(625 ILCS 5/5-102.7) Sec. 5-102.7. Dealer Recovery Trust Fund. (a) The General Assembly finds that motor vehicle dealers that go out of business without fulfilling agreements to pay off the balance of their customers' liens on traded-in vehicles cause financial harm to those customers by leaving those customers liable for multiple vehicle loans and cause harm to the integrity of the motor vehicle retailing industry. It is the intent of the General Assembly to protect vehicle purchasers by creating a Dealer Recovery Trust Fund to reimburse these consumers. (b) The Dealer Recovery Trust Fund shall be used solely for the limited purpose of
helping victims of dealership closings. Any interest accrued by moneys in the Fund shall be
deposited and become part of the Dealer Recovery Trust Fund and its purpose. The sole beneficiaries of the Dealer Recovery Trust Fund are victims of
dealership closings. (c) Except where the context otherwise requires, the following words and phrases, when used in this Section, have the meanings ascribed to them in this subsection (c): "Applicant" means a person who applies for reimbursement from the Dealer Recovery Trust Fund Board. "Board" means the Dealer Recovery Trust Fund Board created under this Section. "Dealer" means a new vehicle dealer licensed under Section 5-101, a used vehicle dealer licensed under Section 5-102, or a Buy Here, Pay Here used vehicle dealer licensed under 5-102.8, excepting a dealer who primarily sells mobile homes, recreational vehicles, or trailers. "Fund" means the Dealer Recovery Trust Fund created under this Section. "Fund Administrator" means the private entity, which shall be appointed by the Board, that administers the Dealer Recovery Trust Fund. (d) Beginning October 1, 2011, each application or renewal for a new vehicle dealer's license and each application or renewal for a Buy Here, Pay Here used vehicle dealer licensed under 5-102.8 or a used vehicle dealer's license shall be accompanied by the applicable Annual Dealer Recovery Fund Fee under Section 5-101 or 5-102 of this Code. The fee shall be in addition to any other fees imposed under this Article, shall be submitted at the same time an application or renewal for a new vehicle dealer's license, used vehicle dealer's license, or Buy Here, Pay Here used vehicle dealer is submitted, and shall be made payable to and remitted directly to the Dealer Recovery Trust Fund, a trust fund outside of the State Treasury which is hereby created. In addition, the Dealer Recovery Trust Fund may accept any federal, State, or private moneys for deposit into the Fund. (e) The Fund Administrator shall maintain a list of all dealers who have paid the fee under subsection (d) of this Section for the current year, which shall be available to the Secretary of State and the Board. The Secretary of State shall revoke the dealer license of any dealer who does not pay the fee imposed under subsection (d) of this Section. The Secretary of State and the Fund Administrator may enter into information sharing agreements as needed to implement this Section. (f) The Fund shall be audited annually by an independent auditor who is a certified public accountant and who has been selected by the Board. The independent auditor shall compile an annual report, which shall be filed with the Board and shall be a public record. The auditor shall be paid by the Fund, pursuant to an order of the Board. (g) The Fund shall be maintained by the Fund Administrator, who shall keep current records of the amounts deposited into the Fund and the amounts paid out of the Fund pursuant to an order of the Board. These records shall be made available to all members of the Board upon reasonable request during normal business hours. The Fund Administrator shall report the balance in the Fund to the Board monthly, by the 15th day of each month. For purposes of determining the amount available to pay claims under this Section at any meeting of the Board, the Board shall use the Fund Administrator's most recent monthly report. The Fund Administrator shall purchase liability insurance to cover management of the Fund at a cost not to exceed 2% of the balance in the Fund as of January 15th of that year. (h) In any year for which the balance in the Fund as of August 31st is greater than $3,500,000, the Fund Administrator shall notify the Secretary of State and the Secretary of State shall suspend collection of the fee for the following year for any dealer who has not had a claim paid from the Fund, has not had his or her license suspended or revoked, and has not been assessed any civil penalties under this Code during the 3 previous years. (i) Moneys in the Dealer Recovery Trust Fund may be paid from the Fund only as directed by a written order of the Board and used only for the following purposes: (i) to pay claims under a written order of the Board |
| as provided in this Section; or
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(ii) to reimburse the Fund Administrator for its
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| expenses related to the administration of the Fund, provided that the reimbursement to the Fund Administrator in any year shall not exceed 2% of the balance in the Fund as of January 15th of that year.
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(j) The Dealer Recovery Trust Fund Board is hereby created. The Board shall consist of the Secretary of State, or his or her designee, who shall serve as chair, the Attorney General, or his or her designee, who shall serve as secretary, and one person alternatively representing new and independent Illinois automobile dealers, selected collectively by the Attorney General, or his or her designee, and the Secretary of State, or his or her designee. The Secretary of State may propose procedures and employ personnel as necessary to implement this Section. The Board shall meet quarterly, and as needed, as directed by the chair. The Board may not pay out any claims before the balance deposited into the Fund exceeds $500,000. Board meetings shall be open to the public. The Board has the authority to take any action by at least a two-thirds majority vote.
(k) The following persons may apply to the Board for reimbursement from the Dealer Recovery Trust Fund:
(i) A retail customer who, on or after October 1,
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| 2011, purchases a vehicle from a dealer who subsequently files for bankruptcy or whose vehicle dealer's license is subsequently revoked by the Secretary of State or otherwise terminated and, as part of the purchase transaction, trades in a vehicle with an outstanding lien to the dealer if lien satisfaction was a condition of the purchase agreement and the retail customer determines that the lien has not been satisfied;
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(ii) A retail customer who, on or after October 1,
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| 2011, purchases a vehicle with an undisclosed lien from a dealer who subsequently files for bankruptcy or whose vehicle dealer's license is subsequently revoked by the Secretary of State or otherwise terminated;
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(iii) A dealer who, on or after October 1, 2011,
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| purchases a vehicle with an undisclosed lien from another dealer who subsequently files for bankruptcy or whose vehicle dealer's license is subsequently revoked by the Secretary of State or otherwise terminated.
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(l) To be considered by the Board, an applicant must submit his or her claim to the Board within 2 years after the date of the transaction that gave rise to the claim.
(m) At each meeting of the Board, it shall consider all claims that are properly submitted to it on forms prescribed by the Secretary of State at least 30 days before the date of the Board's meeting. Before the Board may consider a claim against a dealer, it must make a written determination that the dealer has filed for bankruptcy under the provisions of 11 U.S.C. Chapter 7; that the Secretary of State has revoked his or her dealer's license; or that the license has been otherwise terminated. Once the Board has made this determination, it may consider the applicant's claim against the dealer. If a two-thirds majority of the Board determines that the dealer has committed a violation under subsection (k), it shall grant the applicant's claim. Except as otherwise provided in this Section, the maximum amount of any award for a claim under paragraph (i) of subsection (k) of this Section shall be equal to the amount of the unpaid balance of the lien that the dealer agreed to pay off on behalf of the applicant as shown on the bill of sale or the retail installment sales contract. The maximum amount of any claim under paragraph (ii) or (iii) of subsection (k) of this Section shall be equal to the amount of the undisclosed lien. However, no award for a claim under subsection (k) of this Section shall exceed $35,000.
(n) If the balance in the Fund at the time of any Board meeting is less than the amount of the total amount of all claims awarded at that meeting, then all awards made at that meeting shall be reduced, pro rata, so that the amount of claims does not exceed the balance in the Fund. Before it reviews new claims, the Board shall issue written orders to pay the remaining portion of any claims that were so reduced, provided that the balance in the Fund is sufficient to pay those claims.
(o) Whenever the balance of the Fund falls below $500,000, the Board may charge dealers
an additional assessment of up to $50 to bring the balance to at least $500,000.
Not more than one additional assessment may be made against a dealer in any 12-month period.
(p) If the total amount of claims awarded against any dealer exceeds 33% of the balance in the Fund, the Board may permanently reduce the amount of those claims, pro rata, so that those claims do not exceed 33% of the balance in the Fund.
(q) The Board shall issue a written order directing the Fund Administrator to pay an applicant's claim to a secured party where the Board has received a signed agreement between the applicant and the secured party holding the lien. The agreement must (i) state that the applicant and the secured party agree to accept payment from the Fund to the secured party as settlement in full of all claims against the dealer; and (ii) release the lien and the title, if applicable, to the vehicle that was the subject of the claim. The written order shall state the amount of the claim and the name and address of the secured party to whom the claim shall be paid. The Fund Administrator shall pay the claim within 30 days after it receives the Board's order.
(r) No dealer or principal associated with a dealer's license is eligible for licensure, renewal or relicensure until the full amount of reimbursement for an unpaid claim, plus interest as determined by the Board, is paid to the Fund. Nothing in this Section shall limit the authority of the Secretary of State to suspend, revoke, or levy civil penalties against a dealer, nor shall full repayment of the amount owed to the Fund nullify or modify the effect of any action by the Secretary.
(s) Nothing in this Section shall limit the right of any person to seek relief though civil action against any other person as an alternative to seeking reimbursement from the Fund.
(Source: P.A. 101-505, eff. 1-1-20 .)
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(625 ILCS 5/5-102.8) Sec. 5-102.8. Licensure of Buy Here, Pay Here used vehicle dealers. (a) As used in this Section, "Buy Here, Pay Here used vehicle dealer" means any entity that engages in the business of selling or leasing of vehicles and finances the sale or purchase price of the vehicle to a customer without the customer using a third-party lender. (b) No person shall engage in
the business of selling or dealing in, on consignment or otherwise, 5 or
more used vehicles of any make during the year (except rebuilt salvage vehicles
sold by their rebuilders to persons licensed under this Chapter), or act as
an intermediary, agent, or broker for any licensed dealer or vehicle
purchaser (other than as a salesperson) or represent or advertise that he or she
is so engaged or intends to so engage in such business of a Buy Here, Pay Here used vehicle dealer unless licensed to
do so by the Secretary of State under the provisions of this Section.
(c) An application for a Buy Here, Pay Here used vehicle dealer's license shall be
filed with the Secretary of State, duly verified by oath, in such form
as the Secretary of State may by rule or regulation prescribe and shall
contain:
(1) The name and type of business organization |
| established and additional places of business, if any, in this State.
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(2) If the applicant is a corporation, a list of its
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| officers, directors, and shareholders having a 10% or greater ownership interest in the corporation, setting forth the residence address of each; if the applicant is a sole proprietorship, a partnership, an unincorporated association, a trust, or any similar form of business organization, the names and residence address of the proprietor or of each partner, member, officer, director, trustee, or manager.
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(3) A statement that the applicant has been approved
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| for registration under the Retailers' Occupation Tax Act by the Department of Revenue. However, this requirement does not apply to a dealer who is already licensed hereunder with the Secretary of State, and who is merely applying for a renewal of his or her license. As evidence of this fact, the application shall be accompanied by a certification from the Department of Revenue showing that the Department has approved the applicant for registration under the Retailers' Occupation Tax Act.
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(4) A statement that the applicant has complied with
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| the appropriate liability insurance requirement. A Certificate of Insurance in a solvent company authorized to do business in the State of Illinois shall be included with each application covering each location at which he or she proposes to act as a Buy Here, Pay Here used vehicle dealer. The policy must provide liability coverage in the minimum amounts of $100,000 for bodily injury to, or death of, any person, $300,000 for bodily injury to, or death of, 2 or more persons in any one crash, and $50,000 for damage to property. Such policy shall expire not sooner than December 31 of the year for which the license was issued or renewed. The expiration of the insurance policy shall not terminate the liability under the policy arising during the period for which the policy was filed.
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If the permitted user has a liability insurance
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| policy that provides automobile liability insurance coverage of at least $100,000 for bodily injury to or the death of any person, $300,000 for bodily injury to or the death of any 2 or more persons in any one crash, and $50,000 for damage to property, then the permitted user's insurer shall be the primary insurer and the dealer's insurer shall be the secondary insurer. If the permitted user does not have a liability insurance policy that provides automobile liability insurance coverage of at least $100,000 for bodily injury to or the death of any person, $300,000 for bodily injury to or the death of any 2 or more persons in any one crash, and $50,000 for damage to property, or does not have any insurance at all, then the dealer's insurer shall be the primary insurer and the permitted user's insurer shall be the secondary insurer.
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When a permitted user is "test driving" a Buy Here,
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| Pay Here used vehicle dealer's automobile, the Buy Here, Pay Here used vehicle dealer's insurance shall be primary and the permitted user's insurance shall be secondary.
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As used in this paragraph, "permitted user" means a
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| person who, with the permission of the Buy Here, Pay Here used vehicle dealer or an employee of the Buy Here, Pay Here used vehicle dealer, drives a vehicle owned and held for sale or lease by the Buy Here, Pay Here used vehicle dealer that the person is considering to purchase or lease, in order to evaluate the performance, reliability, or condition of the vehicle. "Permitted user" includes a person who, with the permission of the Buy Here, Pay Here used vehicle dealer, drives a vehicle owned or held for sale or lease by the Buy Here, Pay Here used vehicle dealer for loaner purposes while the user's vehicle is being repaired or evaluated.
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As used in this paragraph, "test driving" occurs when
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| a permitted user who, with the permission of the Buy Here, Pay Here used vehicle dealer or an employee of the Buy Here, Pay Here used vehicle dealer, drives a vehicle owned and held for sale or lease by a Buy Here, Pay Here used vehicle dealer that the person is considering to purchase or lease, in order to evaluate the performance, reliability, or condition of the vehicle.
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As used in this paragraph, "loaner purposes" means
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| when a person who, with the permission of the Buy Here, Pay Here used vehicle dealer, drives a vehicle owned or held for sale or lease by the used vehicle dealer while the user's vehicle is being repaired or evaluated.
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(5) An application for a Buy Here, Pay Here used
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| vehicle dealer's license shall be accompanied by the following license fees:
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(A) $1,000 for the applicant's established place
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| of business, and $50 for each additional place of business, if any, to which the application pertains; however, if the application is made after June 15 of any year, the license fee shall be $500 for the applicant's established place of business plus $25 for each additional place of business, if any, to which the application pertains. License fees shall be returnable only if the application is denied by the Secretary of State. Of the money received by the Secretary of State as license fees under this subparagraph, 95% shall be deposited into the General Revenue Fund.
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(B) Except for dealers selling 25 or fewer
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| automobiles or as provided in subsection (h) of Section 5-102.7 of this Code, an Annual Dealer Recovery Fund Fee in the amount of $500 for the applicant's established place of business, and $50 for each additional place of business, if any, to which the application pertains; but if the application is made after June 15 of any year, the fee shall be $250 for the applicant's established place of business plus $25 for each additional place of business, if any, to which the application pertains. For a license renewal application, the fee shall be based on the amount of automobiles sold in the past year according to the following formula:
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(1) $0 for dealers selling 25 or less
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(2) $150 for dealers selling more than 25 but
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| less than 200 automobiles;
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(3) $300 for dealers selling 200 or more
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| automobiles but less than 300 automobiles; and
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(4) $500 for dealers selling 300 or more
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Fees shall be returnable only if the application
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| is denied by the Secretary of State. Money received under this subparagraph shall be deposited into the Dealer Recovery Trust Fund. A Buy Here, Pay Here used vehicle dealer shall pay into the Dealer Recovery Trust Fund for every vehicle that is financed, sold, or otherwise transferred to an individual or entity other than the Buy Here, Pay Here used vehicle dealer even if the individual or entity to which the Buy Here, Pay Here used vehicle dealer transfers the vehicle is unable to continue to adhere to the terms of the transaction by the Buy Here, Pay Here used vehicle dealer.
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(6) A statement that each officer, director,
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| shareholder having a 10% or greater ownership interest therein, proprietor, partner, member, officer, director, trustee, manager, or other principal in the business of the applicant has not committed in the past 3 years any one violation as determined in any civil, criminal, or administrative proceedings of any one of the following:
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(A) the Anti-Theft Laws of this Code;
(B) the Certificate of Title Laws of this Code;
(C) the Offenses against Registration and
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| Certificates of Title Laws of this Code;
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(D) the Dealers, Transporters, Wreckers and
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| Rebuilders Laws of this Code;
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(E) Section 21-2 of the Illinois Criminal Code of
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| 1961 or the Criminal Code of 2012, Criminal Trespass to Vehicles; or
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(F) the Retailers' Occupation Tax Act.
(7) A statement that each officer, director,
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| shareholder having a 10% or greater ownership interest therein, proprietor, partner, member, officer, director, trustee, manager, or other principal in the business of the applicant has not committed in any calendar year 3 or more violations, as determined in any civil, criminal, or administrative proceedings, of any one or more of the following:
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(A) the Consumer Finance Act;
(B) the Consumer Installment Loan Act;
(C) the Retail Installment Sales Act;
(D) the Motor Vehicle Retail Installment Sales
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(E) the Interest Act;
(F) the Illinois Wage Assignment Act;
(G) Part 8 of Article XII of the Code of Civil
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(H) the Consumer Fraud and Deceptive Business
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(8) A statement that, within 10 years of application,
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| each officer, director, shareholder having a 10% or greater ownership interest therein, proprietor, partner, member, officer, director, trustee, manager, or other principal in the business of the applicant has not committed, as determined in any civil, criminal, or administrative proceeding, in any calendar year one or more forcible felonies under the Criminal Code of 1961 or the Criminal Code of 2012, or a violation of either or both Article 16 or 17 of the Criminal Code of 1961, or a violation of either or both Article 16 or 17 of the Criminal Code of 2012, Article 29B of the Criminal Code of 1961 or the Criminal Code of 2012, or a similar out-of-state offense. For the purposes of this paragraph, "forcible felony" has the meaning provided in Section 2-8 of the Criminal Code of 2012.
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(9) A bond or Certificate of Deposit in the amount of
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| $50,000 for each location at which the applicant intends to act as a Buy Here, Pay Here used vehicle dealer. The bond shall be for the term of the license. The bond shall run to the People of the State of Illinois, with surety by a bonding or insurance company authorized to do business in this State. It shall be conditioned upon the proper transmittal of all title and registration fees and taxes (excluding taxes under the Retailers' Occupation Tax Act) accepted by the applicant as a Buy Here, Pay Here used vehicle dealer.
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(10) Such other information concerning the business
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| of the applicant as the Secretary of State may by rule prescribe.
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(11) A statement that the applicant understands
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| Chapter 1 through Chapter 5 of this Code.
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(12) A copy of the certification from the
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| prelicensing education program.
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(13) The full name, address, and contact information
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| of each of the dealer's agents or legal representatives who is an Illinois resident and liable for the performance of the dealership.
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(d) Any change that renders no longer accurate any information
contained in any application for a Buy Here, Pay Here used vehicle dealer's license shall
be amended within 30 days after the occurrence of each change on such
form as the Secretary of State may prescribe by rule,
accompanied by an amendatory fee of $2.
(e) Anything in this Chapter to the contrary notwithstanding, no
person shall be licensed as a Buy Here, Pay Here used vehicle dealer unless the person
maintains an established place of business as
defined in this Chapter.
(f) The Secretary of State shall, within a reasonable time after
receipt, examine an application submitted under this Section.
Unless the Secretary makes a determination that the application does not conform to this Section or that grounds exist
for a denial of the application under Section 5-501 of this Chapter, the Secretary
must grant the applicant an original Buy Here, Pay Here used vehicle dealer's license in
writing for his or her established place of business and a supplemental license
in writing for each additional place of business in such form as the Secretary may
prescribe by rule that shall include the following:
(1) The name of the person licensed.
(2) If a corporation, the name and address of its
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| officers or if a sole proprietorship, a partnership, an unincorporated association, or any similar form of business organization, the name and address of the proprietor or of each partner, member, officer, director, trustee, or manager.
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(3) In the case of an original license, the
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| established place of business of the licensee.
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(4) In the case of a supplemental license, the
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| established place of business of the licensee and the additional place of business to which the supplemental license pertains.
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(5) The full name, address, and contact information
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| of each of the dealer's agents or legal representatives who is an Illinois resident and liable for the performance of the dealership.
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(g) The appropriate instrument evidencing the license or a certified
copy thereof, provided by the Secretary of State shall be kept posted,
conspicuously, in the established place of business of the licensee and
in each additional place of business, if any, maintained by the
licensee.
(h) Except as provided in subsection (i), all Buy Here, Pay Here used
vehicle dealer's licenses granted under this Section expire by operation
of law on December 31 of the calendar year for which they are granted
unless sooner revoked or cancelled under Section 5-501 of this Chapter.
(i) A Buy Here, Pay Here used vehicle dealer's license may be renewed upon application
and payment of the fee required herein, and submission of proof of
coverage by an approved bond under the Retailers' Occupation Tax Act
or proof that the applicant is not subject to such bonding requirements, as
in the case of an original license, but in the case of an application for the
renewal of an effective license made during the month of December,
the effective license shall remain in force until the application for
renewal is granted or denied by the Secretary of State.
(j) Each person licensed as a Buy Here, Pay Here used vehicle dealer is required to
furnish each purchaser of a motor vehicle:
(1) a certificate of title properly assigned to the
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(2) a statement verified under oath that all
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| identifying numbers on the vehicle agree with those on the certificate of title;
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(3) a bill of sale properly executed on behalf of the
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(4) a copy of the Uniform Invoice-transaction
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| reporting return referred to in Section 5-402;
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(5) in the case of a rebuilt vehicle, a copy of the
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| Disclosure of Rebuilt Vehicle Status; and
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(6) in the case of a vehicle for which the warranty
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| has been reinstated, a copy of the warranty.
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(k) Except at the time of sale or repossession of the vehicle, no
person licensed as a Buy Here, Pay Here used vehicle dealer may issue any other person a newly
created key to a vehicle unless the Buy Here, Pay Here used vehicle dealer makes a color photocopy or electronic scan of the
driver's license or State identification card of the person requesting or
obtaining the newly created key. The Buy Here, Pay Here used vehicle dealer must retain the photocopy or scan
for 30 days.
A Buy Here, Pay Here used vehicle dealer who violates this subsection (k) is guilty of a
petty offense. Violation of this subsection (k) is not cause to suspend,
revoke, cancel, or deny renewal of the used vehicle dealer's license.
(l) A Buy Here, Pay Here used vehicle dealer licensed under this Section shall provide the Secretary of State a register for the sale at auction of each salvage or junk certificate vehicle. Each register shall include the following information:
(1) the year, make, model, style, and color of the
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(2) the vehicle's manufacturer's identification
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| number or, if applicable, the Secretary of State or Illinois Department of State Police identification number;
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(3) the date of acquisition of the vehicle;
(4) the name and address of the person from whom the
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(5) the name and address of the person to whom any
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| vehicle was disposed, the person's Illinois license number or, if the person is an out-of-state salvage vehicle buyer, the license number from the state or jurisdiction where the buyer is licensed; and
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(6) the purchase price of the vehicle.
The register shall be submitted to the Secretary of State via written or electronic means within 10 calendar days from the date of the auction.
(m) If a licensee under this Section voluntarily surrenders a license to the Illinois Secretary of State Police or a representative of the Secretary of State Vehicle Services Department due to the licensee's inability to adhere to recordkeeping provisions, or the inability to properly issue certificates of title or registrations under this Code, or the Secretary revokes a license under this Section, then the licensee and the licensee's agent, designee, or legal representative, if applicable, may not be named on a new application for a licensee under this Section or under this Chapter, nor is the licensee or the licensee's agent, designee, or legal representative permitted to work for another licensee under this Chapter in a recordkeeping, management, or financial position or as an employee who handles certificate of title and registration documents and applications.
(Source: P.A. 101-505, eff. 1-1-20; 102-154, eff. 1-1-22; 102-982, eff. 7-1-23 .)
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