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  ****