Relating to towable recreational vehicles, travel trailers, and fifth-wheel travel trailers, making penalties applicable, and including applicability provisions. Effective 7-1-19

The bill provides that for purposes of registration and titling, towable recreational vehicles are considered travel trailers or fifth-wheel travel trailers under Code chapter 321. The bill makes corresponding changes from the use of the term “travel trailer” in Code chapter 322C to the use of the term “towable recreational vehicle”. Under current law, a manufacturer or distributor is prohibited from refusing to renew a contract for a term of less than five years. The bill changes the term to months.4 that exempts persons licensed under Code chapter 322 (motor vehicle manufacturers, distributors, wholesalers, and dealers) from the requirement to obtain a $25,000 surety bond as a prerequisite to the issuance of a TRV dealer’s license. APPLICABILITY TO AGREEMENTS. The bill provides that if a TRV dealer also sells and services motorized recreational vehicles or other motor vehicles, the provisions of Code chapter 322C relating to manufacturer-dealer agreements apply only to such agreements, or those provisions of such agreements, applicable to TRVs. AGREEMENT REQUIRED —— COMMUNITY. The bill prohibits a manufacturer or distributor from selling a new TRV in this state to or through a TRV dealer without first entering into a manufacturer-dealer agreement with the dealer that has been signed by both parties. The bill also prohibits a dealer from selling a new TRV in this state without first entering into a manufacturer-dealer agreement with a manufacturer or distributor that has been signed by both parties. The bill requires a manufacturer-dealer agreement to designate a community exclusively assigned to a dealer by the manufacturer or distributor, and prohibits the manufacturer or distributor from changing the community or from contracting with another dealer for the sale of the same line-make of TRV in the community for the duration of the agreement. The community designated in a manufacturer-dealer agreement may be reviewed or changed with the consent of both parties not less than months after execution of the agreement. TERMINATION, CANCELLATION, OR NONRENEWAL BY MANUFACTURER OR DISTRIBUTOR. The bill authorizes a manufacturer or distributor to terminate, cancel, or fail to renew a manufacturer-dealer agreement with or without good cause. If the manufacturer or distributor terminates, cancels, or fails to renew an agreement without good cause, the manufacturer or distributor is required to comply with the repurchase requirements set forth in the bill. The manufacturer or distributor has the burden of proof to demonstrate good cause. The bill sets forth certain factors to consider in determining whether good cause exists. The bill requires a manufacturer or distributor to provide to a dealer written notice of termination, cancellation, or nonrenewal of a manufacturer-dealer agreement for good cause at least days prior to terminating, canceling, or failing to renew the manufacturer-dealer agreement. The notice must state all of the reasons for the termination, cancellation, or nonrenewal and that if, within days following receipt of the notice, the dealer provides to the manufacturer or distributor a written notice of intent to cure all claimed deficiencies, the dealer will then have days following receipt of the notice to cure the deficiencies. If the deficiencies are cured within days, the manufacturer’s or distributor’s notice is voided. If the dealer fails to provide the notice of intent to cure the deficiencies within days, or fails to cure the deficiencies within days, the termination, cancellation, or nonrenewal takes effect as provided in the original notice. The bill specifies that the notice period for termination, cancellation, or nonrenewal of a manufacturer-dealer agreement for good cause may be reduced to days if certain grounds exist as set forth in the bill. The manufacturer or distributor is not required to provide the notice if the dealer is insolvent, or has filed for bankruptcy, receivership, or assignment for the benefit of creditors. TERMINATION, CANCELLATION, OR NONRENEWAL BY DEALER. The bill allows a dealer to terminate, cancel, or fail to renew a manufacturer-dealer agreement with or without good cause. If the dealer terminates, cancels, or fails to renew a manufacturer-dealer agreement with good cause, the manufacturer or distributor must comply with the repurchase requirements set forth in the bill. The dealer has the burden of proof to demonstrate good cause for terminating, canceling, or failing to renew a manufacturer-dealer agreement. The bill sets forth certain factors to consider in determining whether good cause exists. The bill requires a dealer to provide to a manufacturer or distributor written notice of termination, cancellation, or nonrenewal of a manufacturer-dealer agreement at least days prior to terminating, canceling, or failing to renew the manufacturer-dealer agreement. If a termination or cancellation is for good cause, the notice must state all of the reasons for the termination or cancellation and that if, within days following receipt of the notice, the manufacturer or distributor provides to the dealer a written notice of intent to cure all claimed deficiencies, the manufacturer or distributor shall then have days following receipt of the notice to cure the deficiencies. If the deficiencies are cured within days, the dealer’s notice is voided. If the manufacturer or distributor fails to provide the notice of intent to cure the deficiencies within days, or fails to cure the deficiencies within days, the termination or cancellation takes effect as provided in the original notice. REPURCHASE OR SALE OF INVENTORY. If a manufacturer-dealer agreement is terminated, canceled, or not renewed by the manufacturer or distributor without good cause, or by a dealer with good cause and, in the case of termination or cancellation, the manufacturer or distributor fails to provide notice or cure the deficiencies claimed by the dealer, the bill requires the manufacturer or distributor to, at the dealer’s option and within days after termination, cancellation, or nonrenewal, repurchase certain items. The repurchase includes all new, untitled TRVs that the dealer acquired from the manufacturer or distributor within months prior to the effective date of the notice that have not been used other than for demonstration purposes, and that have not been altered or damaged, at 100 percent of the net invoice cost, including transportation, less applicable rebates and discounts to the dealer. The repurchase also includes all undamaged proprietary parts for any line-make subject to the termination, cancellation, or nonrenewal that was sold to the dealer for resale within months prior to the effective date of the termination, cancellation, or nonrenewal of the manufacturer-dealer agreement, if accompanied by the original invoice, at 105 percent of the original net price paid to the manufacturer or distributor. The repurchase further includes all properly functioning diagnostic equipment, special tools, current signage, or other equipment and machinery that was purchased by the dealer upon the request of the manufacturer or distributor for any line-make subject to the termination, cancellation, or nonrenewal within five years prior to the effective date of the termination, cancellation, or nonrenewal that can no longer be used in the normal course of the dealer’s ongoing business. The bill does not specify an amount at which such equipment, tools, or machinery must be repurchased. The bill provides that TRVs not repurchased or required to be repurchased that are in the dealer’s inventory may continue to be sold by the dealer until the TRVs are no longer in the dealer’s inventory. TRANSFER OF OWNERSHIP. If a TRV dealer makes or intends to make a change in ownership of a dealership, the dealer must provide to a manufacturer or distributor that is a party to a manufacturer-dealer agreement with the dealer written notice of the proposed change at least business days before the change becomes effective. In the absence of a breach by the dealer of the manufacturer-dealer agreement or a violation of Code chapter 322C, the bill prohibits the manufacturer or distributor from objecting to the proposed change in ownership unless the objection is to the prospective transferee for previously being a party to a manufacturer-dealer agreement with the manufacturer or distributor and the agreement was terminated, canceled, or not renewed by the manufacturer or distributor for good cause; being convicted of a felony or any crime of fraud, deceit, or moral turpitude; lacking any license required by law; failing to have an active line of credit sufficient to purchase the manufacturer’s or distributor’s products; or being insolvent within the previous years, or filing for bankruptcy, receivership, or assignment for the benefit of creditors within the previous years. If a manufacturer or distributor objects to a proposed change in ownership of a dealership, the manufacturer or distributor must provide written notice of the reasons for the objection to the dealer within business days after receipt of the dealer’s notification and supporting documentation about the proposed change. The manufacturer or distributor has the burden of proof to demonstrate that the objection complies with the requirements of the bill. If the manufacturer or distributor does not provide the dealer with timely notice of the objection, the dealer’s proposed change in ownership of the dealership is deemed approved. The bill requires a manufacturer or distributor to provide to a dealer the opportunity to designate, in writing, a family member as a successor to ownership of a dealership in the event of the death, incapacity, or retirement of the dealer. If a dealer desires to designate a family member as a successor to ownership of a dealership, the dealer must provide to the manufacturer or distributor that is a party to the manufacturer-dealer agreement with the dealer written notice of the proposed designation, or modification of a previous designation, at least business days before the designation or proposed modification of a designation becomes effective. In the absence of a breach by the dealer of the manufacturer-dealer agreement or a violation of Code chapter 322C, the bill prohibits the manufacturer or distributor from objecting to the designation or proposed modification of a designation unless the objection is to the designated successor for any of the reasons stated above for objecting to a proposed change in ownership. If a manufacturer or distributor objects to a succession plan, the manufacturer or distributor must provide written notice of the reasons for the objection to the dealer within business days after receipt of the dealer’s notification about the proposed designation or proposed modification of a designation. The manufacturer or distributor has the burden of proof to demonstrate that the objection complies with the requirements of the bill. If the manufacturer or distributor does not provide the dealer with timely notice of the objection, the dealer’s proposed succession plan is deemed approved. The bill requires a manufacturer or distributor to allow the succession of ownership of a dealership to a designated family member when a dealer is deceased, incapacitated, or has retired, unless the manufacturer or distributor has provided to the dealer written notice of the manufacturer’s or distributor’s objections to the succession within days after receipt of notice of the succession. However, the bill prohibits a family member of a dealer from succeeding to ownership of a dealership if the succession involves, without the manufacturer’s or distributor’s consent, a relocation of the dealership or alteration of the terms and conditions of the manufacturer-dealer agreement. WARRANTY OBLIGATIONS. The bill requires a warrantor to specify in writing to each dealer what obligations the dealer has, if any, for preparation and delivery of, and warranty services on, the warrantor’s products; compensate the dealer for warranty services the warrantor requires the dealer to perform; and provide the dealer with a schedule of compensation and time allowances for the performance of warranty services. Time allowances for the performance of warranty services, including diagnostic services, must be reasonable for the service to be performed. In determining what constitutes reasonable compensation, the bill specifies that the principle factors to be given consideration must be the actual wage rates being paid by the dealer and the actual retail wage rates being charged by other dealers in the community in which the dealer is doing business. The bill prohibits the compensation of a dealer for warranty services from being less than the lowest actual retail wage rates charged by the dealer for similar nonwarranty services, as long as the actual retail wage rates are reasonable. The bill requires a warrantor to reimburse a dealer for any warranty part, accessory, or complete component at actual wholesale cost to the dealer plus a minimum of a percent handling charge, not to exceed $150, and plus the cost, if any, to the dealer to return such part, component, or accessory to the warrantor. The bill authorizes a warrantor to conduct a warranty audit of a dealer’s records within months after the payment of a warranty claim. The bill prohibits a warrantor from denying a dealer’s claim for warranty compensation except for good cause, including performance of nonwarranty repairs, material noncompliance with the warrantor’s published policies and procedures, lack of material documentation, fraud, or misrepresentation. The bill requires a dealer to submit claims for compensation for the performance of warranty services to the warrantor within days after completion of the warranty services. A dealer must immediately notify a warrantor in writing if the dealer is unable to perform warranty services, including diagnostic services, within days of receipt of a written complaint from a consumer. A warrantor must deny a claim submitted by a dealer for compensation for the performance of warranty services, in writing, within days after submission of the claim in the manner and form prescribed by the warrantor. A claim not specifically denied is deemed approved and must be paid within days of submission of the claim. The bill prohibits a warrantor from failing to perform any of the warrantor’s obligations with respect to its warranted products; failing to include, in written notices of a factory campaign to TRV owners and dealers, the expected date by which necessary parts and equipment will be available to dealers to perform the factory campaign work; failing to compensate the warrantor’s dealers for authorized repairs performed by the dealer on merchandise damaged in manufacture or in transit to the dealer; failing to compensate the warrantor’s dealers in accordance with the schedule of compensation provided to the dealer, if the warranty services for which compensation is claimed are performed by the dealer in a timely and competent manner; intentionally misrepresenting to consumers that warranties with respect to the manufacture, performance, or design of TRVs are made by the dealer as warrantor or co-warrantor; or requiring the warrantor’s dealers to make warranties to a consumer that are in any manner related to the manufacture of a TRV. The bill prohibits a dealer from failing to perform predelivery inspection functions, as specified by the warrantor, in a competent and timely manner; failing to perform warranty services, as authorized by the warrantor, in a competent and timely manner on any transient consumer’s TRV of a line-make sold or serviced by the dealer; failing to accurately document the time spent completing each repair, the total number of repair attempts conducted on a single TRV, and the number of repair attempts for the same repair conducted on a single TRV; failing to notify the warrantor within days of a second repair attempt on a TRV which impairs the use, value, or safety of the TRV; failing to maintain written records, including a consumer’s written or electronic verification or signature, regarding the amount of time a TRV is stored for the consumer’s convenience during a repair; or making fraudulent warranty claims or misrepresenting the terms of any warranty. INDEMNIFICATION. The bill requires a warrantor to indemnify and hold harmless the warrantor’s dealer against any loss or damage, to the extent the loss or damage is caused by willful misconduct of the warrantor. A warrantor is prohibited from denying a dealer indemnification for failure to discover, disclose, or remedy a defect in the design or manufacture of a new TRV. However, a warrantor may deny a dealer indemnification if the dealer fails to remedy a known and announced defect in accordance with the written instructions of the warrantor for whom the dealer is obligated to perform warranty services. The bill requires a warrantor to provide to the dealer a copy of any pending lawsuit in which allegations are made against the warrantor of willful misconduct. The warrantor must provide the copy to the dealer within days after receiving notice of the lawsuit. The bill requires a dealer to indemnify and hold harmless the dealer’s warrantor against any loss or damage, to the extent that the loss or damage is caused by willful misconduct of the dealer. A dealer must provide to the warrantor a copy of any pending lawsuit in which allegations are made against the dealer of willful misconduct. The dealer must provide the copy to the warrantor within days after receiving notice of the lawsuit. INSPECTION AND REJECTION BY DEALER. Whenever a new TRV is damaged prior to transit or is damaged in transit to a dealer and the carrier or means of transportation has been selected by the manufacturer or distributor, the dealer is required to notify the manufacturer or distributor of the damage within the time frame specified in the manufacturer-dealer agreement and either request from the manufacturer or distributor authorization to replace the components, parts, or accessories damaged, or otherwise repair the vehicle, or reject the vehicle within the time frame set forth in the manufacturer-dealer agreement. If the manufacturer or distributor refuses to authorize repair of the new TRV within days after receipt of a dealer’s notification, or if the dealer rejects the new TRV because of damage, ownership of the TRV will revert to the manufacturer or distributor. The bill requires the dealer to exercise due care when in custody of a new, damaged TRV, but the bill specifies that the dealer has no other obligations, financial or otherwise, with respect to the TRV following rejection in accordance with the manufacturer-dealer agreement. The bill requires the time frame for inspection and rejection of a damaged new TRV by a dealer to be specified in the manufacturer-dealer agreement, but provides that it shall not be less than two business days after the physical delivery of the TRV to the dealer. CIVIL ACTION AND MEDIATION. The bill authorizes a dealer, manufacturer, distributor, or warrantor injured by another party’s violation of Code chapter 322C to bring a civil action in district court to recover actual damages resulting from the violation. The court must award reasonable attorney fees and costs to the prevailing party in such an action. Venue for such a civil action must be exclusively in the county in which the dealer’s business is located. In an action involving more than one dealer, venue may be in any county in which any dealer that is a party to the action is located. Prior to bringing such a civil action, the party alleging a violation must serve a written demand for mediation upon the alleged offending party. The demand for mediation must be served upon the alleged offending party via certified mail at the address stated in the manufacturer-dealer agreement between the parties, if applicable. The demand for mediation must contain a statement of the dispute or violation alleged and the relief sought by the party serving the demand. Within days after service of a demand for mediation, the bill requires the parties to mutually select an independent certified mediator and meet with the mediator for the purpose of attempting to resolve the dispute or alleged violation. The meeting place for the mediation must be in Iowa at a location selected by the mediator. The mediator may extend the date before which the parties are required to have the meeting for good cause shown by either party or upon a stipulation by both parties. The service of a demand for mediation tolls the period during which a party is required to file any complaint, petition, protest, or other action under Code chapter 322C until representatives of both parties have met with the mutually agreed-upon mediator for the purpose of attempting to resolve the dispute or alleged violation. If a complaint, petition, protest, or other action has been filed before the mediation meeting, the court must enter an order suspending any proceeding or action relating to such complaint, petition, protest, or other action until the mediation meeting has occurred and may, upon written stipulation by all parties to the proceeding or action that the parties wish to continue mediation, enter an order suspending the proceeding or action for any period the court considers appropriate. Each party to the mediation must pay its own costs for attorney fees and the costs of the mediation services must be equally allocated among each party. The bill authorizes a manufacturer, distributor, warrantor, or dealer to petition the district court, upon a hearing and for cause shown, for a temporary or permanent injunction, or both, restraining any person from acting as a dealer without being properly licensed, from violating or continuing to violate any of the provisions of Code chapter 322C, or from failing or refusing to comply with the requirements of Code chapter 322C. Such injunction must be issued without bond. The bill specifies that a single act is considered sufficient cause to authorize the issuance of an injunction. TAX EXEMPTION.23 exempting TRVs and fifth-wheel travel trailers from the property tax on manufactured or mobile homes. APPLICABILITY. The bill applies to manufacturer-dealer agreements pertaining to the sale of new TRVs entered into or renewed on or after January 1, 2020.