N.Y. General Business Law § 198-c: Automobile trade-in protection

§ 198-c. Automobile trade-in protection. (a) As used in this section,

"dealer" shall have the same meaning as such term is defined by section

four hundred fifteen of the vehicle and traffic law.

(b) When a dealer purchases or obtains a vehicle in trade in a retail

sale or lease transaction and the vehicle is subject to a prior credit

or lease balance, all of the following apply:

(1) If the dealer agreed to pay a specified amount on the prior credit

or lease balance owing on the vehicle purchased or obtained in trade,

and the agreement to pay the specified amount is contained in a written

agreement documenting the transaction, the dealer shall tender the

agreed upon amount as provided in the written agreement to the lessor,

or to the lien holder, or to the designee of that lessor or lien holder

of the vehicle purchased or obtained in trade within twenty-one calendar

days of purchasing or obtaining the vehicle in trade, provided, however,

that the dealer may rely upon the amount due as stated by the lessor or

lien holder.

(2) If the dealer did not set forth an agreement regarding payment of

a prior credit or lease balance owed on the vehicle purchased or

obtained in trade, in a written agreement documenting the transaction,

the dealer shall tender to the lessor, or to the lien holder, or to the

designee of that lessor or lien holder of the vehicle purchased or

obtained in trade, an amount necessary to discharge the prior credit or

lease balance owing on the vehicle purchased or obtained in trade within

twenty-one calendar days of purchasing or obtaining the vehicle in

trade, provided, however, that the dealer may rely upon the amount due

as stated by the lessor or lien holder.

(3) The time period specified in paragraph one or two of this

subdivision may be shortened if the dealer and consumer agree, in

writing, to a shorter time period.

(4) A dealer shall not sell, consign for sale, or transfer any

ownership interest in the vehicle purchased or obtained in trade until

an amount necessary to discharge the prior credit or lease balance owing

on the vehicle has been tendered to the lessor, or to the lien holder,

or to the designee of that lessor or lien holder of the vehicle

purchased or obtained in trade.

(c) If the agreement gives either party the right to rescind the

entire agreement within a reasonable time period, rescission of the

entire agreement shall effectively rescind the obligations pursuant to

this section without violating this section.

(d) This section shall not apply to agreements or transactions that

involve a state or federal program in which a dealer is issued a voucher

to offset the purchase price or lease price for a qualifying lease of a

new vehicle upon the surrender of an eligible trade-in vehicle to a

dealer participating in the program.

(e) (1) Every violation of this section shall be deemed a deceptive

act and practice subject to enforcement under article twenty-two-A of

this chapter. In addition, the district attorney, county attorney, and

the corporation counsel shall have concurrent authority to seek the

relief in paragraph two of this subdivision, and all civil penalties

obtained in any such action shall be retained by the municipality or

county.

(2) In every case where the court shall determine that a violation of

this section has occurred, it may impose a civil penalty of not more

than five thousand dollars for each violation. Such penalty shall be in

addition to any denial of registration or renewal, suspension of

registration or revocation of registration or assessment of a fine

authorized by subdivision nine of section four hundred fifteen of the

vehicle and traffic law.

(3) Nothing in this section shall be construed to restrict any right

which any person may have under any other statute or the common law.

(4) No dealer shall be deemed to have violated the provisions of this

section if such dealer shows, by a preponderance of the evidence, that

the violation was not intentional and resulted from a bona fide error

made notwithstanding the maintenance of procedures reasonably adopted to

avoid such error.

(f) Any person who is convicted of knowingly violating paragraph four

of subdivision (b) of this section shall be guilty of a class A

misdemeanor.

(g) If any part or provision of this section or the application

thereof to any person or circumstances be adjudged invalid by any court

of competent jurisdiction, such judgment shall be confined in its

operations to the part, provision or application directly involved in

the controversy in which such judgment shall have been rendered and

shall not affect or impair the validity of the remainder of this section

or the application thereof to other persons or circumstances.