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New fund delays license renewals

September 16, 2011
Annual dealership license renewal notices, typically disseminated by the Illinois Secretary of State each September, have been delayed this year till early October for the office to adapt to a new law that raises the license fee.
The Dealer Recovery Trust Fund, which takes effect Oct. 1, adds $500 to the price of a 2012 dealer license. The proceeds will help consumers and dealers who are harmed by a dealer who goes out of business without settling the liens on his customers’ trade-ins.
Since the measure became law in August, secretary of state personnel have been busy assembling paperwork to educate dealers about the fund and how it is to be endowed. Dealers applying for a license now must prepare two checks—one payable to the secretary of state for $1,000, and one for $500 payable to the Dealer Recovery Trust Fund.
The fund will be administered by the Illinois Automobile Dealers Association, something sought by the CATA and the IADA to prevent the General Assembly from using any interest money to shore up the state budget.
Illinois counts about 900 licensed new-vehicle dealers, 2,800 used-car dealers and 770 motorcycle dealers, meaning the fund will collect more than $2.2 million in its first year. In any year when the fund balance on Aug. 31 is $3.5 million, collection of the fund would be suspended the following year for dealers who did not have a claim paid from the fund; or a suspended or revoked license; or have any civil penalties assessed against them during the previous three years.
Beginning Oct. 1, consumers and dealers can file a claim against the fund if they purchase a vehicle on or after that date from a dealer who goes out of business without satisfying a trade-in lien. A claim could not exceed $35,000.
A three-member Dealer Recovery Trust Board will oversee claims against the fund. Board members will come from the offices of the secretary of state and the attorney general, plus an alternating member from the ranks of new- and used-car dealers. Tim Mooney, the current IADA chairman and proprietor of Tim Mooney Ford in Tuscola, is projected to be the board’s first dealer member.
The board will hold its first quarterly meeting Oct. 3.