(a) A dealer who brokers a motor vehicle sale shall deposit directly into a trust account any purchase money, including purchase deposits, it receives from a consumer or a consumer’s lender. This subdivision does not require a separate trust account for each brokered transaction.
(b) The brokering dealer shall not in any manner encumber the corpus of the trust account except as follows:
(1) In partial or full payment to a selling dealer for a vehicle purchased by the brokering dealer’s consumer.
(2) To make refunds.
(c) Subdivision (b) shall not prevent payment of the interest earned on the trust account to the brokering dealer.
(d) The brokering dealer shall serve as trustee of the trust account required by this section. If the brokering dealer is a partnership or a corporation, the managing partner of the partnership or the chief executive officer of the corporation shall be the trustee. The trustee may designate in writing that an officer or employee may manage the trust account if that officer or employee is under the trustee’s supervision and control, and the original of that writing is on file with the department.
(e) All trust accounts required by this section shall be maintained at a branch of a bank, savings and loan association, or credit union regulated by the state or the government of the United States.
(f) The brokering dealer has a fiduciary responsibility with respect to all purchase money received from a consumer or consumer’s lender relative to a brokered sale transaction.
(g) The following are deemed to be held in trust for consumers who have paid purchase money to a brokering dealer:
(1) All sums received by the brokering dealer whether or not required to be deposited in an actual trust account and regardless of whether any of these sums were required to be deposited or actually were deposited in a trust account.
(2) All property with which any of the sums described in paragraph (1) has been commingled if any of these sums cannot be identified because of the commingling.
(h) Upon any judicially ordered distribution of any money or property required to be held in trust and after all expenses of distribution approved by the court have been paid, every consumer of a brokering dealer has a claim on the trust for purchase money payments made to the brokering dealer. Unless a consumer can identify his or her funds in the trust within the time established by the court, each consumer shall receive a proportional share based on the amount paid.
(Added by Stats. 1994, Ch. 1253, Sec. 14. Effective January 1, 1995.)