CIADA JULY 1999 NEWSLETTER
1200 WADSWORTH BLVD.
LAKEWOOD, CO 80215
PHONE: 303-239-8000 / 1-800-569-1899
FAX: 303-237-3305
E-MAIL: CIADAEXEC@aol.com
COLORADO INDEPENDENT AUTOMOBILE DEALERS ASSOCIATION NEWSLETTER July 1999 --------------------------------------------------------------------------------
1200 Wadsworth Blvd., Lakewood, CO 80215 - 303-239-8000 / Fax 303-237-3305 / [ www.ciada.org ]
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DEPOSITS ON DEALS
A number of calls come into the association office each month asking about customer deposits. These calls fall into three basic categories:
First, a deposit that is meant to hold a car until a customer can obtain their own financing or get approval from another person. When you accept such a deposit, there should be an agreement in writing between both the buyer and the seller that says whether the deposit is refundable or not. When the deposit is merely a method of holding a price on a car, that information should be noted on a buyers order. Be sure the customer knows that the vehicle is still for sale and may be sold to another buyer if they are not prompt in accepting the agreed upon price and executing their option to buy. The agreement should clearly state whether or not the deposit, or any portion thereof, is refundable. The conditions of the refund should be apparent to both parties. Without a written agreement that spells out terms and conditions regarding a refund, the deposit may not be retained by the dealer. Secondly, a deposit is made by a customer, who signs all pertinent documentation to compete the car deal and takes delivery of the vehicle. Subsequently a problem arises and the deal falls apart. In this case there are two pieces of paper that should be consulted. The "Required Disclosure" indicates whether the agreement is a cash or a finance deal. In both cases, if the vehicle is delivered prior to the purchase price being paid in full, paragraph "E" spells out information that must be referred to regarding the customer deposit and how it is to be handled. The other document that should be considered is the "Buyers Order." Most "Buyers Orders" contain information concerning a customer deposit and how and when it is refundable. If you read these documents throughly, you should know how the deposit should be handled.
The third type of deposit dealers come into contact with is the deposit where there is no paper work what-so-ever and the customer is only given a receipt for their deposit. Whenever this happens, the receipt should spell out whether or not the deposit is refundable. If there is no notation as such, the dealer should not retain any portion of the deposit. It should be refunded to the buyer without hesitation.
Now, this person could have very well been trying to get the rest of the money and was unable to. Or he could have been trying to sell his car. Either way, the deposit is refundable unless stated otherwise or there is some consideration exchanged.
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