Understanding Consignment Sales in California
Consignment sales in California require meticulous compliance with state regulations to ensure a smooth and lawful transaction. At the core of these transactions is the written consignment agreement, a mandatory document that outlines the terms of the sale, including pricing, fees, and duration. The agreement must include clear disclosures and be signed by both the consignor (owner) and consignee (dealer).
Mandatory Disclosures and Contract Details
According to the California Vehicle Code §§11713.19, 11729–11730, the consignment agreement must disclose the current market value, any outstanding liens, and the consignor’s net proceeds. The agreement also requires a trust clause, confirming the vehicle is entrusted solely for sale purposes. Importantly, payment to the consignor must be made within 20 days of the sale to avoid penalties [source].
Dealer Responsibilities and Fiduciary Duty
Dealers are tasked with a fiduciary duty to the consigner, ensuring proceeds are remitted efficiently and misrepresentations are avoided. Additionally, dealers must maintain accurate records in the deal jacket, handle title and insurance clearly, and follow advertising rules. Failure to remove advertisements for sold vehicles within 48 hours can lead to penalties.
Advertising Practices
When advertising consigned vehicles, dealers must clearly identify their role and honor the advertised price. This transparency is crucial for maintaining legal compliance and fostering trust with buyers.
Handling Unsold Vehicles
If a consigned vehicle remains unsold, the dealer is obligated to return it to the owner or renew the consignment agreement. This ensures both parties understand the status of the sale and any proceeding actions.
Conclusion
By adhering to these guidelines, California dealers can effectively manage consignment sales, ensuring compliance and fostering successful partnerships with vehicle owners. For more in-depth coverage, refer to the relevant sections of the California Vehicle Code.
