to be held.  The            

13  advertisement shall disclose the place where the motor vehicle is           

14  stored and may be inspected, the date, time, and place of the               

15  sale, and the make, model, and serial number of the motor

16  vehicle.