TITLE 21

Motor Vehicles

Miscellaneous

CHAPTER 63. SALE OF MOTOR VEHICLES


As used in this chapter:

(1) "Consignment" is when a vehicle owner enters into an agreement with a dealer for the sale of a vehicle without a transfer of ownership to the dealer.

(2) "Dealer" or "motor vehicle dealer" includes:

a. A person, corporation, partnership, proprietorship or any other legal entity who is in the business of buying, selling or exchanging during any 12-month period 5 or more vehicles; and/or

b. Any person, corporation, partnership, proprietorship or any other legal entity who offers to sell, sells, displays or permits the display for sale, of 5 or more vehicles within a 12-month period.

(3) "Dealer" or "motor vehicle dealer" shall not include:

a. A receiver, trustee, personal representative, or other person appointed by or acting under the authority of any court of competent jurisdiction;

b. A public official who sells or disposes of vehicles in the performance of the official's duties;

c. Any financial institution chartered or authorized to do business in Delaware, including its subsidiaries or affiliates, which receives title to a motor vehicle in the normal course of its business by reason of a lease, foreclosure, repossession, judicial sale or voluntary conveyance or reconveyance of the motor vehicle as a result of any lease of the motor vehicle or any extension of credit secured by the motor vehicle or the enforcement of any lien on the motor vehicle;

d. A licensed auctioneer acting on behalf of a seller, secured party or owner and when title does not pass to the auctioneer and the auction is not for the purpose of avoiding this chapter;

e. An insurance company authorized to do business in Delaware that sells or disposes vehicles under a contract with its insured in the regular course of business;

f. Either a manufacturer or distributor who sells or distributes vehicles to licensed dealers or a person employed by a manufacturer or distributor to promote the sale of the vehicles of the manufacturer or distributor, if that manufacturer, distributor or person does not sell vehicles to retail buyers;

g. A nonprofit educational foundation organized to promote instructional effectiveness and educational achievement.

(4) "Department" shall mean the Department of Transportation, Division of Motor Vehicles.

(5) "Director" shall mean the Director of the Division of Motor Vehicles or the Director's authorized or delegated representative.

(6) "Division" shall mean the Division of Motor Vehicles.

(7) "Franchised motor vehicle dealer" means a dealer in new vehicles that has a franchise agreement with a manufacturer or distributor of vehicles or, in the case of a recreational vehicle dealer, has a manufacturer-dealer agreement with a manufacturer of distributor to sell a particular line-make of new recreational vehicle or new recreational trailer. As used in this section, the term "line-make" is defined in § 8402(7) of this title.

(8) "Retail dealer" means a dealer who may sell vehicles to another dealer, licensed auto auction, or retail customers.

(9) "Vehicle" means motor vehicles, trailers, recreational vehicles, recreational trailers, mobile homes, and any other device, in, upon, or by which any person or property is or may be transported or drawn upon a public highway, excepting devices moved by animal power, human power, off-highway vehicles, special mobile equipment and farm equipment.

(10) "Wholesale dealer" means a dealer who may sell vehicles only to another dealer or licensed auto auction.

71 Del. Laws, c. 449, § 1; 70 Del. Laws, c. 186, § 1; 74 Del. Laws, c. 110, § 110; 75 Del. Laws, c. 33, § 2; 79 Del. Laws, c. 44, § 2; 79 Del. Laws, c. 161, § 2.;

(a) Department approval. — No person, corporation, partnership, proprietorship or any other legal entity shall carry on or conduct the business of buying, selling or dealing in new or used vehicles unless issued a dealer's license by the Department.

(b) Application — Application for a dealer's license shall be made upon the form prescribed by the Department and shall contain the name and address of the applicant. When the applicant is a partnership the name and address of each partner shall appear on the application. When the application is a corporation, the names of the principal officers of the corporation, the state in which incorporated, the place or places where the business is to be conducted and such other information as may be required by the Department shall appear on the application. Every such application shall contain a certification by the applicant that the information provided is true and accurate to the best of the applicant's knowledge.

(c) Resident requirements. — The owner of a dealership must have been issued a Delaware driver's license and established residency in Delaware at least 90 days prior to the time of application. Franchised and new vehicle dealers are exempted from this requirement.

(d) Fee. — No fee for a license is charged by the Department. However, all dealerships must obtain a yearly dealer business license from the Department of Finance, Division of Revenue. Wholesale dealers shall also obtain an additional wholesale license pursuant to § 6307 of this title. The business license(s) must be kept at the business location and be available for inspection by the Department.

36 Del. Laws, c. 10, § 46; Code 1935, § 5583; 21 Del. C. 1953, § 6301; 65 Del. Laws, c. 79, §§ 1-4; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 449, § 1.;

(a) Except as provided in § 6311(b) of this title, no dealers license shall be issued to any vehicle dealer unless the dealership has an established place of business owned, rented, or leased by the dealership and which:

(1) Satisfies all local zoning requirements. Zoning approval shall be submitted to the Division when the application is submitted;

(2) Has sales and office space devoted to the dealership and has adequate display space for 5 or more vehicles, and, in the case of a new recreational vehicle dealer, has a service facility;

(3) Has a telephone installed in the office and listed in the business name;

(4) Has adequate liability insurance as required by § 2118 of this title;

(5) Has a sign on the premises measuring at least 24 x 36 inches which lists the dealership's approved name.

(b) The dealership office shall maintain and have adequate file cabinets to maintain records required by the Department. All dealer records regarding purchases, sales, transfers of ownership, collection of vehicle document fees, titling, registration fees, odometer disclosure statements, temporary license plates and records of dealer registration plates assigned to the dealer shall be maintained on the premises of the licensed location. All records shall be maintained for a minimum of 5 years. The Director may, on written request by a dealer, permit records to be maintained at a location other than the premises of the licensed location for good cause shown.

(c) Every dealer shall have in its possession a certificate of title assigned to the dealership or other documentary evidence of the dealer's right to the possession of, and for every vehicle in the dealership's possession or on the dealership premises.

(d) During business hours, the records of the dealership shall be open to inspection by Department officials, any police officer or any duly authorized investigator at the Department of Justice while discharging their official duties.

71 Del. Laws, c. 449, § 1; 79 Del. Laws, c. 161, § 2.;

Each license issued under this title shall expire at midnight on December 31 of the period for which it was issued and may be renewed upon application to the Department prior to its expiration. Dealers who have not sold a minimum of 5 vehicles between January 1 and December 31 of each year shall be denied license renewal. The Director of the Division of Motor Vehicles may, on written request by a dealer, permit renewal of a dealer's license for dealers selling less than 5 vehicles for good cause shown in writing to the Department.

71 Del. Laws, c. 449, § 1.;

Every motor vehicle dealer shall complete, in duplicate, a bill of sale for each sale or exchange of a motor vehicle. The original shall be retained for a period of 5 years. A duplicate copy shall be delivered to the purchaser at the time of sale or exchange. The bill of sale shall be signed by both buyer and seller. A bill of sale shall include the following:

(1) The name and address of the person to whom the vehicle was sold or traded;

(2) The date of the sale or trade;

(3) The name and address of the motor vehicle dealer selling or trading the vehicle;

(4) The make, model, year, vehicle identification number and body style of the vehicle;

(5) The sale price of the vehicle;

(6) The amount of any deposit made by the buyer;

(7) A description of any Delaware titled vehicle used as a trade-in and the amount credited the buyer for the trade-in;

(8) The amount of the document fee, title fee, registration fee or any other fee for which the buyer is responsible and the dealer has collected; each fee shall be individually listed and identified; and

(9) The amount of any balance due at settlement.

36 Del. Laws, c. 10, § 47; Code 1935, § 5585; 21 Del. C. 1953, § 6303; 65 Del. Laws, c. 79, § 11; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 449, § 1.;

Any motor vehicle dealer offering a vehicle for sale on consignment shall have in their possession a consignment contract for the vehicle, executed and signed by the dealer and the consignor. The consignment contract shall include the following:

(1) The complete name and address of the owner(s);

(2) The name, address and dealer identification number of the selling dealer;

(3) A complete description of the vehicle on consignment, including the make, model, year, vehicle identification number and body style;

(4) The beginning and termination dates of the contract;

(5) The percentage or the net amount the owner is to receive, if the vehicle is sold;

(6) A disclosure of all unsatisfied liens on the vehicle and the location of the certificate of title to the vehicle.

Any dealer offering a vehicle for sale on consignment shall inform any prospective customer that the vehicle is on consignment. Dealer license plates shall not be used to demonstrate a vehicle on consignment. The owners license plate may be used if liability insurance coverage is in effect in the amount prescribed by Delaware law.

71 Del. Laws, c. 449, § 1.;

(a) A wholesale dealer who is licensed by the Division is authorized to do the following:

(1) Buy a vehicle from another dealer, a licensed auto auction or retail seller;

(2) Sell a vehicle to, or exchange vehicles only with another dealer or through a licensed auto auction;

(3) A wholesale dealer may operate from a private residence and is not required to comply with § 6303(a)(2) and (5) of this title.

(b) A wholesale dealer may not:

(1) Sell or exchange vehicles with a retail buyer; and

(2) Buy, sell or exchange new vehicles; and

(3) Sell vehicles on consignment.

71 Del. Laws, c. 449, § 1.;

(a) Each person who conducts auctions of vehicles shall keep a record of each of the following:

(1) The name and address of the consignor or seller;

(2) The date on which the vehicle was consigned;

(3) The year, make, model and vehicle identification number of each vehicle consigned;

(4) The title number and State where the vehicle was last registered;

(5) The odometer mileage reading at the time of consignment;

(6) The name and address of the person to whom the vehicle was sold;

(7) The buyer's driver's license number and state which issued the license;

(8) The selling price; and

(9) The date of sale.

(b) During business hours, auction records shall be open for inspection by Division of Motor Vehicle officials, any police officer or any duly authorized investigator at the Department of Justice while discharging their official duties.

(c) Auction sales must be performed at the approved auction location.

(d) All records required by this section shall be maintained for 5 years after the sale of the vehicle to which such records apply.

(e) Auctions are authorized to issue 30-day temporary license plates under § 2130 of this title to allow vehicles to be removed from the auction lot. The temporary plates shall only be issued to individuals with a valid driver's license. The auction shall witness and record proof of any legally required liability insurance on a vehicle prior to the issuance of the temporary license plate.

71 Del. Laws, c. 449, § 1; 72 Del. Laws, c. 97, § 1.;

(a) A dealer, its agent or an employee of a dealer may not permit any individual to road test a motor vehicle if they know the individual does not have a valid driver's license.

(b) A dealer or an agent or employee of a dealer may not commit any fraud in the execution of, or any material alteration of, a contract, power of attorney or other document incident to a sale or exchange of a vehicle.

(c) A dealer or an agent or employee of a dealer may not wilfully fail to comply with the terms of a warranty or guarantee. A Federal Trade Commission Buyers Guide will be properly completed and displayed on all used vehicles. Buyer(s) will be provided a copy of the Guide prior to completion of the sale.

(d) A dealer or agent of a dealer must disclose to a buyer if the vehicle title has been branded "reconstructed", "flood damaged", "salvage" or was a "taxi". The buyer(s) shall acknowledge the disclosure as described in this paragraph by signing a disclosure statement which has been approved by the Division of Motor Vehicles and is provided by the dealership. A copy of the disclosure statement shall be provided to the Delaware Division of Motor Vehicles with the title application. In the absence of any disclosure statement, the contract may be rescinded at any time by the buyer and the dealer shall provide a full and complete refund to the buyer of all purchase moneys, including interest paid, plus all fees paid. Disclosure shall not prevent any person from otherwise bringing any action under any law for a failure to disclose material information concerning the condition or prior use of any vehicle.

71 Del. Laws, c. 449, § 1.;

If a licensee is a partnership or corporation, it shall be sufficient cause for the denial or suspension of a license if any officer, director or trustee of the partnership or corporation, or any member in the case of a partnership, has committed any act or omitted any duty which would be cause for denial or suspending a license issued to him or her as an individual under this chapter. Each licensee shall be responsible for all acts of any of their salespersons while acting as their agent, if the licensee approved of those acts or had knowledge of those acts or other similar acts and after such knowledge retained the benefit, proceeds, profits or advantages accruing from those acts.

71 Del. Laws, c. 449, § 1; 70 Del. Laws, c. 186, § 1.;

(a) In the event any dealer intends to change a licensed location, the dealer shall provide the Division of Motor Vehicles advance written notice. A successful inspection of the new location shall be required prior to approval of a change of location by the dealer. All requirements of § 6303 of this title shall be completed prior to final approval.

(b) Notwithstanding anything herein to the contrary, a recreational vehicle dealer may sell and display new and used recreational vehicles or recreational trailers at trade or public retail vehicle shows, rallies, or exhibitions, including those in enclosed malls, for up to 14 days per event, provided that:

(1) Delaware recreational vehicle dealers outside of their "area of sales responsibility," as the term is defined in § 8402(1) of this title, do not exhibit, sell or offer for sale the same line-make of recreational vehicle or recreational trailers as a Delaware dealer whose area of sales responsibility encompasses the location of the recreational vehicle trade show or public retail vehicle show, or rally or exhibition, where the term "line-make" has the same meaning as defined in § 8402(7) of this title; and without the written permission of the dealer whose area of responsibility encompasses the show, rally, or exhibition site;

(2) An out-of-state recreational vehicle dealer, without an established place of business in Delaware, must meet all of the following conditions:

a. The dealer must be from a state contiguous to Delaware that permits Delaware dealers to participate in recreational vehicle trade shows, or public retail vehicle shows, or rallies, or exhibitions, including those in enclosed malls, in the dealer's state under conditions substantially equivalent to those imposed on out-of-state dealers by Delaware;

b. The dealer must be in compliance with the laws of the dealer's state of residence;

c. The recreational vehicle trade show or public retail vehicle show, or rally, or exhibition in which the dealer is participating must have a minimum of 3 participating dealers, the majority of which are from Delaware;

d. The dealer may not exhibit, sell, or offer for sale the same line-make of recreational vehicle or recreational trailers as a Delaware dealer who is participating in the same recreational vehicle trade show or public retail vehicle show, rally, or exhibition without the Delaware dealer's written permission, where the term "line-make" has the same meaning as defined in § 8402(7) of this title; and

(3) In the event that an out-of-state dealer is in violation of paragraph (b)(2) of this section, the affected in-state dealer may bring a cause of action pursuant to § 8411(c) of this title.

71 Del. Laws, c. 449, § 1; 79 Del. Laws, c. 161, § 2.;

Upon receiving a dealer license application for approval, and satisfied that the applicant is of good character and, so far as can be ascertained, the applicant has complied with and will comply with, the laws of this and other states, the Department shall approve the application and issue a dealer license. A license entitles a dealer to carry on and conduct the business of a dealer during the calendar year in which the license is issued. Franchised new vehicle dealers must provide the Division a copy of the franchise agreement, or, in the case of a recreational vehicle dealer, a manufacturer-dealer agreement, prior to being licensed as a new vehicle dealer.

36 Del. Laws, c. 10, § 46; Code 1935, § 5584; 21 Del. C. 1953, § 6302; 52 Del. Laws, c. 191; 65 Del. Laws, c. 79, §§ 5-10; 71 Del. Laws, c. 449, § 1; 79 Del. Laws, c. 161, § 2.;

A dealer license applied for or issued pursuant to this chapter may be denied, suspended, or revoked for any 1 of the following reasons:

(1) Material misstatement or omission on the application for a dealer license.

(2) Failure to maintain an established place of business, business phone or Division of Revenue Dealer Business License.

(3) Failure to comply subsequent to receipt from the Division of a cease and desist order; or a written warning or arrest; or failure to comply with this title and Title 30.

(4) Conviction of the dealership of any fraudulent or criminal act in violation of Title 11 in connection with the business of selling vehicles.

(5) Failure to maintain a service facility, if the licensee is a dealer of new recreational vehicles. Recreational vehicle dealers with multiple locations in Delaware may maintain a service facility at 1 location to satisfy this requirement.

71 Del. Laws, c. 449, § 1; 79 Del. Laws, c. 161, § 2.;

(a) No license issued under this title shall be suspended, revoked or renewal thereof refused, until a written copy of the complaint made has been furnished to the licensee against whom the same is directed. The written notice of complaint shall be sent to the licensee by certified mail, return receipt requested, addressed to the last known address as shown on the license or dealership application or other record of information in possession of the Division. The written notice shall inform the licensee of the following:

(1) This Division's intention to suspend, revoke or deny renewal of the dealership license.

(2) The nature of the complaint and the law or regulation allegedly violated by the dealership.

(3) The notice shall cite the law or regulation giving the Division authority to act.

(4) The notice shall inform the dealer of its right to request a hearing to dispute the complaint. The hearing must be requested within 10 days from earlier of the dates that the dealer received the certified letter or the Division received the return receipt on the certified letter.

(5) The notice shall inform the dealer of its right to present evidence, to be represented by counsel and to appear personally or by other representative at the hearing.

(b) The Division shall inform a dealer requesting a hearing of the date, time and place the hearing shall be held. The notification shall be provided by certified mail, return receipt requested, and shall give at least 20 days prior notice to all parties involved, unless waived by the dealer. The notice shall inform the parties of the Division's obligation to reach its decision based upon the evidence received.

(c) The Division Director or designated representative may order a temporary emergency dealer license suspension. Any suspension issued under this subsection shall be exempt from the provisions required in subsections (a) and (b) of this section, except as provided herein.

The following guidelines shall apply for this temporary suspension.

(1) If a dealer has 5 outstanding violations of §§ 2306(e) and/or 2509 of this title for not submitting a buyer's vehicle title application to the Division within the required 30 days from the date of sale; and

(2) A dealer has been provided 5 days' written notice by the Division to submit the required paperwork but has failed to comply, then the Division will place a temporary emergency dealer license suspension notice on or near the entrance of the dealer's place of business to notify potential buyers that the dealer's license is temporarily suspended.

(3) Unauthorized removal of the notice or failure to comply with the temporary emergency dealer license suspension order may result in the immediate permanent suspension of the dealer's license, after notice and an opportunity for a hearing under subsections (a) and (b) of this section.

(4) The temporary emergency dealer license suspension will be lifted by the Division when the required vehicle title applications and payments are submitted to the division.

(5) A dealer who fails to submit the required vehicle title applications and payments within 10 days after receiving a temporary emergency dealer license suspension may have its dealer license permanently suspended, after notice and an opportunity for a hearing under subsections (a) and (b) of this section.

71 Del. Laws, c. 449, § 1; 77 Del. Laws, c. 108, § 1.;

(a) If the Division refuses an application for a license, denies a renewal of a license or proposes the suspension or revocation of a dealer's license, the Division shall provide a hearing when requested under § 6314 of this title. At the hearing the licensee shall have the right to be heard personally, by counsel or by its agent. The Director may initiate investigations, appoint a hearing officer and subpoena witnesses. After the hearing, the Director, upon receiving a decision from the hearing officer upholding the Division's position, may suspend or revoke a dealer's license, deny a renewal or refuse to approve an application. The Director shall consider prior to any suspension, revocation, denial of renewal or refusal to approve an application:

(1) The nature of the violation(s) and the dealer's willingness to make restitution to all parties harmed by dealership actions.

(2) The effect of the proposed action on the community.

The Director shall provide written notice to all parties involved of the decision by certified mail, return receipt requested. The decision is appealable to the Superior Court. Any appeal must be filed within 30 days of the earlier of the receipt of the decision by the dealer or the date of receipt of the return receipt by the Division.

(b) Should a dealer fail to maintain an established place of business, the Division may cancel the license without a hearing after notification of the intent to cancel has been sent by certified mail, to the dealer at the dealer's residence and business addresses, and the notices are returned undelivered or the dealer does not respond within 20 days from the date the notices were sent.

71 Del. Laws, c. 449, § 1.;

If the Division suspends, revokes or denies the renewal of the license of any dealer licensed under this chapter, the dealer immediately shall return the license, dealer number plates, temporary license plates and dealer reassignment forms belonging to the dealer. The Division may grant the licensee up to 30 days to dispose of vehicles belonging to the dealer.

71 Del. Laws, c. 449, § 1.;

In addition to the legal remedies provided for in this chapter, the Division of Motor Vehicles is authorized to issue cease and desist orders to any person, corporation, partnership, proprietorship or other legal entity who violates this chapter. The Division is also authorized to file a complaint for injunctive relief with the Court of Chancery upon notice that a cease and desist order is violated. The Chancery Court is authorized to award attorney fees and costs to the Division if a preliminary or permanent injunction is granted by the court. Nothing herein shall prevent the Attorney General from seeking any other civil remedy or criminal sanction for any conduct constituting a violation of this chapter.

71 Del. Laws, c. 449, § 1; 79 Del. Laws, c. 161, § 2.;

(a) Whoever violates any provision of this chapter shall be guilty of an unclassified misdemeanor and shall be fined not less than $50 nor more than $575.

(b) Subsection (a) of this section shall not apply to violations for which penalties are prescribed elsewhere in this title.

36 Del. Laws, c. 10, § 49; Code 1935, § 5587; 21 Del. C. 1953, § 6306; 68 Del. Laws, c. 9, § 56; 71 Del. Laws, c. 449, § 1; 73 Del. Laws, c. 407, § 1.;