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Financial Services Law Insights and Observations

Iowa Governor Signs Bill to Amend Motor Vehicle Purchase Agreement Requirements

Auto Finance Electronic Records

Consumer Finance

On April 13, Governor Terry Branstad signed into law SF 2228, the Motor Vehicle Records and Dealer Licensing Act. The act amends Chapter 321 of Iowa Code 2016 to, among other things, require that the full price of the “documentary fee” included in the purchase of a motor vehicle be “clearly and conspicuously disclosed in any motor vehicle purchase agreement with the customer.” Defined as “a fee that may be charged to a customer by a motor vehicle dealer for the preparation of documents related to an application for motor vehicle registration and an application for issuance of a certificate of title, and the performance of other related services for the customer,” a documentary fee excludes costs or fees charged to a motor vehicle dealer or a dealer’s customer by a third party. For each vehicle sold in a transaction, a documentary fee is limited to $180, unless a form of electronic applications, titling, registering, and transfers is involved, at which point the documentary fee cannot exceed $155. Pursuant to SF 2228, the Department of Transportation must establish and implement a program to allow for electronic applications, titling, registering, and funds transfers for vehicles subject to registration by January 1, 2018.

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