HAR Chapter 86 – Motor Vehicle Dealers and Salesmen

HAWAII ADMINISTRATIVE RULES
TITLE 16
DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
CHAPTER 86
MOTOR VEHICLE DEALERS AND SALESPERSONS
Subchapter 1 	General Provisions
§16-86-1 	Objective
Subchapter 2 	Definitions
§16-86-2 	Repealed
§16-86-3 	Definitions
Subchapter 3 	Licensing
§16-86-6 	Licensing requirements
Subchapter 4 	Application
§16-86-10 	Application for license
§16-86-11 	Exhibits required
§16-86-12 	Alternative form of security
Subchapter 5 	License Renewal
§16-86-15 	License renewal
Subchapter 6 	Advertising
§16-86-19 	Advertising
Subchapter 7 	Charity Auction
§16-86-23 	Charity auction
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§16-86-1
Subchapter 8 	Oral Testimony
§16-86-27 	Oral testimony
Subchapter 9 	Severability
§16-86-31 	Severability
Subchapter 10 	Practice and Procedure
§16-86-35 	Administrative practice and procedure
SUBCHAPTER 1
GENERAL PROVISIONS
§16-86-1 	Objective. 	This chapter is intended to clarify and implement
chapter 437, Hawaii Revised Statutes, to the end that the provisions thereunder
may be most effectual and the public interest most effectively served. 	[Eff
6/22/81; am and comp 9/1/88; am and comp 4/29/93] (Auth: HRS §437-6) (Imp:
HRS §437-6)
SUBCHAPTER 2
DEFINITIONS
§16-86-2 	Repealed [R 9/1/88]
§16-86-3 	Definitions. 	As used in this chapter:
"Board" means the motor vehicle industry licensing board established under
chapter 437, HRS.
"Charity auction" means an auction held by a bona fide charitable
organization which holds a federal tax exempt status as a nonprofit organization
and meets the criteria set forth in subchapter 7.
"Motor vehicle" means every vehicle which is self-propelled and every
vehicle which is propelled by electric power but which is not operated upon rails,
but excludes mopeds.
"Vehicle" means every device in, upon, or by which any person or property
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§16-86-11
is or may be transported or drawn upon a highway, but excludes devices moved
by human power or devices used exclusively upon stationary rails as tracks and
mopeds. 	[Eff and comp 9/1/88; am and comp 4/29/93] (Auth: 	HRS §437-6)
(Imp: 	HRS §§437-1.1, 249-1, 249-2)
SUBCHAPTER 3
LICENSING
§16-86-6 	Licensing requirements. 	(a) Any person who engages in the
business as or serves in the capacity of, or acts as a motor vehicle dealer, motor
vehicle salesperson, motor vehicle auction, motor vehicle auctioneer, manufacturer,
factory branch, factory representative, distributor, distributor branch, or distributor
representative in this State or otherwise engages in the business of seeing or
negotiating for the purchase of motor vehicles in this State are required to be
licensed as provided for in chapter 437, HRS, and this chapter.
(b) 	A motor vehicle manufacturer factory branch, factory representative,
distributor, distributor branch, or distributor representative who pays the applicable
fee(s) for one county shall not be assessed additional license fee(s) to operate in
other counties in this State. Applicant desiring to operate in more than one county
shall indicate this in the original application or advise the board in writing and the
information shall be reflected on the license certificate.
(c) 	Licenses issued under the provisions of chapter 437, HRS, shall be
nontransferable. 	[Eff 10/26/70; am and ren §16-86-6, 6/22/81; am and comp
9/1/88; am and comp 4/29/93] (Auth: HRS §437-6) (Imp: HRS §§437-2, 437-7)
SUBCHAPTER 4
APPLICATION
§16-86-10 Application for license. Applications for licenses shall be filed
on forms prescribed by the board, accompanied by the application fee which shall
be nonrefundable. 	[Eff and comp 9/1/88; comp 4/29/93] (Auth: 	HRS §437-6)
(Imp: 	HRS §§437-7, 437-11)
§16-86-11 Exhibits required. (a) Applicants for the issuance of a dealer’s
or auction’s license shall file:
(1) 	Floor plans showing measurements for all facilities, including
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§16-86-11
boundaries of the proposed premises and sanitary facilities;
(2) 	Tenancy or lease agreement with landlord which shall include
certification of landlord stating whether the property is being rented
or leased and whether the property is located in a business zone;
(3) 	Confirmation letter signed by an official of a federally insured
financial institution certifying that an inventory or flooring line of
credit has been secured in the required amount indicated in section
437-7, HRS;
(4) 	Photocopy of the 	financing statement filed at 	the bureau of
conveyances of the department of land and natural resources,
securing the inventory or flooring line of credit;
(5) 	Financial statement that is current and prepared by a registered
certified public accountant or public accountant which need not be
audited;
(6) 	Franchise agreement for new vehicle dealers only, attesting that
applicant is authorized to sell or distribute new motor vehicles in
the respective county; and
(7) 	Proof from the business registration division (BREG) of the
department of commerce and consumer affairs that the partnership
or corporation is properly registered with the State.
(b) 	Motor vehicle salespersons shall submit a separate application form
which includes an affidavit by the dealer certifying that the salesperson is
employed by and under the supervision of the dealer. [Eff and comp 9/1/88; am
and comp 4/29/93] (Auth: 	HRS §437-6) (Imp: 	HRS §§437-7, 437-11)
§16-86-12 	Alternative form of security. 	(a) Where an inventory or
flooring line of credit cannot reasonably be obtained by a dealer, the board may
provide that a bond, for one of the following amounts, be obtained as an
alternative form of security:
(1) 	$200,000 for new vehicle dealers selling ten or more new motor
vehicle units a month on an annual basis;
(2) 	$50,000 for new vehicle dealers selling less than ten new motor
vehicle units per month on an annual basis;
(3) 	$100,000 for used motor vehicle dealers selling sixty or more
motor vehicle units per month on an annual basis;
(4) 	$25,000 for a used motor vehicle dealer selling less than sixty units
a month on an annual basis; and
(5) 	$10,000 for motorcycle and motor scooter dealers.
(b) 	More than one bond may be furnished by the same applicant,
provided they aggregate the full amount prescribed by this section.
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§16-86-12
(c) 	The bond must be:
(1) 	Executed by a surety company authorized to do business in the
State; or
(2) 	Secured by a deposit of cash with the board in lieu of surety.
Interest earned on a cash deposit while in the possession of the
director shall belong to the licensee or trustee.
(d) 	The bond shall be conditioned:
(1) 	That the dealer will faithfully and truly comply with chapter 437,
HRS, as the same now is or may be amended, and with any rules
as may be promulgated by the board pursuant to chapter 437, HRS;
(2) 	That the dealer will not be guilty of fraud, misrepresentation, or
other improper business conduct in connection with the selling,
purchasing, negotiating for purchase, or otherwise dealing with
motor vehicles or any other property related thereto, and that the
dealer will satisfy all judgments rendered against the dealer based
in whole or in part upon representations or warranties made in
connection with any retail sale or negotiation for the purchase of
a motor vehicle; and
(3) 	That the dealer will protect any purchaser of any vehicle or any
person acquiring any lien thereon or successor in interest of any
such person against any loss on account of any defect in or
undisclosed encumbrances upon the title of any motor vehicle,
registered in reliance upon any certificate, affidavit, or other
representation 	of 	the 	dealer, 	or 	registration 	or 	transfer 	of
registration procured by the dealer.
(e) 	Suit on bond. 	The board, director of commerce and consumer
affairs, or any person who has been or claims to have been injured by the conduct
of the dealer shall have the right of action to recover on any such bond, plus a
reasonable attorney’s fee (to be allowed by the court, no other attorney’s fees shall
be permitted from the bond proceeds) incurred to procure the recovery under the
bond, but the aggregate liability of the surety or sureties to all such persons shall
in no event exceed the amount of the bond. Nothing in chapter 437, HRS, or the
rules promulgated pursuant thereto, shall be deemed to prohibit or prevent an
independent action against the dealer and any other person from being joined or
consolidated with an action on the bond, and the recovery of a larger amount than
the amount of the bond founded upon any other cause or causes of action so
joined or consolidated. [Eff and comp 4/29/93] (Auth: HRS §437-6) (Imp: HRS
§§437-7, 26-9(j), 26-9(q))
SUBCHAPTER 5
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§16-86-15
LICENSE RENEWAL
§16-86-15 	License renewal. 	(a) Each license shall be renewed on or
before June 30 of each even-numbered year.
(b) 	Application for renewal shall be accompanied by the applicable fee.
(c) 	Failure, neglect, or refusal to pay the renewal fee shall constitute
grounds for forfeiture of license. 	[Eff and comp 9/1/88; am and comp 4/29/93]
(Auth: 	HRS §437-6) (Imp: 	HRS §§437-23, 437-24)
SUBCHAPTER 6
ADVERTISING
§16-86-19 	Advertising. 	Advertising by any licensee shall be subject to
the following conditions:
(1) 	Statewide 	media 	(i.e., 	any 	media 	whose 	rate 	base 	includes
statewide audiences) may be used by any licensee.
(2) 	If charges in addition to the price quoted in any advertisement are
to be assessed, the exact amount of the charges and what they are
assessed for shall be shown in the advertisement in type size equal
to the quoted price in printed media or with equal prominence to
the quoted price in electronic media. Any additional charge items
shall include all options required by law to make the vehicle street
legal as well as all optional equipment already installed on the
vehicle being offered for sale.
(3) 	Transfer of title fees which may be excluded from a quoted price
are limited to safety inspection fees and those fees imposed directly
by some governmental authority. 	Dealership "documentary fees"
or any other charges imposed by the seller shall be shown and the
amount thereof quoted.
(4) 	Unfair or deceptive advertising by a motor vehicle dealer shall be
punishable as provided by statute or ordinance and shall be deemed
a violation of this chapter. 	It shall be considered unfair or
deceptive advertising for any new motor vehicle dealer, in any
advertisement, to offer a discount on a motor vehicle (or any
premium or incentive tantamount to a discount) unless the amount
of the discount is calculated from the manufacturer’s suggested
retail price (MSRP) of the vehicle so advertised; provided that
optional equipment or services actually installed or applied on or
to the vehicle, but not supplied by the manufacturer, may be added
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§16-86-27
to the MSRP at the published retail price of the equipment. 	[Eff
and comp 9/1/88; comp 4/29/93] (Auth: 	HRS §§437-6, 437-41)
(Imp: 	HRS §437-4)
SUBCHAPTER 7
CHARITY AUCTION
§16-86-23 Charity auction. Any bona fide charitable organization which
holds federal tax exempt status as a nonprofit organization may hold an auction
for the benefit of charity provided that the following criteria are met:
(1) 	Application to hold the auction is made to the board stating the
date, time, and place of the auction;
(2) 	No more than one auction shall be held in any county of the State
by the same organization in one calendar year;
(3) 	No vehicle to be auctioned shall be purchased by the organization
(auctioned vehicles may be acquired only through donation of the
vehicle to be auctioned); and
(4) 	Total number of vehicles to be sold in any auction shall not exceed
ten. 	[Eff and comp 9/1/88; am and comp 4/29/93] (Auth: 	HRS
§437-6) (Imp: 	HRS §437-1)
SUBCHAPTER 8
ORAL TESTIMONY
§16-86-27 	Oral testimony. 	(a) The board shall accept oral testimony on
any item which is on the board’s agenda, provided that the testimony shall be
subject to the following conditions:
(1) 	Each person seeking to present oral testimony is requested to so
notify the board no later than forty-eight hours prior to the meeting,
and at that time to state the item on which testimony is to be
presented;
(2) 	The board may request that any person providing oral testimony
submit the remarks, or summary of the remarks, in writing to the
board;
(3) 	The board may rearrange the items on the agenda for the purpose
of providing for the most efficient and convenient presentation of
oral testimony;
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§16-86-27
(4) 	Persons presenting oral testimony shall, at the beginning of the
testimony, identify themselves and the organization, if any, that
they represent;
(5) 	The board may limit oral testimony to a specified time period but
in no case shall the period be less than five minutes, and the person
testifying shall be informed prior to the commencement of the
testimony of the time contraints to be imposed; and
(6) 	The board may refuse to hear any testimony which is irrelevant, or
immaterial or duly repetitious to the agenda item on which it is
presented.
(b) 	Nothing herein shall require the board to hear or receive any oral
or documentary evidence from a person on any matter which is the subject of
another pending proceeding subject to the hearing relief, declaratory relief, or rule
relief provisions of the rules of administrative procedure.
(c) 	Nothing herein shall prevent the board from soliciting oral remarks
from 	persons 	present 	at 	the 	meeting 	or 	from 	inviting 	persons 	to 	make
presentations to the board on any particular matter on the board’s agenda. 	[Eff
and comp 9/1/88; am and comp 4/29/93] (Auth: 	HRS §437-6) (Imp: 	HRS
§437-6)
SUBCHAPTER 9
SEVERABILITY
§16-86-31 	Severability. 	If any section of this chapter is declared
unconstitutional, or the applicability of the section to any person or circumstance
is 	held 	invalid, 	the 	constitutionality 	of 	the 	remainder 	of 	this 	chapter 	and
applicability of this chapter to other persons and circumstances shall not be
affected. [Eff and comp 9/1/88; comp 4/29/93] (Auth: HRS §437-6) (Imp: HRS
§437-6)
SUBCHAPTER 10
PRACTICE AND PROCEDURE
§16-86-35 	Administrative practice and procedure. 	The rules of practice
and procedure of motor vehicle dealers, salespersons, auctions, auctioneers,
manufacturers, factory branches, factory representatives, distributors, distributor
branches, and distributor representatives shall be as provided in chapter 16-201,
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§16-86-35
the rules of practice and procedure of the department of commerce and consumer
affairs, which are incorporated by reference and made a part of this chapter. [Eff
and comp 9/1/88; am and comp 4/29/93] (Auth: HRS §§91-2, 437-7) (Imp: HRS
§§91-2, 437-7, 437-29)
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Amendments to and compilation of chapter 16-86, Hawaii Administrative
Rules, on the Summary Page dated March 9, 1993, were adopted on March 9,
1993, following public hearing held on March 9, 1993, after public notices were
given in the Honolulu Star-Bulletin and Advertiser, Maui News, Hawaii Tribune-
Herald, and West Hawaii Today on February 7, 1993, and in the Kauai Times on
February 3, 1993.
They shall take effect ten days after filing with the Office of the Lieutenant
Governor.
/s/ Gary A. Wassel
GARY A. WASSEL
Motor Vehicle Industry Licensing Board
APPROVED AS TO FORM: 	Date 	4/2/93
/s/ James C. Paige
Deputy Attorney General
APPROVED: 	Date 	4/8/93
/s/ Clifford K. Higa
CLIFFORD K. HIGA, Director
Department of Commerce and Consumer Affairs
APPROVED: 	Date 	4/19/93
/s/ John Waihee
JOHN WAIHEE, Governor
State of Hawaii
April 19, 1993
Filed
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DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS
Amendment and Compilation of Chapter 16-86
Hawaii Administrative Rules
March 9, 1993
SUMMARY
1. 	§16-86-1 is amended.
2. 	§16-86-3 is amended.
3. 	§16-86-6 is amended.
4. 	§16-86-11 is amended.
5. 	§16-86-12 is added.
6. 	§16-86-15 is amended.
7. 	§16-86-23 is amended.
8. 	§16-86-35 is amended.
9. 	Chapter 86 is compiled.