(a) As used in this section:

(1) "Customer" means a person who trades in or otherwise provides a vehicle to a motor vehicle dealer for resale;

(2) "Motor vehicle dealer" means a motor vehicle dealer as defined in § 23-112-103 or a used motor vehicle dealer as defined in § 23-112-103; and

(3) "Subsequent purchaser" means a person who buys the vehicle that was provided to the motor vehicle dealer as a trade-in or for resale by the customer.

(b)

(1) If a motor vehicle dealer takes possession of a vehicle for purposes of resale and there is an outstanding lien or encumbrance on the vehicle, the motor vehicle dealer shall in good faith tender full payment on the outstanding lien or encumbrance within ten (10) business days after the motor vehicle dealer takes possession of the vehicle from the customer.

(2) This time period may be shortened if the customer and the motor vehicle dealer agree to a shorter time period.

(c)

(1) If the motor vehicle dealer fails to act in good faith in tendering full payment for the outstanding lien or encumbrance within ten (10) business days or within the time period agreed to by the motor vehicle dealer and the customer under subdivision (b)(2) of this section, the customer shall have an absolute right to cancel the contract for sale between the customer and the motor vehicle dealer.

(2) If the contract for sale is cancelled pursuant to subdivision (c)(1) of this section, the motor vehicle dealer shall be responsible for late fees, finance charges, or any financial penalty that is required to be made by the customer as part of the existing lien or encumbrance.

(d) If the motor vehicle dealer sells the vehicle to a subsequent purchaser without first tendering full payment for the outstanding lien or encumbrance, the subsequent purchaser who buys the vehicle subject to the existing lien or encumbrance shall have an absolute right to cancel the contract for sale between the subsequent purchaser and the motor vehicle dealer.