If someone were to ask you what the most important documents were in a deal jacket (aside from the obvious answer of “all of them”), a Due Bill would most likely not make the top of your list. Although a seemingly innocuous document that is used to document outstanding obligations related to the sale of a vehicle, improper use of a Due Bill can lead to a world of problems for a dealer. This article will explore how to use a Due Bill properly to avoid these potential pitfalls.
Components of a Due Bill
Generally, a Due Bill (also known as a “We Owe” or “Get Ready” form) should identify the parties involved in the transaction (i.e., the customer and dealership) as well as the vehicle involved in the transaction. The document should also have a section that describes what work the customer is entitled to have performed by the dealer, and another section that identifies good/accessories the customer is entitled to have installed on the vehicle at no additional charge. Finally, the document should have a place for both the customer and a dealer representative to sign. We recommend using the Reynolds & Reynolds LAWCA-412Q form for your Due Bill.
Proper Use of a Due Bill
A Due Bill should only be used to indicate outstanding dealership obligations that are part of the sales transaction for the vehicle. Specifically, a Due Bill should be used to document work promised to be performed on a customer’s vehicle that was agreed upon during the sales process. Examples include dent or ding repair, buffing out scratches, car wash or detailing, and other minor repairs. I emphasize that the work listed should be minor, and as we will discuss in more detail below, a Due Bill should not be used to document major work that needs to be performed.
A Due Bill should also be used to document after-market products or accessories that are to be installed or applied to the vehicle at the time of sale or after the sale. These accessories include theft-deterrent devices (i.e., alarms, window etching, Lojack, etc.), surface protection products (i.e., PermaPlate, Cilajet, etc.), and hard-adds (Tonneau covers, rims, aftermarket leather, etc.). Remember that charges for any accessories should be properly itemized on the retail installment sale contract and Pre-Contract Disclosure form. Said in another way, there should not be any accessory listed on the Due Bill that is not accounted for on the contract and Pre-Contract Disclosure.
Even when a good or accessory has been installed on the vehicle before the customer taking delivery, it is still a good practice to include those items on the Due Bill. This provides another layer of documentation showing the customer’s consent to install those goods or accessories. If your dealer is using a Due Bill in such a fashion, you should also write “already installed” next to the installed accessory.
Although a Due Bill is not required where no further work is promised, and no accessories are to be installed, many dealers still include one to promote consistency. If you are one of these dealers, ensure that there are no blank spaces on the Due Bill. Instead, indicate “N/A” on all lines throughout.
Improper Use of Due Bill
Perhaps the best way to start this section is by giving some examples of the improper uses of Due Bills. Each of these examples can lead to significant legal liability, which I will speak about further down. Here are some of the ones that have stood out over the years:
- Due Bill was used to document a hold-check agreement
- Due Bill provided for additional optional products to be installed on a vehicle that were not disclosed on either the retail installment contract or the Pre-Contract Disclosure
- Due Bill documented that the customer was to return for a safety inspection on the vehicle
- Due Bill documented a 30-day/1,000-mile dealer warranty that was not disclosed on the Buyers Guide
- Due Bill stated the customer needed to return within 30 calendar days of the date of contracting to have the installation of products completed or it will no longer be installed at no cost to the customer
Due Bills should never be used to document any extra-contractual financial agreement, such as pickup payments, hold check agreements, or any other agreements related to payment or payment term.
Regarding the safety inspection, Due Bills should never document or indicate a safety inspection or major repairs that could relate to safety items, such as “change brakes.” Dealers are prohibited from selling a vehicle that does not meet state and federal equipment standards. [Vehicle Code § 11713(i)]. Furthermore, California requires that a vehicle be “safe” at the time of sale by a dealer to a customer. [Vehicle Code § 24007]. If there is concern over a safety item or anything about the vehicle that could potentially relate to a safety item, the vehicle should not be delivered to a customer until it is properly inspected and/or repaired by a qualified technician. Also, if a vehicle requires major repair work, do not document this on a Due Bill. Rather, perform the necessary repairs to the vehicle before offering it for sale. And if those repairs are too extensive or costly, you can always consider wholesaling the vehicle instead.
Dealers must also avoid including a deadline, after which time work will not be performed or goods/accessories will not be installed. A typical example of this is language akin to: “All work must be performed at the dealership within 30 days of purchase.” Including this, or similar language could potentially be a Single Document Rule violation.
Bonus Requirement: The Service Department
Generally, many services documented on Due Bills are completed in the dealership’s service department. As such, these Due Bill services should be treated like any other repair service that comes into the repair facility. Be sure to abide by all documentation and record retention requirements, as outlined by the Bureau of Automotive Repair. The only other recommendation would be to keep an additional copy of the Repair Order with the deal jacket to show that the Due Bill service was completed.