STAND. COM. REP. NO. 1539

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 411
                                        H.D. 1
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred H.B. No. 411, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO MOTOR VEHICLES,"

begs leave to report as follows:

     The purpose of this measure is to require that dealers'
contracts for the sale or lease of new or used motor vehicles
specifically disclose whether the transaction is subject to a
three-day right of rescission.

     The Department of Commerce and Consumer Affairs and the
Hawaii Automobile Dealers' Association presented testimony in
support of the measure.  Insurance Auto Auctions and State Farm
Insurance Companies presented comments on the measure.  

     Your Committee finds that, based upon the numerous telephone
inquiries received by the State's Consumer Resource Center
regarding the possibility of rescinding a new car contract, there
is a common misconception among consumers that under the law
there is a three-day right of rescission for motor vehicle leases
or purchases.  This confusion is most likely caused by a
statement found in car sale credit applications referring to a
three-day right of rescission for door-to-door sales that is
inapplicable to most motor vehicle transactions.

     Your Committee finds that this measure would help consumers
to better understand their rights in motor vehicle transactions

 
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                                   STAND. COM. REP. NO. 1539
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by requiring that salespersons and dealers include as part of the
lease or sale contract a specific provision, acknowledged and
agreed to by the consumer, indicating whether or not the
transaction is subject to a three-day right of rescission.  The
failure to include this provision within a contract would
constitute a licensing law violation under section 437-28, Hawaii
Revised Statutes (HRS).

     Upon careful consideration of all the testimony, your
Committee has amended this measure by:

     (1)  Exempting motor vehicles sold at auction from the
          disclosure requirement; and 

     (2)  Adding a new section to chapter 437, HRS, that provides
          that new or used motor vehicle sales and lease
          contracts contingent upon financing, are void if the
          buyer is unable to qualify for financing. 

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 411, H.D. 1, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as H.B. No. 411, H.D. 1, S.D. 1, and be placed on the
calendar for Third Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Commerce and
                                   Consumer Protection,



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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