Although these are unprecedented times, the rules and regulations addressing how dealerships operate have not been suspended. Here is what dealerships need to know about operations during the COVID-19 pandemic.
IADA's government relations team is advocating on your behalf to have service and parts departments considered essential services in the event of an order to shelter in place or go on full lockdown.
Minimum Business Hours
We have petitioned the Department of Transportation to waive the minimum business hours requirement for dealerships during the COVID-19 crisis. This would allow dealerships to reduce hours or temporarily close without facing a dealer license violation.
It is problematic to conduct any part of a sales transaction in your customer's home. While there are ways to minimize your risks, it is clearly a violation to take a car that the dealership owns away from the licensed dealership location and engage in sales practices offsite. The risks are two-fold:
- It is a prohibited practice for any person to conduct sales away from the licensed dealership location. The consequences are steep. Dealers can lose their license after three violations, and it is a civil misdemeanor. Additionally, it is potentially a misdemeanor for the salesperson who conducts the sale. (Iowa Code Chapter 322.3 (11))
- Conducting sales away from the dealership also triggers the Door-to-Door Sales Act, which includes a three-day right to unwind the deal. If you trigger the Door-to-Door Sales Act, the deal can be unwound at the customer's option until three days after the delivery of the right to return notice. A real risk dealerships face if they engage in this sales method but forget to deliver the notice is that a customer could return the vehicle to the dealership and demand a full refund since they did not receive the proper notice.
We have discussed the possibility of an emergency waiver of the offsite sales statute in the event that the state of emergency is of long duration. We can petition the governor for an emergency waiver if this situation is of long duration.
Titling & Registration Issues
The governor's proclamation also temporarily eliminates the 30-day requirement for submitting titling and registration paperwork. This comes with a pitfall, however, since it does not rescind the bankruptcy code. Although your dealership will not be penalized if you submit the paperwork later than 30 days, the funding source is still going to require that there be a timely lien preservation. The lien is preserved when it is delivered to the county treasurer. Dealerships still need to get their title work done if they can in 30 days.
Unemployment Compensation Rules
County Treasurer Closings
We have heard from the DOT that at least a dozen county treasurer offices are closed to the public but still processing transactions. If you can't hand deliver title and registration applications you should utilize the United States Postal Service or an overnight courier to deliver titling and registration paperwork at this time.
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