Section 32-6B-7.1 - Pooling of assets to satisfy bond requirements--Right, title, and interest in state--Termination--Notice of payment of claim--Replenishment of pool.
32-6B-7.1. Pooling of assets to satisfy bond requirements--Right, title, and interest in state--Termination--Notice of payment of claim--Replenishment of pool. Members of any incorporated automobile dealers association may join together for the limited purpose of forming a pool of assets to satisfy the bond requirements of § 32-6B-7. Each pool shall be deposited in escrow or trust with a South Dakota financial institution approved of by the department.
All right, title, and interest in a pool shall be in the state for the benefit of any customer of a participating dealer who suffers any loss caused by the dealer's failure to deliver title, or by fraudulent misrepresentation or by a breach of warranty as to freedom from liens. A pool shall remain the property of the state until the department releases the pool. A pool is not the property of any participating dealer and may not be canceled, assigned, revoked, disbursed, replaced, or allowed to terminate except with department approval. Until a pool has been terminated as provided in this section, no portion of the pool may be assigned for the benefit of creditors, attached, garnished, levied, or executed on, or subject to process issued from any court, except as provided for payment of claims pursuant to this section.
A pool shall continue from year to year and cover for each license period those dealers participating in the pool. The department shall be notified by the escrow agent or trustee of the dealers participating or continuing to participate in a pool prior to the beginning of each license period.
The participating dealers may determine to terminate a pool. Notice of the intent to terminate shall be given to the department at least sixty days prior to the end of a license period. Termination shall be effective four years from the end of the license period notice was received. The escrow agent or trustee, in accordance with this section, shall continue to pay moneys prior to termination to any customer of a participating dealer whose claims arose during any license period prior to notice.
The escrow agent or trustee will notify the department in writing when a claim has been paid from the pool. All claims must be based upon a final judgment of a court of record in this state.
A pool will be established when one hundred thousand dollars of liquid assets are deposited with the escrow agent or trustee. Anytime a pool's balance falls below ninety thousand dollars it shall be replenished by the participating dealers within thirty days. If a pool is not replenished within thirty days, those dealers participating in the pool will be subject to the revocation of their dealer license unless the dealer provides a bond as set forth in § 32-6B-7 within fifteen days. After the notice of termination of a pool is received, notwithstanding any provision to the contrary, any dealer participating in the pool during the license period notice is given is subject to the revocation of their dealer license if the pool's balance falls below ninety thousand dollars and is not replenished within thirty days.
The escrow agent or trustee shall have those powers necessary to pay any claim upon the presentation of a final judgment and order of execution of any court record in this state.
The department may adopt rules pursuant to chapter 1-26 to implement this section.
Source: SL 1989, ch 263.