SB 766 compliance checklist for independent used-car dealers

SB 766 compliance checklist for independent used-car dealers: signs, cancel notice, contract page, ads, add-ons, records and training by 1 October 2026.

SB 766, the California Combating Auto Retail Scams (CARS) Act (Chapter 354, Statutes of 2025), becomes operative on 1 October 2026 and applies to every licensed California dealer, independent or franchised. It adds Civil Code sections 1784.20 to 1784.44, rewrites the dealer wall sign in Vehicle Code 11709.2, changes the first page of every sale and lease contract, and repeals the paid two-day contract cancellation option in Vehicle Code 11713.21.

This page is the one-page version: everything an independent used-car dealer needs to have in place on 1 October 2026, with the section that requires it. The detail behind each line is in the four linked guides.

Key dates

1. Signs

• One physical sign in each sales office, each sales cubicle where written terms of a specific deal are discussed, and each room where contracts are regularly signed (Vehicle Code 11709.2(a)).
• Type at least 36 points; text exactly as the statute quotes it, starting "CALIFORNIA DOES NOT HAVE A COOLING-OFF PERIOD FOR NEW VEHICLES. BUT IF YOU PURCHASED OR LEASED A USED VEHICLE FOR $50,000 OR LESS..." and ending "ASK THE DEALER FOR MORE INFORMATION ABOUT HOW TO EXERCISE THIS RIGHT."
• The motorcycle and off-highway sentence added, also at 36 points, only if you sell or lease those at the same location (11709.2(b)).
• The old "THERE IS NO COOLING-OFF PERIOD UNLESS YOU OBTAIN A CONTRACT CANCELLATION OPTION" signs removed on 1 October 2026.

Wording and placement: /california-sb-766/sb-766-notice-wall-sign-contract-warning/.

2. Cancel notice and contract page

• A separate document titled "3-Day Right to Cancel Used Car Purchase or Lease" for every used vehicle sold or leased at $50,000 or less, containing the nine items in Civil Code 1784.43(b): the parties, the description and VIN, the deadline to cancel and return, how both parts of the restocking fee are calculated, the 400-mile cut-off, what must be personally delivered during business hours, that you may require cancellation documents, the trade-in payment rule, and the redacted trade-in sale document rule.
• Translations ready in Spanish, Chinese, Tagalog, Vietnamese and Korean for deals negotiated primarily in those languages (1784.43(b), Civil Code 1632(b)).
• Sale contracts and lease contracts with the fixed Civil Code 1784.43(e) paragraph on the first page (Civil Code 2982(r) and 2985.8(e) as operative 1 October 2026). Ask your forms vendor for the dated revision.
• The old contract cancellation option agreement form retired for contracts signed on or after 1 October 2026.
• No signed waiver of the right anywhere in the deal jacket; waivers are void (Civil Code 1784.21).

The right itself: /california-sb-766/sb-766-three-day-right-to-cancel/.

3. Advertising and first written replies

• Every listing that names a specific vehicle shows its total price: sale price including any dealer markup and any installed item, excluding only taxes and the charges in Vehicle Code 11713.1(e), and never net of a rebate (Civil Code 1784.31(j), 1784.41(a)).
• Every ad that quotes a dollar amount or a financing term for a specific vehicle shows the total price.
• Lead-response templates put the total price in the first written reply about a specific vehicle, at least once (1784.41(a)(3)).
• Inventory feed removes sold units from every marketplace within 48 hours and logs it (Vehicle Code 11713(c), Civil Code 1784.40(d)).
• Rebates, if shown, are a specific dollar amount from the manufacturer, distributor, affiliated finance company, utility or government (Vehicle Code 11713.1(j)).

The definition and the ad review: /california-sb-766/sb-766-total-price-advertising-rules/.

4. Add-ons and payment quotes

• Every add-on menu, brochure, email and worksheet says at least once that the add-on is not required and the vehicle can be bought without it (1784.41(b)).
• Every written monthly payment carries the total of payments over the term and the down payment or trade-in value it assumes (1784.41(c)).
• Any written comparison that mentions lower monthly payments says lower payments often increase the total paid (1784.41(d)).
• No charge for an add-on the customer cannot benefit from; check the statute's list in 1784.42(a) (nitrogen under 95 percent, no-coverage products, non-compliant GAP, service contracts void for pre-existing conditions, EV oil changes, converter etching on vehicles without one, surface protection that voids the paint warranty).
• Add-on providers paid within 10 days of signing, or a written provider agreement allowing later payment that does not affect coverage (1784.42(b)).
• Loan-to-value calculation kept for every deal with GAP (1784.44(a)(3)).

5. Running a cancellation

Write this down as a one-page procedure and give it to everyone who touches a return:

1. Confirm the vehicle is a used vehicle sold or leased at $50,000 or less and the buyer is inside the window: three calendar days starting the day after signing, ending at close of business, extended to the next open day if day three falls on a day you are closed (Civil Code 1784.31(i)).
2. Read the odometer. More than 400 miles since signing: no right. Over 250: note the miles for the $1 per mile charge, capped at $150.
3. Compute the restocking fee: 1.5 percent of the sale price, minimum $200, maximum $600, or the actual shipping cost if you charged shipping and it is lower than that figure (1784.31(g)).
4. Inspect the vehicle. Document anything beyond reasonable wear and tear with photos and a written report; claiming damage without a reasonable basis is a violation (1784.43(c)(7)).
5. Have the buyer sign the cancellation documents you reasonably require (1784.43(b)(7)).
6. Return the trade-in with all keys. If it has been sold or a title transfer started, pay the greater of the contract value, the resale amount or fair market value, less the lien payoff, and hand over the redacted sale document (1784.43(a)(3), (b)(9)).
7. Give the buyer a receipt with the date and time of cancellation and an itemized breakdown of every deduction (1784.43(a)(3)(B)).
8. Refund within 48 hours, or two business days after a check clears with a document showing the verification date (1784.43(d)).
9. Reverse the DMV report of sale and the sales tax on the refunded portion (Revenue and Taxation Code 6012.3 as amended).

The arithmetic and a worked example: /california-sb-766/sb-766-restocking-fee-mileage-refund/.

6. Records: two, three and seven years

Three retention rules stack on the same deal file. The longest one wins for each document.

Civil Code 1784.44(c) says the two-year rule "does not limit the requirements imposed by Section 2984.5," and 1784.44(b) lets you keep the records in any legible form you already use. Failing to keep any required record is itself a violation.

7. Staff training

Cover these with every salesperson, desk manager, finance manager and anyone who answers leads, and keep a signed attendance sheet:

• The three-day right: who gets it, how days are counted, the 400-mile rule, the no-waiver rule.
• The eight listed violations in Civil Code 1784.43(c), especially "anything to impede" a cancellation and claiming the refund person is unavailable.
• The thirteen misrepresentation topics in 1784.40, including availability at the advertised price, pre-approval claims, what happens to deposits and trade-ins if the deal falls through, and trade-in payoff timing.
• The total price rule in first written replies, and the add-on "not required" sentence.
• The cancellation procedure in section 5 above and who is authorized to release a refund or a trade-in.

8. A sale log

The statute does not require a log, but the records it does require are far easier to produce from one. For every retail sale or lease from 1 October 2026, record:

• Stock number, VIN, new or used, sale or lease, contract date and time.
• Vehicle price on the contract and whether it is $50,000 or less (right to cancel applies).
• Odometer at signing.
• Cancel notice given (date, language versions).
• Trade-in: yes or no, contract value, lien payoff, date sold if sold during the window.
• Deadline to cancel (date and closing time), and whether it was extended for a closed day.
• Cancellation: date and time exercised, odometer at return, restocking fee, mileage charge, deductions, refund date and method, trade-in returned or paid.
• Add-ons sold, provider paid date.
• First written communication saved (yes, with date).
• Listing removed from all feeds (date).

9. Still open as of September 2026

• No DMV form for the cancel notice, no sign template and no CARS Act regulation had been published.
• The statute does not define "price" or "sale price" for the $50,000 threshold and the restocking fee, so whether taxes, fees and add-ons count is unsettled; the DMV's own summary says "under $50,000" where the statute says "equal to or less than."
• No CDTFA notice on the rewritten Revenue and Taxation Code 6012.3 had been issued.
• The CARS Act sets no penalty of its own; enforcement will come through the Unfair Competition Law, the Consumers Legal Remedies Act, the Attorney General, district attorneys and DMV licensing.

Next steps

• Order the signs and the revised contract forms now; both must be in use on 1 October 2026, not before.
• Draft the cancel notice and its five translations, and the cancellation procedure.
• Run the advertising review and fix templates, feeds and add-on menus.
• Set the record retention schedule in your DMS and CRM: two years for CARS Act records, three years for DMV records, seven years or contract life for financed deals.
• Train staff in September 2026 and keep the sign-in sheet in the compliance file.

Frequently asked questions

Sources

• SB 766 (Chapter 354, Statutes of 2025), chaptered text, California Legislative Information
• Civil Code section 1784.44 (record retention), California Legislative Information
• Vehicle Code section 11709.2 (dealer notice), California Legislative Information
• 13 CCR 272.00 (business records, three-year retention), Legal Information Institute
• 13 CCR 272.02 (location of business records), Legal Information Institute
• Civil Code section 2984.5 (Automobile Sales Finance Act, seven-year retention), California Legislative Information
• DMV highlights new laws in 2026, California DMV
• CARS Act (SB 766): major changes coming October 1, 2026, California Dealer Academy

Related guides