The following is an excerpt from the NHADA Legal Guide. Dealers need to be aware of the fact that there is a significant difference between a documentary fee and an administrative fee.
Documentary fees are defined by RSA 361-A:1, IV as "the fees for filing, recording or investigating, perfecting and releasing or satisfying a retained title or a lien created by a retail installment contract, and shall not exceed the actual cost assessed by the Department of Safety, Division of Motor Vehicles (DMV), or other state or local agency for filing, recording or investigating, perfecting and releasing or satisfying such title or lien."
Documentary fees are the combination of the $25 title fee that is submitted to the DMV and the $2 agent fee. Documentary fees ($27) can be listed on the retail installment contract.
On the other hand, the term administrative fee is not defined anywhere in the state's statutes. Therefore, according to the Banking Department, administrative fees cannot be listed on the retail installment contract. Administrative fees can, however, be listed on the Purchase and Sale Agreement. The bottom line on the Purchase and Sale Agreement becomes the "cash sale price," which includes the administrative fee and is then carried over to the Retail Installment Contract.
Also, dealers need to be able to justify the amount of the administrative fee. A dealer should be able to identify and justify those expenses included in the administrative fee. NHADA provides a brochure explaining the purpose of an administrative fee. Dealers should use the NHADA brochure or another to provide an explanation to customers. Similarly, all dealer personnel should be trained to explain the "why" behind the fee. Complying with the documentary/administrative fee rule as well as the other requirements of RSA 361-A will keep the Banking Department examiners off your doorstep.
The Banking Department has the authority to do an audit of a dealer's records, including, but not limited to, deal sales jackets, to determine if the dealer is complying with NH law. A violation can result in a fine or the suspension of the dealer's retail seller's license. Moreover if, as the result of an audit, a dealer is found to be in violation of RSA 361-A, in addition to the imposition of a penalty, the dealer must reimburse the state for the cost of the audit.