BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2503| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2503 Author: Hagman (R) Amended: 8/19/14 in Senate Vote: 27 - Urgency SENATE BUSINESS, PROF. & ECON. DEVELOP. COMM. : 8-0, 6/16/14 AYES: Lieu, Wyland, Berryhill, Block, Corbett, Galgiani, Hill, Torres NO VOTE RECORDED: Hernandez SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 8/5/14 AYES: DeSaulnier, Beall, Cannella, Galgiani, Hueso, Lara, Liu, Pavley, Roth, Wyland NO VOTE RECORDED: Gaines SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for vote SUBJECT : Repossessors SOURCE : California Association of Licensed Repossessors DIGEST : This bill makes various changes to state law governing licensed repossessors, including clarifying that a repossessed vehicle is not subject to registration. Senate Floor Amendments of 8/19/14 make clarifying changes and narrow the provisions of the bill. CONTINUED AB 2503 Page 2 ANALYSIS : Existing law, the Business and Professions Code: 1.Provides for the licensing and regulation of repossession agencies, repossessors, and repossessor qualified managers by the Bureau of Security and Investigative Services (BSIS) under the Department of Consumer Affairs (DCA). 2.Establishes the Collateral Recovery Act (Act) governing collateral repossessions by a legal owner, lienholder, lessor or lessee, or the agent of any of them based on written authorization and a security agreement. 3.Provides that a financial institution that knowingly engages a nonexempt unlicensed person to repossess collateral on its behalf is guilty of a misdemeanor, punishable by a $5,000 fine. 4.Defines the following terms: A. "Repossession agency" to include any person who engages in business or accepts employment to locate or recover collateral, whether voluntarily or involuntarily, which is subject to a security agreement; B. "Repossessor's tow vehicle" to mean a tow vehicle which is registered to a licensed repossessor that is used exclusively in the course of the repossession business; and C. "Security agreement" to mean an obligation, pledge, mortgage, chattel mortgage, lease agreement, deposit, or lien, given by a debtor as security for payment or performance of his/her debt, by furnishing the creditor with recourse to be used in case of failure in the principal obligation. 1.Specifies that vehicle repossession is complete when the repossessor gains entry to the collateral or when the collateral becomes connected to the repossessor's tow vehicle. Prohibits any person other than the legal owner to direct a repossessor to release a vehicle without the legal authority to do so. AB 2503 Page 3 2.Authorizes BSIS to assess administrative fines for various prohibited acts, including using any identification to indicate registration as a repossessor, other than a registration card issued by BSIS, or an employer identification card approved by BSIS. 3.Authorizes an employee officer, director, or representative of a repossession agency to wear a badge, cap insignia, or jacket patch if it includes (a) a substantial part of the licensed repossession agency's name; (b) the BSIS-issued license number; and (c) a word referring to the individual as a repossessor. Existing law, the Vehicle Code: 4. Requires that when possession is taken of any vehicle on behalf of the legal owner under the terms of a security or lease agreement, the person taking possession shall notify the local police department or other law enforcement agency where the repossession occurred within one hour. 5. Defines a buy-here-pay-here dealer, as an automobile dealer who enters into contracts to sell a vehicle and who assigns less than 90% of the sales contracts to a third party for financing. 6. Provides that a repossessed vehicle is exempt from registration solely for the purpose of transporting the vehicle, as specified, and provided that the repossessor transports with the vehicle the appropriate documents authorizing the repossession and makes them available to a law enforcement officer on request. 7. Prohibits a person from driving, moving, or parking along a road or in a public parking facility a motor vehicle or trailer unless the motor vehicle or trailer is registered. To register a vehicle, the owner provides the Department of Motor Vehicles (DMV) with specified information and pays DMV a basic registration fee, plus various additional state and local charges, including a vehicle license fee that is based on the value of the vehicle. This bill: AB 2503 Page 4 1.Requires a repossession agency to only transact business with another person or entity as an independent contractor, and prohibits a repossession agency from allowing a person or entity, other than the qualified certificate holder or the repossession agency's owner or officer, to manage the day to day operations, operate, control, or transact business covered by this bill, except as specified. 2.Adds buy-here-pay-here dealers to the financial institutions that are subject to a misdemeanor for knowingly engaging an unlicensed person to repossess collateral on its behalf and also specifies that DMV may take disciplinary action against a buy-here-pay-here dealer who hires an unlicensed repossessor. 3.Requires a repossessor to contact the local police or sheriff within one hour of taking possession of a vehicle, but if, after an attempt to notify, law enforcement is unable to receive and record the required notification, then the repossessor shall continue to attempt notification until he/she can provide notification. Specifies that the notification shall include all of the following information provided in this order: The approximate location from which the vehicle was taken; The date and approximate time when the vehicle was taken; The vehicle year, make, and model; The last six digits of the vehicle identification number; The registered owner as provided on the repossession assignment; The legal owner requesting the repossession as provided on the repossession assignment; and The name and telephone number of the repossession agency. 1.Requires a legal owner of a vehicle (typically a bank or other financing entity) to indemnify and hold harmless a law enforcement agency, local or state government, an impound or tow yard, or any other storage facility from any claim arising out of that entity releasing a vehicle to a repossessor and from any damage occurring to the vehicle after its release. AB 2503 Page 5 2.Exempts from the registration requirement a vehicle obtained by a licensed repossessor as a release of collateral for purposes of the repossessor removing the vehicle to the storage facility or the facility of the legal owner. Requires a law enforcement agency, impounding authority, tow yard, storage facility, or any other person in possession of the collateral to release the vehicle without requiring current registration. 3.Makes it illegal to interfere with an employee of a repossession agency's transport of a vehicle to a storage facility, auction, or dealer. This does not apply to a peace officer while acting in an official capacity. 4.Makes it illegal for any tow yard, impounding agency, or government agency to refuse to release a vehicle or other collateral to anyone that is legally entitled to that vehicle or other collateral. This does not apply to vehcicles being held for evidence by law enforcement or a prosecuting attorney. 5.Prohibits a licensed repossessor from appraising or determining the value of any collateral, whether damaged or not, as specified. 6.Makes other clarifying and minor changes to the Collateral Recovery Act, including exempting a badge, cap insignia, or jacket patch from the prohibition on using any identification to indicate registration as a repossessor. Background BSIS protects consumers by licensing and regulating the following industries: alarm company operator and alarm company employees, locksmith companies and locksmith company employees, private investigators, private patrol operators and security guards, proprietary private security officers and employees, and repossessor agencies and repossessor agency employees. BSIS also has jurisdiction over firearm and baton training facilities and their instructors. As part of its mission, BSIS actively investigates complaints against its licensees and works to punish unlicensed business AB 2503 Page 6 operations. This includes the suspension and revocation of licenses and seeking administrative, criminal, and civil sanctions against violators. According to the BSIS Internet Web site, undercover sting and sweep operations are conducted on an ongoing basis throughout all of California. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT : (Verified 8/19/14) California Association of Licensed Repossessors (source) ARGUMENTS IN SUPPORT : The author introduced this bill at the request of the California Association of Licensed Repossessors to clarify the process a repossessor follows when notifying law enforcement that he/she has picked up a vehicle; to ensure that impound yards do not require repossessors to renew a vehicle's registration when repossessing it; and to ensure that repossessors are able to complete repossessions without undue interference. Specifically, the proponents note that repossessors have experienced difficulty due to varying interpretations of the Vehicle Code, which this bill attempts to clarify. ASSEMBLY FLOOR : 78-0, 5/15/14 AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dababneh, Dahle, Daly, Dickinson, Donnelly, Gordon, Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, Atkins NO VOTE RECORDED: Mansoor, Vacancy MW:nl 8/20/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE AB 2503 Page 7 SU PPORT/OPPOSITION: NONE RECEIVED **** END ****