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A4081
ASSEMBLY, No. 4081
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 19, 2026
Sponsored by:
Assemblywoman� ANNETTE QUIJANO
District 20 (Union)
SYNOPSIS
���� Regulates pay-off of trade-in vehicles and certain
vehicle title releases.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning the trade-in of used motor vehicles,
supplementing chapter 10 of Title 39 of the Revised Statutes, and amending
R.S.39:10-10
and R.S.39:10-11
.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� (New section)� a.� A
dealer or used motor vehicle dealer who buys a motor vehicle from a purchaser
as a trade-in on which there remains a balance due under a security agreement
which is to be satisfied pursuant to an agreement between the dealer and the purchaser
shall, within 15 days of taking possession of the motor vehicle, remit payment
in the full amount of the remaining loan to the secured party holding a
security interest in the trade-in vehicle.
���� b.��� A dealer or used motor
vehicle dealer subject to the provisions of subsection a. of this section shall
provide proof of payment of the full balance due upon request by the person who
transferred title or possession of the motor vehicle to the dealer or used
motor vehicle dealer.
���� c.���� A dealer or used motor
vehicle dealer who violates the provisions of this section shall be liable to a
penalty of not more than $1,000 for the first offense and not more than $2,000
for the second and each subsequent offense. The penalty assessed pursuant to
this subsection shall be exclusive of and in addition to any other penalties
provided under chapter 10 of Title 39 of the Revised Statutes.� In addition to
any penalty assessed pursuant to this subsection, a dealer or used motor
vehicle dealer subject to the provisions of subsection a. of this section shall
pay any late cost or fee resulting from the dealer�s failure to remit payment
of the remaining loan in a timely manner.
�
���� 2.��� R.S.39:10-10 is amended
to read as follows:
���� 39:10-10.��� When the contract
or terms of the security agreement noted on the certificate of origin, or
certificate of ownership have been performed
, or when the full balance due
has been satisfied,
the seller or secured party shall
:
����
a.
���� deliver
to the buyer
,
or the buyer�s assignee,
the certificate of ownership thereto, executed as
provided in this chapter, with proper evidence of satisfaction of the contract
or termination of the security interest
[
.Within
15 days after the performance of the contract or termination of the security
interest, the seller or secured party shall
]
within 15 days after receipt of payment, provided, however, that when
payment is made by non-certified check or draft, the seller or secured party shall
make delivery within 15 days of the date which funds are credited to the
seller�s or secured party�s account; and
����
b.
��� file with the
[
director
]
chief
administrator
a notice, in such form as the
[
director
]
chief
administrator
shall prescribe, containing evidence of such performance or
termination
within 15 days after the performance of the contract or
termination of the security interest
.� The
chief administrator
shall
thereupon cause a notation to be made on his records of certificate of
ownership of the motor vehicle that the contract has been satisfied or the
security interest terminated.
����
c.���� A person who
violates subsection a. of this section shall be liable to a penalty of not more
than $500 for the first offense and not more than $1,000 for the second and
each subsequent offense and shall be liable to the buyer or buyer�s assignee
for any fine, fee, or expense directly resulting from the failure to comply
with subsection a. of this section.
�Any person violating the provisions of
subsection b. of
this section shall pay a fine of
[
$25.00
]
$25
.
(cf: P.L.1961, c.122, s.4)
���� 3.��� R.S.39:10-11 is amended
to read as follows:
���� 39:10-11.� A.� The purchaser
of a motor vehicle in this State, other than a dealer licensed pursuant to the
provisions of R.S.39:10-19, shall, within 10 working days after its purchase,
submit to the
[
director
]
chief
administrator
evidence of the purchase.� Upon presentation to the
[
director
]
chief
administrator
of the certificate of origin, or certificate of ownership, or
bill of sale issued prior to October 1, 1946, with proper assignment and
certification of the seller, a record of the transaction shall be made and
filed.� A certificate of ownership shall be issued by the
[
director
]
chief
administrator
and delivered to the buyer, in case of a sale not subject to
a security interest, and the
[
director
]
chief
administrator
shall collect a fee of $20 for the issuance and filing
thereof.
���� B.��� In the case of a sale
subject to a security interest, a certificate of ownership, with the name and
address of the holder of the encumbrance or secured party or his assignee
recorded thereon, shall be delivered to the holder of the encumbrance or
secured party or his assignee and a copy thereof shall be delivered to the
buyer. The
[
director
]
chief
administrator
shall collect a fee of $30 for his services in issuing a
certificate and copy thereof, and for making a record of and filing the record
of the transaction, pursuant to this subsection.
���� C.��� Except as hereinafter in
this section otherwise expressly provided, whenever a security interest is
created in a motor vehicle, other than a security interest which is required to
be noted on the certificate of origin or the certificate of ownership, as provided
in R.S.39:10-8 and R.S.39:10-9, there shall be filed with the
[
director
]
chief
administrator
the certificate of ownership of the motor vehicle, together
with a financing statement on a form prescribed by the
[
director
]
chief
administrator
.� The
[
director
]
chief
administrator
shall make and file a record of the transaction and shall
issue a certificate of ownership, recording the name and address of the secured
party or his assignee thereon, and shall deliver it to the secured party or his
assignee.� A copy of the certificate of ownership so issued shall be delivered
to the buyer. The
[
director
]
chief
administrator
shall collect a fee of $20 for his services in issuing a
certificate and copy thereof and for making a record of and filing the record
of the transaction, pursuant to this subsection.
���� D.�� The financing statement
required to be filed pursuant to subsection C.� hereof shall be signed only by
the buyer, shall not be required to be acknowledged or proved, and shall show,
in addition to such matters as the
[
director
]
chief
administrator
may require for the proper identification of the motor
vehicle affected, the date of the security agreement, and the names and
addresses of the parties thereto.� Nothing
contained
in this section
[
39:10-11
contained
]
shall be construed as requiring that the security agreement or a copy thereof,
or any proof of execution thereof other than that contained in the financing
statement, shall be presented to the
[
director
]
chief
administrator
.� When the buyer is a corporation, it shall be sufficient if
the financing statement is signed by any officer thereof, or by any agent
designated by the corporation for that purpose, and it shall not be necessary
that the financing statement recite the authorization of the agent.� When there
is more than one buyer, it shall be sufficient if the financing statement is
signed by any one of them.
���� E.��� Nothing in subsections
C. and D. of this section shall apply to security interests in motor vehicles
which constitute inventory held for sale, but such interests shall be subject
to chapter 9 of Title 12A of the New Jersey Statutes, nor shall anything in the
said subsections apply to interests in personal property subject to chapter 28
of Title 46 of the Revised Statutes.
���� F.��� In addition to the fees
elsewhere in this section provided for, there shall be paid to the
[
director
]
chief
administrator
at the time a certificate of ownership is issued a fee of $10
for notice of satisfaction of the lien or encumbrance of the record or
abstract, or of the termination of the security interest, where the motor
vehicle is subject to a lien or encumbrance or a security interest as provided
in R.S.39:10-14.
���� G.�� Notwithstanding any other
provision of this chapter, when any dealer licensed under the provisions of
R.S.39:10-19 is the purchaser of a motor vehicle in this State, he may, within
10 working days after its purchase, submit to the
[
director
]
chief
administrator
the evidence of purchase.� Upon presentation of the
certificate of ownership with proper assignment and certification of the seller
to the
[
director
]
chief
administrator
, a record of the transaction shall be made and filed. A
certificate of ownership shall be issued by the
[
director
]
chief
administrator
and delivered to such purchaser, and the
[
director
]
chief
administrator
shall collect a fee of $10 for the issuing and filing
thereof.
���� If a dealer does not submit
the evidence of purchase, upon resale of the motor vehicle he shall execute and
attach to the certificate of ownership a dealer reassignment certificate.� The
[
director
]
chief
administrator
shall issue dealer reassignment certificates in lots upon
payment of a fee of $10 for each certificate.
���� H.�� Any purchaser of a motor
vehicle who fails to comply with the provisions of this section shall pay to
the
[
director
]
chief
administrator
a penalty of $25 plus the issuing and filing fee.
���� I.���� The failure of any
person to comply with the requirements of this section shall not constitute a
misdemeanor within the provisions of R.S.39:10-24, nor shall such failure
affect the validity of any instrument creating or reserving a security interest
in a motor vehicle, as between the parties to such instrument.
���� J.���� The notation of the
name and business or residence address of a secured party or his assignee, on
the certificate of origin or on the certificate of ownership, as provided in
R.S.39:10-8 and R.S.39:10-9, and the presentation to the
[
director
]
chief
administrator
, in accordance with R.S.39:10-11, of the certificate of
origin or certificate of ownership so noted, and the compliance with the
requirements of subsections C. and D. of R.S.39:10-11 shall be in lieu of all
filing requirements imposed by chapter 9 of Title 12A of the New Jersey
Statutes and shall constitute the perfection of a security interest in the
motor vehicle, and the rights and remedies of the debtors and the secured
parties in respect to such security interest shall, except as otherwise
expressly provided in this chapter, be subject to and governed by chapter 9 of
Title 12A of the New Jersey Statutes.
����
K.�� A levy on a motor
vehicle which is constructive and not actual in nature, initiated pursuant to
R.S.39:10-15, shall not be valid, enforceable, or effective unless the person
taking constructive possession of the motor vehicle seizes and takes actual
possession of the motor vehicle within 30 days of filing the required notice
with the chief administrator as required by R.S.39:10-15.� The chief
administrator shall remove any title transfer restriction or other impairment
affecting the title if the motor vehicle is not seized and taken actual
possession of within 30 days, or upon the request of the good faith purchaser.�
A levy by a judgment creditor on a motor vehicle shall not be effective against
a subsequent good faith purchaser for value unless the motor vehicle in
question was seized and actual possession was taken by the creditor.
(cf: P.L.1994, c.60, s.26)
�����
4.��� This act shall
take effect on the first day of the third month following enactment.
STATEMENT
���� This bill requires motor
vehicle dealers to pay the remaining loan on a customer�s trade-in within 15
days of accepting that trade-in. The bill also requires the dealer to provide
proof of the payment to the customer upon request. A dealer who violates the bill�s
provisions is subject to a penalty of up to $1,000 for the first offense and up
to $2,000 for each subsequent offense.� In addition, a dealer would be required
to pay any late cost or fee incurred by the customer as a result of the
dealer�s failure to pay the remaining loan on a customer�s trade-in in a timely
manner.�
���� In addition, the bill requires
a secured party to release the title within 15 days of receipt of payment from
the motor vehicle dealer.� When the balance is paid by non-certified check, the
secured parties are required to release the title within 15 days from the date
the check is credited to their account. A secured party who fails to comply
with these time requirements is subject to a civil penalty of up to $500 for
the first offense and up to $1,000 for each subsequent offense.
���� Under current law, a creditor
that takes actual or constructive possession of a motor vehicle is required to
notify the Chief Administrator of the Motor Vehicle Commission. This bill
invalidates levies placed on vehicles unless a creditor taking constructive
possession of the vehicle seizes and takes actual possession of the vehicle
within 30 days of providing notice to the chief administrator.� The bill also
exempts a subsequent purchaser of a trade-in motor vehicle from financial
responsibility for a levy on a motor vehicle that is not in a creditor�s actual
possession.� The chief administrator is to release title transfer restrictions
on motor vehicles that have been legally, but not physically, seized after 30
days or upon request of the good faith purchaser.