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NJ Legislature Passes Bill To Allow Online Sales & Authorizes The Use of E-Signatures In Certain Circumstances

Jun 07, 2021

On June 3, 2021, the New Jersey Senate passed Bill A5033, the Motor Vehicle Transaction Modernization Act, that authorizes licensed dealerships to sell motor vehicles online. To facilitate the online sale, the Bill allows the buyer and the licensed motor vehicle dealer to acknowledge all transaction documents by electronic signature, as a valid and acceptable alternative to a traditional ink (“wet”) signature.

An important aspect of the Bill is to modernize the New Jersey Motor Vehicle Commission (NJMVC) by allowing the use of electronic signatures on transaction documents that currently require use of a power of attorney so that someone other than the customer can sign them with a “wet” signature.  The Bill makes it clear that the NJMVC must accept electronically signed transaction documents and prohibits the requirement of a notarized signature of any transaction documents completed by a licensed motor vehicle dealer. The Bill also requires the Commission to permit the use of digital signature technology for the signing of documents and other appropriate purposes and to allow documents to be submitted in electronic form if the documents pertain to the provisions of the “Motor Vehicle Transaction Modernization Act.”

Another important aspect of the Bill is to expand the definition of “motor vehicles which constitute inventory held for sale.”  The COVID-19 pandemic shed light on the need to expand this definition to increase the inventory of motor vehicle dealers and allow customers to purchase and lease new vehicles that are in route to franchised dealerships.   The Bill specifically includes new vehicles that can be identified by a manufacturer’s Vehicle Identification Number (VIN) and have been invoiced to, allocated to, or reserved by a new motor vehicle dealer licensed to do business in New Jersey, and such vehicle can be shipped by the manufacturer or distributor within a reasonable period of time and used motor vehicles held for the purpose of sale by new or used motor vehicle dealers which can be identified by a manufacturer’s VIN where title or right to title is held by the used motor vehicle dealer.

The Bill restricts a used motor vehicle dealer to the sale of ONLY used vehicles, requires a used motor vehicle dealer to maintain an established place of business and authorizes the NJMVC to establish requirements for an established place of business. A5033 further requires that the established place of business (of a new motor vehicle dealer or used motor vehicle dealer) display an exterior sign that meets certain requirements. The legislation also requires that a leasing dealer who sells vehicles to anyone, other than the lessee at the end of a lease term, must be licensed as a used car dealer.

The Motor Vehicle Transaction Modernization Act is a much-needed step in the modernization of the NJMVC that will improve the transaction process for dealers and customers alike and dramatically increases the available inventory from which customers can choose a vehicle.  The Bill awaits the Governor’s signature.