A BILL TO BE ENTITLED
AN ACT to make multiple changes to motor vehicle laws.
The General Assembly of North Carolina enacts:

REVISE VEHICLE DEALER LICENSING LAWS
SECTION 1.1.  G.S. 20‑287 reads as rewritten:
"§ 20‑287.  Licenses required; penalties.
(a)	License Required. – It shall be unlawful for any new motor vehicle dealer, used motor vehicle dealer, motor vehicle sales representative, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler to engage in business in this State without first obtaining a license as provided in this Article. If any motor vehicle dealer acts as a motor vehicle sales representative, the dealer shall obtain a motor vehicle sales representative's license in addition to a motor vehicle dealer's license. The sales representative license shall show the name of each dealer or wholesaler employing the sales representative. An individual who has submitted an application to the Division for a sales representative license pursuant to G.S. 20‑288(a) may engage in activities as a sales representative while the application is pending under the following conditions: (i) the sales representative applicant is  actively and directly supervised by a licensed motor vehicle dealer or a licensed sales representative designated by the dealer, (ii) the applicant certifies in the application that the applicant has not been previously denied a sales representative license for any dealer by the Division, and (iii) the applicant has not been previously convicted of a felony. Any license issued by the Division to a motor vehicle dealer, manufacturer, factory branch, factory representative, distributor, distributor branch, distributor representative, or wholesaler under this Article may not be assigned, sold, or otherwise transferred to any other person or entity.
(b)	Civil Penalty for Violations by Licensee. – In addition to any other punishment or remedy under the law for any violation of this section, the Division may levy and collect a civil penalty, in an amount not to exceed one thousand dollars ($1,000) for each violation, against any person who has obtained a license pursuant to this section, or is an applicant for a license under this section, if it finds that the person has violated any of the provisions of G.S. 20‑285 through G.S. 20‑303, Article 15 of this Chapter, or any statute or rule adopted by the Division relating to the sale of vehicles, vehicle titling, or vehicle registration. If the Division finds that a sales representative applicant has violated any of these provisions, the penalty shall be assessed against the applicant unless the Division finds that a dealership owner, manager, or officer had knowledge of the violation before the application was submitted to the Division.
(c)	Civil Penalty for Violations by Person Without a License. – In addition to any other punishment or remedy under the law for any violation of this section, the Division may levy and collect a civil penalty, in an amount not to exceed five thousand dollars ($5,000) for each violation, against any person who is required to obtain a license under this section and has not obtained the license, if it finds that the person has violated any of the provisions of G.S. 20‑285 through G.S. 20‑303, Article 15 of this Chapter, or any statute or rule adopted by the Division relating to the sale of vehicles, vehicle titling, or vehicle registration. It shall be an affirmative defense if the person subject to this penalty promptly applies and is issued the appropriate motor vehicle license. A person acting in a specific licensed activity must be issued the appropriate license for that activity. The investigative report of a violation must be considered in the issuance of any license."
SECTION 1.2.  G.S. 20‑294 reads as rewritten:
"§ 20‑294.  Grounds for denying, suspending, placing on probation, or revoking licenses.
In accordance with G.S. 20‑295 and G.S. 20‑296, the Division may deny, suspend, place on probation, or revoke a license issued under this Article for any one or more of the following grounds:
(1)	Knowingly making a material misstatement in an application for a license.
(2)	Willfully and intentionally failing to comply with this Article, Article 15 of this Chapter, or G.S. 20‑52.1, 20‑75, 20‑79.1, 20‑79.2, 20‑108, 20‑109, 20‑109.3, or a rule adopted by the Division under this Article. It shall be an affirmative defense, exclusive to the dealer licensee, if the violation is a result of fraud, theft, or embezzlement against the licensee. Responsible persons, including officers, directors, and sales representative licensees, shall be charged individually. This affirmative defense is waived if any violation charged creates an unrecoverable loss for a citizen or another licensed motor vehicle dealer of this State.
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(4)	Willfully defrauding any retail or wholesale buyer, to the buyer's damage, or any other person in the conduct of the licensee's business.
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(6)	Using unfair methods of competition or unfair or deceptive acts or practices that cause actual damages to the buyer.
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(9)	Being convicted of an offense set forth under G.S. 20‑106, 20‑106.1, 20‑107, or 20‑112 while holding such a license or within five years next preceding the date of filing the application; or being convicted of a felony involving moral turpitude under the laws of this State, another state, or the United States. It shall be an affirmative defense, and will operate as a stay of this violation, if the person charged is determined to qualify and obtains expunction, certificate of relief, or pardon, or, if the violative conviction is vacated. If relief is granted, this violation is dismissed. If relief is denied, the stay is lifted.
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(11)	Knowingly giving an incorrect certificate of title, or failing to give a certificate of title to a purchaser, a lienholder, or the Division, as appropriate, after a vehicle is sold. It shall be an affirmative defense, exclusive to the dealer licensee, if it is found the violation is a result of fraud, theft, or embezzlement against the licensee. Officers, directors, members, and sales representative licensees shall be charged individually. This affirmative defense is waived if any violation charged creates an unrecoverable loss for a citizen or another licensed motor vehicle dealer of this State.
(12)	Knowingly making a material misstatement in an application for a dealer license plate.
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SECTION 1.3.  G.S. 20‑299 reads as rewritten:
"§ 20‑299.  Acts of officers, directors, partners, salesmen and other representatives.
(a)	The Division may deny, suspend, place on probation, or revoke a license issued to a corporation, limited liability company, limited liability partnership, or any other business entity that is a licensee under this Article if more than fifty percent (50%) of the business entity ownership engaged in conduct prohibited by G.S. 20‑294. A license issued to a business entity under this Article may also be revoked if any damages suffered due to a violation of this Article are not satisfied, including damages caused by a sales representative while acting as an agent of the business entity. An owner of a business entity that did not engage personally in a violation of G.S. 20‑294 and did not knowingly omit any duty may not be penalized for the acts of a business entity found to have violated this section.
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TRANSFER VEHICLE DEALER LICENSE HEARINGS FROM DMV TO OAH
SECTION 2.1.  G.S. 150B‑1(e)(8) reads as rewritten:
"(8)	The Department of Transportation, except as provided in G.S. 20‑295, 20‑296, and 136‑29."
SECTION 2.2.  G.S. 20‑295(a) reads as rewritten:
"§ 20‑295.  Action on application; grace period while application for license renewal is pending.
(a)	Division Action. – The Division shall either grant or deny an application for a license or license renewal within 30 days after receiving it. No later than 30 days after the Division denies an application, an applicant may petition for a hearing with the Office of Administrative Hearings pursuant to Article 3 of Chapter 150B of the General Statutes."
SECTION 2.3.  G.S. 20‑296 reads as rewritten:
"§ 20‑296.  Notice and hearing upon license suspension, revocation, or placing on probation.
No license shall be suspended, revoked, or placed on probation by the Division until the Division has notified the licensee by certified mail of the proposed action and the Division and the licensee have participated in informal settlement procedures under G.S. 150B‑22(a). If the Division and the licensee are unable to agree to a resolution, the Division may commence a contested case under Article 3 of Chapter 150B of the General Statutes for the suspension, revocation, or placing on probation of the license."

LENDERS MAY OBTAIN COLOR IMAGE OF BORROWER'S DRIVERS LICENSE
SECTION 3.  G.S. 20‑30(6) reads as rewritten:
"(6)	To make a color photocopy or otherwise make a color reproduction of a drivers license, learner's permit, or special identification card which has been color‑photocopied or otherwise reproduced in color, unless such color photocopy or other color reproduction was authorized by the Commissioner or is made to comply with G.S. 163‑230.2. It shall be lawful to make a black and white photocopy of a drivers license, learner's permit, or special identification card or otherwise make a black and white reproduction of a drivers license, learner's permit, or special identification card. This subdivision does not apply to a lender that is licensed or otherwise authorized to engage in the lending business in this State from creating, storing, or receiving, in the ordinary course of business, a color image of a drivers license, learners permit, or special identification card of a borrower or loan applicant."

MANDATORY REPLACEMENT OF DEALER PLATES
SECTION 4.  G.S. 20‑79 is amended by adding a new subsection to read:
"(c1)	Dealer Plate Mandatory Replacement. – Notwithstanding G.S. 20‑63.1, registration plates issued under this section shall be replaced every three years."

PRINT LICENSE RENEWAL GRACE PERIOD ON DEALER'S BLUE LICENSE
SECTION 5.  G.S. 20‑295(b) reads as rewritten:
"(b)	Pending License Renewal Grace Period. – When an application for license renewal has been timely submitted prior to expiration of the license, the license shall remain valid for up to 30 days after the expiration date until the Division grants or denies the application. The Division shall (i) ensure that any database maintained by the Division that indicates the status of a license issued under this Article reflects that the license continues to be valid during this period and (ii) send a temporary license to the applicant for display while the Division reviews the application."

SAFETY INSPECTIONS AND EMISSIONS
SECTION 6.1.  G.S. 20‑183.7A(d1) reads as rewritten:
"(d1)	Multiple Violations in Separate Safety Inspections. – In the case of two or more violations committed in separate safety inspections, considered at one time, the Division shall consider each violation as a separate occurrence and shall impose a separate penalty for each violation as a first, second, or third or subsequent violation as found in the applicable penalty schedule. The Division may in its discretion direct that any suspensions for the first, second, or third or subsequent violations run concurrently. If the Division does not direct that the suspensions run concurrently, they shall run consecutively. Nothing in this section shall prohibit or limit the ability of a reviewing administrative law judge or court to affirm, reverse, remand, or modify the Division's decisions involving penalties, suspensions, or revocations, whether discretionary or otherwise, pursuant to Article 3 and Article 4 of Chapter 150B of the General Statutes."
SECTION 6.2.  G.S. 20‑183.8B(c2) reads as rewritten:
"(c2)	Multiple Violations in Separate Emissions Inspections. – In the case of two or more violations committed in separate emissions inspections, considered at one time, the Division shall consider each violation as a separate occurrence and shall impose a separate penalty for each violation as a first, second, or third or subsequent violation as found in the applicable penalty schedule. The Division may in its discretion direct that any suspensions for the first, second, or third or subsequent violations run concurrently. If the Division does not direct that the suspensions run concurrently, they shall run consecutively. Nothing in this section shall prohibit or limit the ability of a reviewing administrative law judge or court to affirm, reverse, remand, or modify the Division's decisions involving penalties, suspensions, or revocations, whether discretionary or otherwise, pursuant to Article 3 and Article 4 of Chapter 150B of the General Statutes."
SECTION 6.3.  G.S. 20‑183.8G reads as rewritten:
"§ 20‑183.8G.  Administrative and judicial review.
(a)	Right to Hearing. – A person who applies for a license or registration under this Part or who has a license or registration issued under this Part has the right to commence a contested case under Article 3 of Chapter 150B of the General Statutes when any of the following occurs:
(1)	The Division denies the person's application for a license or registration.
(2)	The Division delivers to the person a written statement of charges of a violation that could result in the suspension or revocation of the person's license.
(3)	The Division summarily suspends or revokes the person's license following review and authorization of the proposed adverse action by a judge.
(4)	The Division assesses a civil penalty against the person.
(5)	The Division issues a warning letter to the person.
(6)	The Division cancels the person's registration.
(b)	Hearing After Statement of Charges. – When a license holder receives a statement of charges of a violation that could result in the suspension or revocation of the person's license, the person may, within 10 days after receiving the statement of charges, commence a contested case under Article 3 of Chapter 150B of the General Statutes. Suspension or revocation of the license is stayed until a final decision is made by an administrative law judge.
The Division must hold a hearing requested under this subsection within 30 days after receiving the request, unless the matter is continued for good cause. The hearing must be held at the location designated by the Division. Suspension or revocation of the license is stayed until a decision is made following the hearing.
If a person does not commence an administrative proceeding within the time allowed for making the request, the proposed suspension or revocation becomes effective the day after the time for making the request ends. If a person requests a hearing but does not attend the hearing, the proposed suspension or revocation becomes effective the day after the date set for the hearing.
(c)	Hearing After Summary Action. – When the Division summarily suspends a license issued under this Part after judicial review and authorization of the proposed action, the person whose license is suspended or revoked may, within 10 days after receiving notice of the summary action, commence a contested case under Article 3 of Chapter 150B of the General Statutes.
(d)	All Other Hearings. – When this section gives a person the right to commence a contested case under Article 3 of Chapter 150B of the General Statutes and subsection (b) or (c) of this section does not apply, the contested case must be commenced within 10 days after the person receives written notice of the action for which a hearing is requested.
	
(f)	Decision. – The administrative law judge may order a suspension for a first occurrence Type I violation of a station to be stayed upon reasonable compliance terms to be determined by the administrative law judge. The administrative law judge may order the suspensions against a license holder to run consecutively or concurrently. The administrative law judge may affirm, reverse, remand, or modify a Division decision after a contested case hearing on any other action. Notwithstanding G.S. 150B‑48, suspension or revocation of the license is automatically stayed for 30 days after the person is served with a written copy of the decision.
(g)	Judicial Review. – Article 4 of Chapter 150B of the General Statutes governs judicial review of an administrative decision made under this section."
SECTION 6.4.  G.S. 150B‑2(3) reads as rewritten:
"(3)	"License" means any certificate, permit or other evidence, by whatever name called, of a right or privilege to engage in any activity, including licenses issued under Article 3A and Article 12 of Chapter 20 of the General Statutes, but excluding all other licenses issued under Chapter 20 of the General Statutes, licenses issued under Subchapter I of Chapter 105 of the General Statutes, occupational licenses, and certifications of electronic poll books, ballot duplication systems, or voting systems under G.S. 163‑165.7."

MANUFACTURED HOMES
SECTION 7.1.  G.S. 20‑109.2 reads as rewritten:
"§ 20‑109.2.  Surrender of title to manufactured home.
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(d)	Application for Title After Cancellation. – If the owner of a manufactured home whose certificate of title has been cancelled under this section subsequently seeks to separate the manufactured home from the real property, the owner may apply for a new certificate of title. The owner must submit to the Division an affidavit containing the same information set out in subsection (b) of this section, verification that the manufactured home has been removed from the real property, verification of the identity of the current owner of the real property upon which the manufactured home was located, and written consent of any affected owners of recorded mortgages, deeds of trust, or security interests in the real property where the manufactured home was placed. Upon receipt of this information, together with a title application and required fee, the Division shall issue a new title for the manufactured home in the name of the current owner of the real property upon which the manufactured home was located.
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(f)	No Right of Action. – A person damaged by the cancellation of a certificate of title pursuant to subsection (a1) of this section does not have a right of action against the Division or a license plate contractor of the Division."
SECTION 7.2.  G.S. 20‑58.3A(g) reads as rewritten:
"(g)	The Division, or a license plate contractor of the Division, shall not be subject to a claim under Article 31 of Chapter 143 of the General Statutes related to the renewal of the perfection of a security interest or the failure to acknowledge or give effect to an expired perfection of a security interest on a certificate of title for a manufactured home pursuant to this section if the claim is based on reliance by the Division, or a license plate contractor of the Division, on any application for renewal submitted to the Division, or a license plate contractor of the Division, by a third party pursuant to this section or based on the automatic expiration of a perfection of a security interest pursuant to this section."
SECTION 7.3.  G.S. 20‑58.4 reads as rewritten:
"§ 20‑58.4.  Release of security interest.
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(c)	An owner, upon securing the release of any security interest in a vehicle shown upon the certificate of title issued therefor, may exhibit the documents evidencing such release, signed by the person or persons making such release, and the certificate of title to the Division, or a license plate contractor of the Division, which shall, when satisfied as to the genuineness of the release, issue to the owner either a new certificate of title in proper form or an endorsement or rider attached thereto showing the release of the security interest.
(d)	If an owner exhibits documents evidencing the release of a security interest as provided in subsection (c) of this section but is unable to furnish the certificate of title to the Division because it is in possession of a prior secured party, the Division, or a license plate contractor of the Division, when satisfied as to the genuineness and regularity of the release, shall procure the certificate of title from the person in possession thereof for the sole purpose of noting thereon the release of the subsequent security interest, following which the Division shall return the certificate of title to the person from whom it was obtained and notify the owner that the release has been noted on the certificate of title.
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(e2)	The Division may treat either of the methods employed by the owner pursuant to subsection (e) or subsection (e1) of this section as a proper release for purposes of this section when satisfied as to the genuineness, truth and sufficiency of the evidence. Before cancelling a security interest under this section, the Division, or a license plate contractor of the Division, shall send notice to the last known address of the secured party. If the secured party files an objection no later than 15 days after notice was sent, the Division shall not cancel the security interest until the secured party consents or receives an order issued by a court of competent jurisdiction that directs the Division to cancel the security interest.
(f)	The Division, or a license plate contractor of the Division, shall not be subject to a claim under Article 31 of Chapter 143 of the General Statutes related to the release of the perfection of a security interest on a certificate of title for a manufactured home pursuant to this section if the claim is based on reliance by the Division, or a license plate contractor of the Division, on any release, affidavit, notation of the certificate of title, or documents evidencing the release or satisfaction of a security interest submitted to the Division, or a license plate contractor of the Division, by a third party pursuant to this section."

REMOVE SUNSET ON NOTATIONS OF SECURITY INTERESTS MODIFICATIONS
SECTION 8.  Section 3(e) of S.L. 2020‑77 reads as rewritten:
"SECTION 3.(e)  This section is effective when it becomes law and applies to applications for notation of security interests submitted to the Division of Motor Vehicles on or after that date."

ELECTRONIC LIEN SYSTEM CONTRACTORS MUST HAVE EXPERIENCE IN ELECTRONIC LIENS
SECTION 9.  G.S. 20‑58.4A(d) reads as rewritten:
"(d)	Qualified vendors and service providers shall have experience in directly providing electronic lien and title solutions to State motor vehicle departments or agencies."

HIGHLIGHT IMPORTANCE OF VEHICLE DEALERS TO THE STATE
SECTION 10.  G.S. 20‑285 reads as rewritten:
"§ 20‑285.  Regulation of motor vehicle distribution in public interest.
The General Assembly finds and declares that the distribution and sale of motor vehicles in the State of North Carolina vitally affects and contributes to the general economy of the State and the public interest and welfare of its citizens. In order to protect and preserve the investments and properties of the citizens and licensed motor vehicle businesses of this State, the State must prevent fraud and other abuses upon the citizens and licensed motor vehicle businesses of this State by licensing and regulating manufacturers, distributors, wholesalers, dealers, and motor vehicle sales representatives."

EFFECTIVE DATE
SECTION 11.  Except as otherwise provided, this act becomes effective October 1, 2021.