CHAPTER 138 HOUSE BILL No. 2114 An Act concerning the vehicle dealers and manufacturers licensing act; relating to vehicle
bonds; amending K.S.A. 2000 Supp. 8-2404 and repealing the existing section. Be it enacted by the Legislature of the State of Kansas:

      Section  1. K.S.A. 2000 Supp. 8-2404 is hereby amended to read as
follows: 8-2404. (a) No vehicle dealer shall engage in business in this state
without obtaining a license as required by this act. Any vehicle dealer
holding a valid license and acting as a vehicle salesperson shall not be
required to secure a salesperson's license.

      (b) No first stage manufacturer, second stage manufacturer, factory
branch, factory representative, distributor branch or distributor represen-
tative shall engage in business in this state without a license as required
by this act, regardless of whether or not an office or other place of busi-
ness is maintained in this state for the purpose of conducting such busi-
ness.

      (c) An application for a license shall be made to the director and shall
contain the information provided for by this section, together with such
other information as may be deemed reasonable and pertinent, and shall
be accompanied by the required fee. The director may require in the
application, or otherwise, information relating to the applicant's solvency,
financial standing, or other pertinent matter commensurate with the safe-
guarding of the public interest in the locality in which the applicant pro-
poses to engage in business, all of which may be considered by the di-
rector in determining the fitness of the applicant to engage in business
as set forth in this section. The director may require the applicant for
licensing to appear at such time and place as may be designated by the
director for examination to enable the director to determine the accuracy
of the facts contained in the written application, either for initial licensure
or renewal thereof. Every application under this section shall be verified
by the applicant.

      (d) All licenses shall be granted or refused within 30 days after ap-
plication is received by the director. All licenses, except licenses issued
to salespersons, shall expire, unless previously suspended or revoked, on
December 31 of the calendar year for which they are granted, except that
where a complaint respecting the cancellation, termination or nonrenewal
of a sales agreement is in the process of being heard, no replacement
application shall be considered until a final order is issued by the director.
Applications for renewals, except for renewals of licenses issued to sales-
persons, received by the director after February 15 shall be considered
as new applications. All salespersons' licenses issued on or after January
1, 1987, shall expire on June 30, 1988, and thereafter shall expire, unless
previously suspended or revoked, on June 30 of the calendar year for
which they are granted. Applications for renewals of salespersons' licenses
received by the director after July 15 shall be considered as new appli-
cations. All licenses for supplemental places of business existing or issued
on or after January 1, 1994, shall expire on December 31, 1994, unless
previously expired, suspended or revoked, and shall thereafter expire on
December 31 of the calendar year for which they are granted, unless
previously suspended or revoked.

      (e) License fees for each calendar year, or any part thereof shall be
as follows:

      (1) For new vehicle dealers, $50;

      (2) for distributors, $50;

      (3) for wholesalers, $50;

      (4) for distributor branches, $50;

      (5) for used vehicle dealers, $50;

      (6) for first and second stage manufacturers, $200 plus $50 for each
factory branch in this state;

      (7) for factory representatives, $25;

      (8) for distributor representatives, $25;

      (9) for brokers, $50;

      (10) for lending agencies, $25;

      (11) for first and second stage converters, $25;

      (12) for salvage vehicle dealers, $50;

      (13) for auction motor vehicle dealers, $50;

      (14) for vehicle salesperson, $15; and

      (15) for insurance companies, $50.

      Any salvage vehicle dealer who is also licensed as a used vehicle dealer
shall be required to pay only one $50 fee for both licenses. Any new
vehicle dealer who is also licensed as a used vehicle dealer shall be re-
quired to pay only one $50 fee for both licenses.

      (f) Dealers may establish approved supplemental places of business
within the same county of their licensure or, with respect to new vehicle
dealers, within their area of responsibility as defined in their franchise
agreement. Those doing so shall be required to pay a supplemental license
fee of $10. In addition to any other requirements, new vehicle dealers
seeking to establish supplemental places of business shall also comply with
the provisions of K.S.A. 8-2430 through 8-2432, and amendments thereto.
A new vehicle dealer establishing a supplemental place of business in a
county other than such dealer's county of licensure but within such
dealer's area of responsibility as defined in such dealer's franchise agree-
ment shall be licensed only to do business as a new motor vehicle dealer
in new motor vehicles at such supplemental place of business. Original
inspections by the division of a proposed established place of business
shall be made at no charge except that a $5 fee shall be charged by the
division for each additional inspection the division must make of such
premises in order to approve the same.

      (g) The license of all persons licensed under the provisions of this act
shall state the address of the established place of business, office, branch
or supplemental place of business and must be conspicuously displayed
therein. The director shall endorse a change of address on a license with-
out charge if: (1) The change of address of an established place of busi-
ness, office, branch or supplemental place of business is within the same
county; or (2) the change of address of a supplemental place of business,
with respect to a new vehicle dealer, is within such dealer's area of re-
sponsibility as defined in their franchise agreement. A change of address
of the established place of business, office or branch to a different county
shall require a new license and payment of the required fees but such
new license and fees shall not be required for a change of address of a
supplemental place of business, with respect to a new vehicle dealer, to
a different county but within the dealer's area of responsibility as defined
in their franchise agreement.

      (h) Every salesperson, factory representative or distributor represen-
tative shall carry on their person a certification that the person holds a
valid state license. The certification shall name the person's employer and
shall be displayed upon request. An original copy of the state license for
a vehicle salesperson shall be mailed or otherwise delivered by the divi-
sion to the employer of the salesperson for public display in the em-
ployer's established place of business. When a salesperson ceases to be
employed as such, the former employer shall mail or otherwise return
the original copy of the employee's state license to the division. A sales-
person, factory representative or distributor representative who termi-
nates employment with one employer may file an application with the
director to transfer the person's state license in the name of another
employer. The application shall be accompanied by a $2 transfer fee. A
salesperson, factory representative or distributor representative who ter-
minates employment, and does not transfer the state license, shall mail
or otherwise return the certification that the person holds a valid state
license to the division.

      (i) If the director has reasonable cause to doubt the financial respon-
sibility or the compliance by the applicant or licensee with the provisions
of this act, the director may require the applicant or licensee to furnish
and maintain a bond in such form, amount and with such sureties as the
director approves, but such amount shall be not less than $5,000 nor more
than $20,000, conditioned upon the applicant or licensee complying with
the provisions of the statutes applicable to the licensee and as indemnity
for any loss sustained by any person a retail or wholesale buyer or seller
of a vehicle by reason of any act by the licensee constituting grounds for
suspension or revocation of the license. Every applicant or licensee who
is or applies to be a used vehicle dealer or a new vehicle dealer shall
furnish and maintain a bond in such form, amount and with such sureties
as the director approves, in the amount of $15,000, conditioned upon the
applicant or licensee complying with the provisions of the statutes appli-
cable to the licensee and as indemnity for any loss sustained by any person
a retail or wholesale buyer or seller of a vehicle by reason of any act by
the licensee in violation of any act which constitutes grounds for suspen-
sion or revocation of the license. The amount of such bond shall be as
follows: (1) For any new applicant $30,000; or (2) for any current licensee,
$15,000, until the renewal date of the existing bond, then $30,000, except
that on and after January 1, 2003, the amount of such bond shall be
$30,000. To comply with this subsection, every bond shall be a corporate
surety bond issued by a company authorized to do business in the state
of Kansas and shall be executed in the name of the state of Kansas for
the benefit of any aggrieved party retail or wholesale buyer or seller of a
vehicle. The aggregate liability of the surety for all breaches of the con-
ditions of the bond in no event shall exceed the amount of such bond.
The surety on the bond shall have the right to cancel the bond by giving
30 days' notice to the director, and thereafter the surety shall be relieved
of liability for any breach of condition occurring after the effective date
of cancellation. Bonding requirements shall not apply to first or second
stage manufacturers, factory branches, factory representatives or sales-
persons. Upon determination by the director that a judgment from a
Kansas court of competent jurisdiction is a final judgment and that the
judgment resulted from an act in violation of this act or would constitute
grounds for suspension, revocation, refusal to renew a license or admin-
istrative fine pursuant to K.S.A. 8-2411, and amendments thereto, the
proceeds of the bond on deposit or in lieu of bond provided by subsection
(j), shall be paid. The determination by the director under this subsection
is hereby specifically exempted from the Kansas administrative procedure
act (K.S.A. 77-501 through 77-549, and amendments thereto,) and the
act for judicial review and civil enforcement of agency actions (K.S.A. 77-
601 through 77-627, and amendments thereto). Any proceeding to en-
force payment against a surety following a determination by the director
shall be prosecuted by the judgment creditor named in the final judgment
sought to be enforced. Upon a finding by the court in such enforcement
proceeding that a surety has wrongfully failed or refused to pay, the court
shall award reasonable attorney fees to the judgment creditor.

      (j) An applicant or licensee may elect to satisfy the bonding require-
ments of subsection (i) by depositing with the state treasurer cash, ne-
gotiable bonds of the United States or of the state of Kansas or negotiable
certificates of deposit of any bank organized under the laws of the United
States or of the state of Kansas. On or after January 1, 2003, the amount
of cash, negotiable bonds of the United States or of the state of Kansas or
negotiable certificates of deposit of any bank organized under the laws of
the United States or of the state of Kansas deposited with the state trea-
surer shall be in an amount of no less than $30,000. When negotiable
bonds or negotiable certificates of deposit have been deposited with the
state treasurer to satisfy the bonding requirements of subsection (i), such
negotiable bonds or negotiable certificates of deposit shall remain on
deposit with the state treasurer for a period of not less than two years
after the date of delivery of the certificate of title to the motor vehicle
which was the subject of the last motor vehicle sales transaction in which
the licensee engaged prior to termination of the licensee's license. In the
event a licensee elects to deposit a surety bond in lieu of the negotiable
bonds or negotiable certificates of deposit previously deposited with the
state treasurer, the state treasurer shall not release the negotiable bonds
or negotiable certificates of deposits until at least two years after the date
of delivery of the certificate of title to the motor vehicle which was the
subject of the last motor vehicle sales transaction in which the licensee
engaged prior to the date of the deposit of the surety bond. The cash
deposit or market value of any such securities shall be equal to or greater
than the amount of the bond required for the bonded area and any in-
terest on those funds shall accrue to the benefit of the depositor.

      (k) No license shall be issued by the director to any person to act as
a new or used dealer, wholesaler, broker, salvage vehicle dealer, auction
motor vehicle dealer, second stage manufacturer, first stage converter,
second stage converter or distributor unless the applicant for the vehicle
dealer's license maintains an established place of business which has been
inspected and approved by the division. First stage manufacturers, factory
branches, factory representatives, distributor branches, distributor rep-
resentatives and lending agencies are not required to maintain an estab-
lished place of business to be issued a license.

      (l) Dealers required under the provisions of this act to maintain an
established place of business shall own or have leased and use sufficient
lot space to display vehicles at least equal in number to the number of
dealer license plates the dealer has had assigned.

      (m) A sign with durable lettering at least 10 inches in height and easily
visible from the street identifying the established place of business shall
be displayed by every vehicle dealer. Notwithstanding the other provi-
sions of this subsection, the height of lettering of the required sign may
be less than 10 inches as necessary to comply with local zoning regula-
tions.

      (n) If the established or supplemental place of business or lot is
zoned, approval must be secured from the proper zoning authority and
proof that the use complies with the applicable zoning law, ordinance or
resolution must be furnished to the director by the applicant for licensing.

      (o) An established or supplemental place of business, otherwise
meeting the requirements of this act may be used by a dealer to conduct
more than one business, provided that suitable space and facilities exist
therein to properly conduct the business of a vehicle dealer.

      (p) If a supplemental place of business is not operated on a contin-
uous, year-round basis, the dealer shall give the department 15 days' no-
tice as to the dates on which the dealer will be engaged in business at the
supplemental place of business.

      (q) Any vehicle dealer selling, exchanging or transferring or causing
to be sold, exchanged or transferred new vehicles in this state must sat-
isfactorily demonstrate to the director that such vehicle dealer has a bona
fide franchise agreement with the first or second stage manufacturer or
distributor of the vehicle, to sell, exchange or transfer the same or to
cause to be sold, exchanged or transferred.

      No person may engage in the business of buying, selling or exchanging
new motor vehicles, either directly or indirectly, unless such person holds
a license issued by the director for the make or makes of new motor
vehicles being bought, sold or exchanged, or unless a person engaged in
such activities is not required to be licensed or acts as an employee of a
licensee and such acts are only incidentally performed. For the purposes
of this section, engaged in the business of buying, selling or exchanging
new motor vehicles, either directly or indirectly, includes: (1) Displaying
new motor vehicles on a lot or showroom; (2) advertising new motor
vehicles, unless the person's business primarily includes the business of
broadcasting, printing, publishing or advertising for others in their own
names; or (3) regularly or actively soliciting or referring buyers for new
motor vehicles.

      (r) No person may engage in the business of buying, selling or ex-
changing used motor vehicles, either directly or indirectly, unless such
person holds a license issued by the director for used motor vehicles being
bought, sold or exchanged, or unless a person engaged in such activities
is not required to be licensed or acts as an employee of a licensee and
such acts are only incidentally performed. For the purposes of this sec-
tion, engaged in the business of buying, selling or exchanging used motor
vehicles, either directly or indirectly, includes: (1) Displaying used motor
vehicles on a lot or showroom; (2) advertising used motor vehicles, unless
the person's business primarily includes the business of broadcasting,
printing, publishing or advertising for others in their own names; or (3)
regularly or actively soliciting buyers for used motor vehicles.

      (s) The director of vehicles shall publish a suitable Kansas vehicle
salesperson's manual. Before a vehicle salesperson's license is issued, the
applicant for an original license or renewal thereof shall be required to
pass a written examination based upon information in the manual.

      (t) No new license shall be issued nor any license renewed to any
person to act as a salvage vehicle dealer until the division has received
evidence of compliance with the junkyard and salvage control act as set
forth in K.S.A. 68-2201 et seq., and amendments thereto.

      (u) On and after the effective date of this act, no person shall act as
a broker in the advertising, buying or selling of any new or used motor
vehicle. Nothing herein shall be construed to prohibit a person duly li-
censed under the requirements of this act from acting as a broker in
buying or selling a recreational vehicle as defined by subsection (f) of
K.S.A. 75-1212, and amendments thereto, when the recreational vehicle
subject to sale or purchase is a used recreational vehicle which has been
previously titled and independently owned by another person for a period
of 45 days or more, or is a new or used recreational vehicle repossessed
by a creditor holding security in such vehicle.

      (v) Nothing herein shall be construed to prohibit a person not oth-
erwise required to be licensed under this act from selling such person's
own vehicle as an isolated and occasional sale.

 Sec.  2. K.S.A. 2000 Supp. 8-2404 is hereby repealed.
 Sec.  3. This act shall take effect and be in force from and after Jan-
uary 1, 2002, and its publication in the statute book.

Approved April 19, 2001.
__________