Ordinance No. 75-98-13 v ORDINANCE NO. 75-98-13
• ANORDINANCE ORDIN NCE OF THE CITY OF ATLANTIC BEACH, FLORIDA,
ADDING A NEW ARTICLE IV TO CHAPTER 21, TRAFFIC AND MOTOR
VEHICLES, REGULATING THE MOTOR VEHICLE TITLE LOAN
INDUSTRY, AND PROVIDING AN EFFECTIVE DATE.
BE IT ENACTED BY THE CITY COMMISSION ON BEHALF OF THE PEOPLE
OF THE CITY OF ATLANTIC BEACH, FLORIDA:
WHEREAS, Section 538.17, Florida Statutes, permits political subdivisions of the State
of Florida to enact laws more restrictive than the provisions of Chapter 538, Part I, Florida
Statutes; and
WHEREAS, the City Commission of the City of Atlantic Beach finds that consumers
in Atlantic Beach are in need of greater consumer protection for motor vehicle title loan
transactions than are provided in Chapter 538, Part I, Florida Statutes,
BE IT ENACTED by the City Commission on behalf of the people of the City of
Atlantic Beach, Florida:
• SECTION 1. The Code of Ordinances of the City of Atlantic Beach, Florida, is hereby
amended by adding a new Article IV, MOTOR VEHICLE TITLE LOANS, to Chapter 21,
TRAFFIC AND MOTOR VEHICLES, which shall read as follows:
ARTICLE IV. MOTOR VEHICLE TITLE LOANS
Sec. 21-60 Definitions.
(a) Title loan agreement means a written agreement whereby a second-
hand dealer agrees to make a loan of a specific sum of money to the owner of a
motor vehicle, and the owner of the motor vehicle agrees to give the secondhand
dealer a security interest in a motor vehicle certificate of title owned by the
borrower and encumbered only by a title loan agreement.
(b) Secondhand dealer has the same meaning as used in §538.03(1)(a),
Florida Statutes, as it may be amended from time to time.
Sec. 21-61 Motor vehicle title loan transactions.
A secondhand dealer registered under Chapter 538, Part I, Florida
Statutes, may engage in motor vehicle title loan transactions, as that term is used
in Chapter 538, Part I, Florida Statutes, if the following conditions are met:
•
(a) The secondhand dealer maintains physical possession of the motor
• vehicle certificate of title; and
(b) The borrower maintains possession of, or control over, the motor
vehicle throughout the term of the loan; and
(c) The borrower is not required to pay rent or any other charge for
the use of the motor vehicle; and
(d) The secondhand dealer delivers to the borrower, at the time a loan
is made, a statement showing the loan amount, origination date, maturity date,
finance charges, a description of the security, the name and address of the
borrower and the secondhand dealer, the rate of interest expressed in terms of
annual percentage rate, the total number of payments required, and the total
amount required to be paid over the life of the loan. In the event the borrower
has a right to renew the loan, the secondhand dealer must deliver a statement with
the information required herein for each renewal; and
(e) The title loan agreement contains the following statements printed
in not less than 14 point type:
(1) Your vehicle has been pledged as security for this loan and
if you do not repay this loan in full, including the finance charge, YOU WILL
• LOSE YOUR VEHICLE.
(2) You are encouraged to repay this loan at the end of the 30
day period. The lender is not required to extend or renew your loan. It is
important that you plan your finances so that you can repay this loan as soon as
possible.
(3) THIS LOAN HAS A VERY HIGH INTEREST RATE. DO
NOT COMPLETE THIS LOAN TRANSACTION IF YOU HAVE THE
ABILITY TO BORROW FROM ANOTHER SOURCE AT A RATE LOWER
THAN 2.5% PER MONTH OR AN ANNUAL PERCENTAGE RATE OF 30%.
(4) The borrower represents and warrants that the motor vehicle
and the certificate of title is not stolen, it has no liens or encumbrances against
it, the borrower has the right to enter into this transaction, and the borrower will
not attempt to sell the motor vehicle or apply for a duplicate certificate of title
while the title loan agreement is in effect, and that doing so will be a violation
of the law.
(f) Immediately above the signature of the borrower, the statement that
"I, the borrower, declare that the information I have provided is true and correct
• and I have read and understand the foregoing document."
(g) A blank line for the signature of the borrower.
2
(h) The secondhand dealer must display, in a prominent place in the
• title loan premises, for customer viewing, a sign no smaller than 3 feet by 5 feet
with the following messages written in letters no less than 4 inches high:
"IF YOU RECEIVE A TITLE LOAN, YOUR VEHICLE WILL
BE PLEDGED AS SECURITY FOR THE LOAN. IF YOU DO
NOT REPAY THIS LOAN IN FULL, INCLUDING ALL
FINANCE CHARGES, YOU WILL LOSE YOUR VEHICLE.
THIS LOAN HAS A VERY HIGH INTEREST RATE. DO NOT
COMPLETE A TITLE LOAN TRANSACTION IF YOU HAVE
THE ABILITY TO BORROW MONEY FROM ANOTHER
SOURCE AT AN INTEREST RATE LOWER THAN 2.5% PER
MONTH OR AN ANNUAL PERCENTAGE RATE OF 30%."
Sec. 21-62 Maximum interest rate.
A secondhand dealer who engages in title loan transactions may not exceed
the following interest rates:
(a) A secondhand dealer may charge an interest rate not to exceed
2.5% per 30-day period the title loan agreement remains outstanding and
unsatisfied. In determining compliance with the maximum interest and finance
• charges, the computation must be simple interest and not add-on interest or any
other interest computation.
(b) If the title loan agreement has not been satisfied within 360 days,
a secondhand dealer may charge an interest rate not to exceed 18% per annum
for the time the title loan agreement remains outstanding and unsatisfied beyond
360 days.
(c) The annual percentage rate that may be charged in a motor vehicle
title loan may equal, but not exceed, the annual percentage rate that must be
computed and disclosed as required by the federal Truth in Lending Act and
Regulation Z of the Board of Governors of the Federal Reserve System. When
the period for which the charge is computed is more or less than one month, the
maximum rate for the period must be computed on a basis of 1/30 the applicable
monthly interest rate, multiplied by the number of days of the period.
(d) Any transaction involving a borrower's delivery of a motor vehicle
certificate of title in exchange for the advancement of funds on the condition that
the borrower shall or may redeem or repurchase the certificate of title upon the
payment of a sum of money, whether the transaction be characterized as a "buy-
sell agreement", "sale-leaseback agreement", or otherwise, shall be deemed a
violation of this ordinance if such sum exceeds the amount that a secondhand
• dealer may collect in a title loan agreement under this ordinance or if the terms
3
of the transaction otherwise conflict with the permitted terms and conditions of
• a title loan agreement under this ordinance.
(e) Any fees or taxes paid to a state agency and directly related to an
individual title loan transaction may be collected from the borrower and shall be
in addition to the permitted finance and interest charge.
(f) No charges, including interest, in excess of the combined total of
all charges permitted by this section shall be allowed.
Sec. 21-63 Transaction satisfaction and default.
(a) When the title loan has been paid in full, the secondhand dealer
must deliver to the borrower a certificate of title clear of all encumbrances placed
upon the title by the secondhand dealer within 30 days of such payment in full.
(b) A secondhand dealer who engages in title loan transactions may
take possession of the motor vehicle upon the borrower's default under the title
loan agreement. Unless the borrower voluntarily surrenders the motor vehicle,
the secondhand dealer may only take possession of a motor vehicle through an
agent licensed by the State of Florida to repossess motor vehicles.
(c) A secondhand dealer who takes possession of a motor vehicle
• pursuant to this section shall comply with the applicable requirements of Chapter
679, Part V, Florida Statutes.
(d) Disposition of the collateral or motor vehicle may be by public or
private proceedings and may be made by way of one or more contracts. Sale or
other disposition may be as a unit or in parts and at any time and place and on
any terms, but every aspect of the disposition, including the method, manner,
time, place and terms including surplus of the debt, must be commercially
reasonable.
Sec. 21-64 Title loan lending license.
(a) No secondhand dealer may engage in business as a title loan lender
six months after the effective date of this ordinance unless the secondhand dealer
has a valid title loan lending license issued by the city. A separate title loan
lending license will be required for each physical location of the title loan
business. The city shall issue more than one title loan lending license to an
applicant if that applicant complies with the requirements of this part for each
such license.
(b) An application for a title loan lending license pursuant to this part
must be submitted to the city on such form as the city may prescribe. If the city
• determines that an application should be granted, it shall issue such license for a
period not to exceed two years. A non-refundable application and license feed of
4
- e€edi g $1,250.00 shall accompany an initial application for each title loan
• location.
(c) The city shall charge a biennial renewal fee of$1,000.00. A title
loan lending license that is not renewed at the end of each two-year period shall
automatically become inactive. An inactive license may be reactivated within 90
days after the date it became inactive upon the submission of a completed
reactivation form and payment of a reactivation fee not exceeding $200.00 and
a biennial license fee of$1,000.00. No inactive license may be reactivated after
90 days.
(d) Each title loan lending license must specify the location for which
it is issued and must be conspicuously displayed at that location. When a licensee
wishes to move a title loan office to another location, the licensee shall give 30
days prior written notice to the city by certified or registered mail, return receipt
requested, and the city shall then amend the title loan lending license accordingly.
A license issued pursuant to this part is not transferable or assignable.
(e) Books, accounts and records; maintenance and examinations by the
city:
(1) Each licensee shall maintain, at the principal place of
business designated on the license, all books, accounts, records and documents
• necessary to determine the licensee's compliance with this part.
(2) The city may authorize maintenance of records at a location
other than a principal place of business. The city may require books and records
to be produced and available at a reasonable and convenient location within the
city.
(3) All books, accounts, records, documents and receipts for
expenses paid by the licensee on behalf of the borrower, including each contract
signed by the borrower and expenses incurred by the licensee in the event of
foreclosure and property recovery, will be preserved and kept available for
examination by the city for two (2) years after the date of original entry.
(4) The city may prescribe by rule the minimum information
to be shown in the books, accounts, records and documents of licensee so that
such records will enable the city to determine the licensee's compliance with this
part.
(f) Each licensee shall designate and maintain an agent in this state for
service of process.
(g) A licensee must apply to the city for a new title loan lending
• license upon a change in ownership of 25% or more by a natural person in any
title loan location or office. No application for a title loan lending license or an
5
application for transfer of an existing title loan lending license is required for any
410
change, directly, or beneficially, in the ownership of a title loan location if one
or more of the holders of at least 75% of the outstanding equity interest in the
title loan location or office before the change in ownership continue to hold at
least 75% of the outstanding equity interest in the title loan location or office after
the change in ownership.
(h) To be eligible for title loan lending license, an applicant shall:
(1) File with the city a bond in the amount of $35,000.00 for
each license with a surety company qualified to do business in this state. In lieu
of the bond, the applicant may establish a certificate of deposit or an irrevocable
letter of credit in a Florida financial institution in the amount of the bond. The
original bond, certificate of deposit, or letter of credit shall be filed with the city
and the city shall be the beneficiary of such instrument. The bond, certificate of
deposit, or letter of credit shall be in favor of the city for the use and benefit of
any consumer who is injured in the context of a title loan transaction by the
fraud, misrepresentation, breach of contract, financial failure, unfair or deceptive
trade practice, disclosure violation or violations of any provision of this part by
the licensee. Such liability shall be enforced by the filing of a suit in a court of
competent jurisdiction.
(2) Not have been convicted of a felony within the last ten years
• or be acting on behalf of a beneficial owner who has been convicted of a felony
within the last ten years.
(3) Not have been convicted, and not acting on behalf of a
beneficial owner who has been convicted, of a crime that the city finds directly
related to the duties and responsibilities of a title loan lender within the past ten
years.
(i) The city shall determine the form of the title loan lending license.
(j) No part of this ordinance may be construed to impair or affect the
obligation of any title loan agreement which was lawfully entered into prior to the
effective date of this ordinance.
(k) Licensees shall report changes in address, location or records, and
any change of an executive officer within 30 days of the change.
(1) In addition to the above, an applicant must also obtain any required
occupational license.
Sec. 21-65. Violations and penalties.
• (a) The following acts are violations of this part and shall constitute
grounds for disciplinary action:
6
(1) Failure to comply with any provision of this part, rule
• adopted under this party by the city, or any written agreement entered into with
the city.
(2) Fraud, misrepresentation, deceit or gross negligence in any
title loan transaction.
(3) Fraudulent misrepresentation, circumvention, or conceal-
ment of any matter required to be stated or furnished to a consumer pursuant to
this part.
(4) Willful imposition of illegal charges on any title loan
transaction.
(5) False, deceptive or misleading advertising by a licensee.
(6) Failure to maintain, preserve and keep available for
examination all books, accounts and other documents required by this part, state
or federal law, or by any agreement entered into with the city.
(7) Aiding, abetting or conspiring with an individual to
circumvent or violate any of the requirements of this part or state or federal law.
• (8) Refusal to permit inspection of books or records in an
investigation or examination by the city or refusal to comply with a subpoena
issued by the city.
(9) Criminal conduct in the course of a licensee's business as
a title lender.
(10) Knowingly entering into a title loan agreement with a person
under the age of 18 years.
(11) Making any agreement requiring or allowing for the
personal liability of a pledgor or the waiver of any of the provisions of this part.
(12) Knowingly entering into a title loan agreement with any
person who is under the influence of drugs or alcohol when such condition is
visible or apparent, or with any person using a name other than his own or the
registered name of his business.
(13) Entering into a title loan agreement in which the amount of
money advanced in consideration for the loan secured by any single certificate of
title exceeds one third of the value of the motor vehicle. The city shall determine
the method of assessing the value of the pledged property.
•
7
(14) Failure to exercise reasonable care in the safekeeping of the
• certificate of title or motor vehicle repossessed pursuant to this part.
(15) Failure to return the certificate of title or motor vehicle
taken into possession to a borrower with any and all of the title lender's liens on
the property properly released within 30 days of the payment of the full amount
due, unless the property has been seized or impounded by an authorized law
enforcement agency, taken into custody by a court, or otherwise disposed of by
court order.
(16) Charging or receiving any finance charge, interest, cost or
fee which is not permitted by this part.
(17) Engaging in business as a title lender without first securing
the required license.
(18) Refusing to accept partial repayment of the amount financed
when all accrued finance charges have been paid.
(19) Charging a prepayment penalty.
(20) Capitalizing any unpaid finance charge as part of the amount
• financed in the renewal of a title loan agreement.
(21) Acting as a title loan lender in the city six months after the
effective date of this ordinance without a current, active license issued by the city
pursuant to this part.
(22) In any practice or transaction or course of business relating
to the making of a title loan, negotiation, promotion, advertisement or hypotheca-
tion of a title loan transaction, directly or indirectly:
(i) To knowingly or willingly employ any devise,
scheme or article to defraud;
(ii) To engage in any transaction, practice or course of
business which operates as a fraud upon any person in connection with the
purchase or sale of any title loan;
(iii) To obtain property by fraud, willful misrepresenta-
tion of a future act or false promise.
(23) In any manner within the jurisdiction of the city to
knowingly and willfully falsify, conceal or cover up by a trick, scheme or devise
41) a material fact, make any false or fraudulent statement or representation, or make
or use any false writing or document, knowing the same to contain any false or
fraudulent statement or entry.
8
(24) Commission of fraud, misrepresentation, concealment,
• dishonest dealing by trick, scheme or device, culpable negligence, or breach of
trust in any title loan transaction in the city; or aiding, assisting or conspiring
with any other person engaged in any such misconduct and in furtherance thereof.
(b) Upon a finding by the city that the licensee or applicant has
committed any of the acts set forth in subsection (a) hereof, the city may enter
an order and take one or more of the following actions:
(1) Deny the application for license pursuant to this ordinance.
(2) Revoke or suspend a license previously granted pursuant to
this part.
(3) Place a licensee or applicant for a license on probation for
a period of time and subject to such conditions as the city may specify.
(4) Issue a letter of concern or reprimand.
(5) Place permanent restrictions or conditions upon issuance or
maintenance of a license pursuant to this ordinance.
(6) Impose an administrative fine not to exceed $2,500.00 for
each violation of this part.
(7) The city shall be entitled to a reasonable attorney's fee,
including appellate fees and costs, in an action successfully enforcing any fine
imposed under this part.
(c) When the city has reasonable cause to believe that a licensee is
operating in violation of this part, it may bring a civil action in any court of
competent jurisdiction to enforce or administer this part, including a temporary
or permanent injunction, or appointment of a receiver.
(d) The city may adopt rules which set forth with specificity acts or
practices which violate this part and which prescribe procedural rules for the
administration of this part.
Sec. 21-66. Transition period for regulations, restrictions and licensure provisions.
Each secondhand dealer operating as a title loan lender on the effective
date of this ordinance shall have six (6) months from the effective date of this
ordinance to comply with the regulations, restrictions and licensure provisions of
this part before the city may initiate any administrative or civil action, or refer
a matter for criminal prosecution."
•
9
SECTION 2. This Ordinance shall take effect immediately upon its final passage and
• adoption.
PASSED by the City Commission on first reading this 23rd day of November ,
1998.
PASSED by the City Commission on second and final reading this 14th day of
December , 1998.
ATTEST: ,Q-A z;AGC•iC. „
M REEN KIN SUZAN :a SHAUG SSY
City Clerk Mayor, Presiding Officer
Approved as to form and correctness:
AN 510r SEN, ESQUIRE
City At
•
•
10