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Benson & Verrelli Bill to Allow Auto Dealers to Sell Vehicles Online & Obtain Electronic Signatures Now Law

New Jersey auto dealers will be permitted to sell motor vehicles online under legislation recently signed into law, which allows power of attorney documents to be signed electronically by car buyers.

Early on in the COVID-19 pandemic in New Jersey, new car sales plummeted 70 percent as motor vehicle dealers were forced to close their doors due to statewide stay-at-home restrictions. Governor Phil Murphy signed an executive order to allow auto dealers to sell vehicles online, but customers were still required to come to the dealership to sign necessary paperwork. Without written signatures, the New Jersey Motor Vehicle Commission (MVC) could reject the documents during the registration process.

This new law (formerly bill A-5033) will allow car sales to be conducted remotely, by allowing customers to select and purchase their vehicles online and then sign power of attorney documents electronically. The MVC will then be required to accept the documents signed via e-signature.

Since the vehicle titling system is currently paper-based, dealers may still have to submit paper documents with those electronic signatures when registering and titling a car for their customers. As such, the law also gives the Chief Administrator of the MVC two years to update its rules and regulations in order to establish a modernized system that enables fully-electronic titling going forward.

The system must be set up to prevent fraud and ensure electronic sales comply with federal law. The law also sets requirements for both new and used car dealers, including that they must maintain an office space in the state and display clear signage.

The measure’s sponsors, Assembly Democrats Daniel Benson (D-Mercer, Middlesex), Chair of the Assembly Transportation Committee, and Anthony Verrelli (D-Mercer, Hunterdon) released the following statements upon the bill becoming law:

Assemblyman Benson: “The COVID-19 pandemic has forced every industry to adapt and innovate the way it does business. The auto industry is no exception. Though many of us are used to visiting a dealership and buying a car in person, we can now envision a future where purchasing a car online is commonplace. This law removes regulatory hurdles to allow people to buy vehicles without stepping foot in a dealership.”

Assemblyman Verrelli: “Online car sales are a relatively new concept, offering customers convenience, comfort and, during the pandemic, more safety with social distancing. Just as people can sign many other legally binding documents online, there’s no reason car buyers shouldn’t be able to electronically sign papers to purchase a vehicle. Now that we know we can adapt various business procedures during a crisis such as the COVID-19 pandemic, these useful alternatives must be allowed to continue.”

 The act takes effect immediately.