Amended in Assembly March 18, 2016

California Legislature—2015–16 Regular Session

Assembly BillNo. 1859


Introduced by Assembly Member Gallagher

February 10, 2016


An act to amendbegin delete Section 7506.5end deletebegin insert Sections 7500.1 and 7507.9end insert of the Business and Professions Code,begin insert and to add Section 22651.03 to the Vehicle Code,end insert relating to collateral recovery.

LEGISLATIVE COUNSEL’S DIGEST

AB 1859, as amended, Gallagher. Collateralbegin delete recovery.end deletebegin insert recovery: release of vehicle.end insert

begin insert(1)end insertbegin insertend insertThe Collateral Recovery Act provides for the licensure and regulation of repossession agencies by the Bureau of Security and Investigative Services under the supervision and control of the Director of Consumer Affairs.begin delete The act requires every person entering the employ of, or contracting with, a licensee or multiple licensee to immediately complete an application for an initial registration or a reregistration and file the appropriate application with the chief of the bureau, as specified. The act further requires that application to be verified and include certain information, and provides that all information obtained on the application is confidential, as specified.end deletebegin insert That act defines the term “repossession” as meaning the locating or recovering of collateral by means of an assignment. That act requires a licensee to remove personal effects from the collateral and requires a licensee to make a complete and accurate inventory of the personal effects. That act makes a violation of any of its provisions a crime.end insert

This bill wouldbegin delete make a nonsubstantive change to that confidentiality provision. end deletebegin insert define the terms “repossession” or “repossess” to mean the locating and physical recovering of collateral by means of an assignment. The bill would instead require a licensee to make a good faith effort to inventory personal effects in the collateral and would prohibit a licensee from inventorying or removing any kind of trash or from being held responsible for hidden personal effects. The bill would authorize a licensee to allow a debtor or person in possession of the collateral to sign a waiver forfeiting personal effects or other personal property not covered by a security agreement and to waive the required inventory of personal effects, and would require a licensee, once the waiver is signed, to immediately dispose of the personal effects or other property. The bill would authorize a licensee to store personal effects inside the collateral, as specified. The bill would also prohibit a licensee from conspiring or agreeing to release personal effects or other personal property not covered by a security agreement to anyone other than the debtor. By placing new prohibitions on a licensee, this bill would expand an existing crime and would, therefore, impose a state-mandated local program.end insert

begin insert

(2) Existing law specifies how and to whom a vehicle that has been removed by a peace officer may be released, including to the legal owner of the vehicle and the legal owner’s agent.

end insert
begin insert

This bill would, notwithstanding specified sections of law, instead prescribe specified procedures and requirements for releasing a vehicle to a licensed repossessor, as defined, including that the licensed repossessor present a copy of the assignment and pay all towing and storage fees related to the seizure of the vehicle.

end insert
begin insert

Existing law exempts from registration a vehicle repossessed pursuant to a security agreement solely for the purpose of transporting the vehicle from the point of repossession to the storage facilities of the repossessor or other specified places if the repossessor transports the vehicle with appropriate documents and makes them available to a law enforcement officer upon request. Existing law exempts a legal owner of a vehicle from the payment of administrative costs assessed by a city, county, or city and county for releasing a properly impounded vehicle, unless the legal owner who redeems the vehicle requests a poststorage hearing. Existing law prohibits a city, county, or city and county from requiring the legal owner or the legal owner’s agent to request a poststorage hearing as a requirement for release of the vehicle.

end insert
begin insert

This bill would specify that the above exemptions apply when a vehicle is released to a licensed repossessor.

end insert
begin insert

(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

end insert
begin insert

This bill would provide that with regard to certain mandates no reimbursement is required by this act for a specified reason.

end insert
begin insert

With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.

end insert

Vote: majority. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: begin deleteno end deletebegin insertyesend insert.

The people of the State of California do enact as follows:

P3    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 7500.1 of the end insertbegin insertBusiness and Professions
2Code
end insert
begin insert is amended to read:end insert

3

7500.1.  

The following terms as used in this chapter have the
4meaning expressed in this section:

5(a) “Advertisement” means any written or printed
6communication, including a directory listing, except a free
7telephone directory listing that does not allow space for a license
8number.

9(b) “Assignment” means any written authorization by the legal
10owner, lienholder, lessor, lessee, registered owner, or the agent of
11any of them, to repossess any collateral, including, but not limited
12to, collateral registered under the Vehicle Code that is subject to
13a security agreement that contains a repossession clause.
14“Assignment” also means any written authorization by an employer
15to recover any collateral entrusted to an employee or former
16 employee in possession of the collateral. A photocopy of an
17assignment, facsimile copy of an assignment, or electronic format
18of an assignment shall have the same force and effect as an original
19written assignment.

20(c) “Bureau” means the Bureau of Security and Investigative
21Services.

22(d) “Chief” means the Chief of the Bureau of Security and
23Investigative Services.

P4    1(e) “Collateral” means any specific vehicle, trailer, boat,
2recreational vehicle, motor home, appliance, or other property that
3is subject to a security agreement.

4(f) “Combustibles” means any substances or articles that are
5capable of undergoing combustion or catching fire, or that are
6flammable, if retained.

7(g) “Dangerous drugs” means any controlled substances as
8defined in Chapter 2 (commencing with Section 11053) of Division
910 of the Health and Safety Code.

10(h) “Deadly weapon” means and includes any instrument or
11weapon of the kind commonly known as a blackjack, slungshot,
12billy, sandclub, sandbag, metal knuckles, dirk, dagger, pistol, or
13revolver, or any other firearm, any knife having a blade longer
14than five inches, any razor with an unguarded blade, and any metal
15pipe or bar used or intended to be used as a club.

16(i) “Debtor” means any person obligated under a security
17agreement.

18(j) “Department” means the Department of Consumer Affairs.

19(k) “Director” means the Director of Consumer Affairs.

20(l) “Electronic format” includes, but is not limited to, a text
21message, email, or Internet posting.

22(m) “Health hazard” means any personal effects that if retained
23would produce an unsanitary or unhealthful condition, or which
24might damage other personal effects.

25(n) “Legal owner” means a person holding a security interest
26in any collateral that is subject to a security agreement, a lien
27against any collateral, or an interest in any collateral that is subject
28to a lease agreement.

29(o) “Licensee” means an individual, partnership, limited liability
30company, or corporation licensed under this chapter as a
31repossession agency.

32(p) “Multiple licensee” means a repossession agency holding
33more than one repossession license under this chapter, with one
34fictitious trade style and ownership, conducting repossession
35business from additional licensed locations other than the location
36shown on the original license.

37(q) “Person” includes any individual, partnership, limited
38liability company, or corporation.

39(r) “Personal effects” means any property that is not the property
40of the legal owner.

P5    1(s) “Private building” means and includes any dwelling,
2outbuilding, or other enclosed structure.

3(t) “Qualified certificate holder” or “qualified manager” is a
4person who possesses a valid qualification certificate in accordance
5with the provisions of Article 5 (commencing with Section 7504)
6and is in active control or management of, and who is a director
7of, the licensee’s place of business.

8(u) “Registered owner” means the individual listed in the records
9of the Department of Motor Vehicles, or on a conditional sales
10contract, or on a repossession assignment, as the registered owner.

11(v) “Registrant” means a person registered under this chapter.

12(w) “Repossession”begin insert or “repossess”end insert means the locatingbegin delete orend deletebegin insert and
13physicalend insert
recovering of collateral by means of an assignment.

14(x) “Secured area” means and includes any fenced and locked
15area.

16(y) “Security agreement” means an obligation, pledge, mortgage,
17chattel mortgage, lease agreement, deposit, or lien, given by a
18debtor as security for payment or performance of his or her debt,
19by furnishing the creditor with a recourse to be used in case of
20failure in the principal obligation. “Security agreement” also
21includes a bailment where an employer-employee relationship
22exists or existed between the bailor and the bailee.

23(z) “Services” means any duty or labor to be rendered by one
24person for another.

25(aa) “Violent act” means any act that results in bodily harm or
26injury to any party involved.

begin delete

27(bb)

end delete

28begin insert(ab)end insert The amendments made to this section by Chapter 418 of
29the Statutes of 2006 shall not be deemed to exempt any person
30from the provisions of this chapter.

31begin insert

begin insertSEC. 2.end insert  

end insert

begin insertSection 7507.9 of the end insertbegin insertBusiness and Professions Codeend insert
32begin insert is amended to read:end insert

33

7507.9.  

begin deletePersonal end deletebegin insertExcept as otherwise provided in this section,
34personal end insert
effects shall be removed from the collateral, including
35any personal effect that is mounted but detachable from the
36collateral by a release mechanism. Abegin delete complete and accurate
37inventory of the personal effects shall be made, and theend delete
begin insert licensee
38shall make a good faith effort to inventory the personal effects,
39but shall not inventory or remove trash of any kind or be held
40responsible for hidden personal effects. Theend insert
personal effects shall
P6    1be labeled and stored by the licensee for a minimum of 60 days in
2a secure manner, except those personal effects removed by or in
3the presence of the debtor or the party in possession of the collateral
4at the time of the repossession. If the licensee or the licensee’s
5agent cannot determine whether the property attached to the
6collateral is a personal effect or a part of the collateral, then that
7fact shall be noted on the inventory and the licensee or agent shall
8not be obligated to remove the item from the collateral, unless the
9item can be removed without the use of tools, in which case it shall
10be removed and inventoried. The licensee or the licensee’s agent
11shall notify the debtor that if the debtor takes the position that an
12item is a personal effect, then the debtor shall contact the legal
13owner to resolve the issue.

14(a) The date and time the inventory is made shall be indicated.
15The permanent records of the licensee shall indicate the name of
16the employee or registrant who performed the inventory.

17(b) The following items of personal effects are items determined
18to present a danger or health hazard when recovered by the licensee
19and shall be disposed of in the following manner:

20(1) Deadly weapons and dangerous drugs shall be turned over
21to any law enforcement agency for retention. These items shall be
22entered on the inventory and a notation shall be made as to the
23date, time, and place the deadly weapon or dangerous drug was
24turned over to the law enforcement agency, and a receipt from the
25law enforcement agency shall be maintained in the records of the
26repossession agency.

27(2) Combustibles shall be inventoried and noted as “disposed
28of, dangerous combustible,” and the item shall be disposed of in
29a reasonable and safe manner.

30(3) Food and other health hazard items shall be inventoried and
31noted as “disposed of, health hazard,” and disposed of in a
32reasonable and safe manner.

33(c) Personal effects may be disposed of after being held for at
34least 60 days. The inventory, and adequate information as to how,
35when, and to whom the personal effects were disposed of, shall
36be filed in the permanent records of the licensee and retained for
37four years.

38(d) The inventory shall include the name, address, business
39hours, and telephone number of the repossession agency to contact
40for recovering the personal effects and an itemization of all
P7    1personal effects removal and storage charges that will be made by
2the repossession agency. The inventory shall also include the
3following statement: “Please be advised that the property listed
4on this inventory will be disposed of by the repossession agency
5after being held for 60 days from the date of this notice IF
6UNCLAIMED.”

7(e) The inventory shall be provided to a debtor not later than
848 hours after the recovery of the collateral, except that if:

9(1) The 48-hour period encompasses a Saturday, Sunday, or
10postal holiday, the inventory shall be provided no later than 72
11hours after the recovery of the collateral.

12(2) The 48-hour period encompasses a Saturday or Sunday and
13a postal holiday, the inventory shall be provided no later than 96
14hours after the recovery of the collateral.

15(3) Inventory resulting from repossession of a yacht, motor
16home, or travel trailer is such that it shall take at least four hours
17to inventory, then the inventory shall be provided no later than 96
18hours after the recovery of the collateral. When the 96-hour period
19encompasses a Saturday, Sunday, or postal holiday, the inventory
20shall be provided no later than 120 hours after the recovery of the
21collateral.

22(4) The licensee is unable to open a locked compartment that
23is part of the collateral, the available inventory shall be provided
24no later than 96 hours after the recovery of the collateral. When
25the 96-hour period encompasses a Saturday, Sunday, or postal
26holiday, the inventory shall be provided no later than 120 hours
27after the recovery of the collateral.

28(f) Environmental, Olympic, special interest, or other license
29plates issued pursuant to Article 8 (commencing with Section
305000), Article 8.4 (commencing with Section 5060), or Article 8.5
31(commencing with Section 5100) of Chapter 1 of Division 3 of
32the Vehicle Code that remain the personal effects of the debtor
33shall be removed from the collateral and inventoried pursuant to
34this section. If the plates are not claimed by the debtor within 60
35days, they shall either (1) be effectively destroyed and the licensee
36shall, within 30 days thereafter, notify the Department of Motor
37Vehicles of their effective destruction on a form promulgated by
38the chief that has been approved as to form by the Director of the
39Department of Motor Vehicles; or (2) be retained by the licensee
40indefinitely to be returned to the debtor upon request, in which
P8    1case the licensee shall not charge more than 60 days’ storage on
2the plates.

3(g) The notice may be given by regular mail addressed to the
4last known address of the debtor or by personal service at the option
5of the repossession agency.

6(h) begin insert(1)end insertbegin insertend insertWith the consent of the licensee, the debtor waives the
7preparation and presentation of an inventory if the debtor redeems
8the personal effects or other personal property not covered by a
9security interest within the time period for the notices required by
10this section and signs a statement that he or she has received all
11the property.

begin insert

12(2) A licensee may allow a debtor or a person in possession of
13the collateral to sign, at the time of repossession or at a later date,
14a waiver forfeiting personal effects or other personal property not
15covered by a security agreement and waiving an inventory of those
16personal effects or other personal property. Once the waiver has
17been signed, the licensee shall immediately dispose of the personal
18effects or personal property.

end insert

19(i) begin insert(1)end insertbegin insertend insertIf personal effects or other personal property not covered
20by a security agreement are to be released to someone other than
21the debtor, the repossession agency shall request written
22authorization to do so from the debtor.

begin insert

23(2) A licensee shall not release or conspire or agree to release
24personal effects or other personal property not covered by a
25security agreement to anyone other than the debtor.

end insert

26(j) A licensee shall not sell personal effects or other personal
27property not covered by a security agreement and remit money
28from the sale to a third party, including, but not limited to, any
29lending institution.

30(k) The inventory shall be a confidential document. A licensee
31shall only disclose the contents of the inventory under the following
32circumstances:

33(1) In response to the order of a court having jurisdiction to
34issue the order.

35(2) In compliance with a lawful subpoena issued by a court of
36competent jurisdiction.

37(3) When the debtor has consented in writing to the release and
38the written consent is signed and dated by the debtor subsequent
39to the repossession and states the entity or entities to whom the
40contents of the inventory may be disclosed.

P9    1(4) To the debtor.

begin insert

2(l) A licensee may store personal effects or personal property
3inside the collateral until the collateral is no longer in the
4possession of the licensee. The collateral shall not leave the
5possession of the licensee until all personal effects or personal
6property have been removed.

end insert
7begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 22651.03 is added to the end insertbegin insertVehicle Codeend insertbegin insert, end insert8immediately following Section 22651begin insert, to read:end insert

begin insert
9

begin insert22651.03.end insert  

(a) Notwithstanding Sections 14602.6 and 22651,
10this section shall apply when collateral is released to a licensed
11repossessor. For purposes of this section, “licensed repossessor”
12means a licensed repossessor, licensed repossession agency, or
13its officers or employees pursuant to Chapter 11 (commencing
14with Section 7500) of Division 3 of the Business and Professions
15Code.

16(b) Pursuant to Section 4022, a vehicle obtained by a licensed
17repossessor as a release of collateral is exempt from registration
18for purposes of the repossessor removing the vehicle to his or her
19storage facility or the facility of the legal owner. A law enforcement
20agency, impounding authority, tow yard, storage facility, or any
21other person in possession of the collateral shall release the vehicle
22without requiring current registration and pursuant to this section.
23The law enforcement agency shall be open to issue a release to
24the legal owner or a licensed repossessor whenever the agency is
25open to serve the public for nonemergency business.

26(c) The law enforcement agency and the impounding agency,
27including any storage facility acting on behalf of the law
28enforcement agency or impounding agency, shall comply with this
29section and shall not be liable to the registered owner for the
30improper release of the vehicle to the legal owner or a licensed
31repossessor provided the release complies with this section. A law
32enforcement agency shall not refuse to issue a release to a legal
33owner or a licensed repossessor on the grounds that it previously
34issued a release.

35(d) A vehicle removed and seized for any reason shall be
36released to the legal owner of the vehicle or to a licensed
37repossessor if all of the following conditions are met:

38(1) The legal owner is a motor vehicle dealer, bank, credit union,
39acceptance corporation, or other licensed financial institution
P10   1legally operating in this state or is another person, not the
2registered owner, holding a security interest in the vehicle.

3(2) (A) The legal owner or the licensed repossessor pays all
4towing and storage fees related to the seizure of the vehicle. Any
5person having possession of the vehicle shall not collect from the
6legal owner of the type specified in paragraph (1) or a licensed
7repossessor any administrative charges imposed pursuant to
8Section 22850.5 unless the legal owner voluntarily requested a
9poststorage hearing.

10(B) A person operating or in charge of a storage facility where
11vehicles are stored pursuant to this section shall accept a valid
12bank credit card or cash for payment of towing, storage, and
13related fees by a legal owner or a licensed repossessor claiming
14the vehicle. A credit card shall be in the name of the person
15presenting the card. “Credit card” means “credit card” as defined
16in subdivision (a) of Section 1747.02 of the Civil Code, except, for
17the purposes of this section, credit card does not include a credit
18card issued by a retail seller.

19(C) A person operating or in charge of a storage facility
20described in subparagraph (B) who violates subparagraph (B)
21shall be civilly liable to the owner of the vehicle or to the person
22who tendered the fees for four times the amount of the towing,
23storage, and related fees, but not to exceed five hundred dollars
24($500).

25(D) A person operating or in charge of a storage facility
26described in subparagraph (B) shall have sufficient funds on the
27premises of the primary storage facility during normal business
28hours to accommodate, and make change in, a reasonable
29monetary transaction.

30(E) Credit charges for towing and storage services shall comply
31with Section 1748.1 of the Civil Code. Law enforcement agencies
32may include the costs of providing for payment by credit when
33making agreements with towing companies on rates.

34(3) The legal owner or licensed repossessor presents a copy of
35the assignment, as defined in subdivision (b) of Section 7500.1 of
36the Business and Professions Code; a release from the one
37responsible governmental agency, only if required by the agency;
38a government-issued photographic identification card; and any
39one of the following, as determined by the legal owner or the
40 licensed repossessor: a certificate of repossession for the vehicle,
P11   1a security agreement for the vehicle, or title, whether paper or
2electronic, showing proof of legal ownership for the vehicle. Any
3documents presented may be originals, photocopies, or facsimile
4copies, or may be transmitted electronically. The law enforcement
5agency, impounding agency, or any other governmental agency,
6or any person acting on behalf of those agencies, shall not require
7any documents to be notarized. The law enforcement agency,
8impounding agency, or any person acting on behalf of those
9agencies may require the licensed repossessor to produce a
10photocopy or facsimile copy of its repossession agency license or
11registration issued pursuant to Chapter 11 (commencing with
12Section 7500) of Division 3 of the Business and Professions Code.

13No administrative costs authorized under subdivision (a) of
14Section 22850.5 shall be charged to the legal owner, of the type
15specified in paragraph (1), who redeems the vehicle unless the
16legal owner voluntarily requests a poststorage hearing. No city,
17county, city and county, or state agency shall require a legal owner
18or a licensed repossessor to request a poststorage hearing as a
19requirement for release of the vehicle to the legal owner or the
20licensed repossessor. The law enforcement agency, impounding
21agency, or other governmental agency, or any person acting on
22behalf of those agencies, shall not require any documents other
23than those specified in this paragraph. The law enforcement
24agency, impounding agency, or other governmental agency, or
25any person acting on behalf of those agencies, shall not require
26any documents to be notarized. The legal owner or the licensed
27repossessor shall be given a copy of any documents he or she is
28required to sign, except for a vehicle evidentiary hold logbook.
29The law enforcement agency, impounding agency, or any person
30acting on behalf of those agencies, or any person in possession of
31the vehicle may photocopy and retain the copies of any documents
32presented by the legal owner or licensed repossessor.

33(4) A failure by a storage facility to comply with any applicable
34conditions set forth in this subdivision shall not affect the right of
35the legal owner or a licensed repossessor to retrieve the vehicle,
36provided all conditions required of the legal owner or licensed
37repossessor under this subdivision are satisfied.

38(e) (1) A legal owner or a licensed repossessor that obtains
39release of a vehicle pursuant to subdivision (d) shall not release
40the vehicle to the registered owner of the vehicle, the person who
P12   1was listed as the registered owner when the vehicle was
2 impounded, or any agents of the registered owner, unless the
3registered owner is a rental car agency.

4(2) The legal owner or the licensed repossessor shall not
5relinquish the vehicle to the registered owner or the person who
6was listed as the registered owner when the vehicle was impounded
7until the registered owner or that owner’s agent presents his or
8her valid driver’s license or valid temporary driver’s license to
9the legal owner or the licensed repossessor. The legal owner,
10licensed repossessor, or person in possession of the vehicle shall
11make every reasonable effort to ensure that the license presented
12is valid and that possession of the vehicle will not be given to the
13driver who was involved in the original impoundment proceeding
14until the expiration of the impoundment period.

15(f) The legal owner of collateral shall, by operation of law and
16without requiring further action, indemnify and hold harmless a
17law enforcement agency, city, county, city and county, the state,
18a tow yard, storage facility, or an impounding yard from a claim
19arising out of the release of the collateral to a licensed repossessor
20and from any damage to the collateral after its release, including
21reasonable attorney’s fees and costs associated with defending a
22claim, if the collateral was released in compliance with this section.

end insert
23begin insert

begin insertSEC. 4.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
24Section 6 of Article XIII B of the California Constitution for certain
25costs that may be incurred by a local agency or school district
26because, in that regard, this act creates a new crime or infraction,
27eliminates a crime or infraction, or changes the penalty for a crime
28or infraction, within the meaning of Section 17556 of the
29Government Code, or changes the definition of a crime within the
30meaning of Section 6 of Article XIII B of the California
31Constitution.

end insert
begin insert

32However, if the Commission on State Mandates determines that
33this act contains other costs mandated by the state, reimbursement
34to local agencies and school districts for those costs shall be made
35pursuant to Part 7 (commencing with Section 17500) of Division
364 of Title 2 of the Government Code.

end insert
begin delete
37

SECTION 1.  

Section 7506.5 of the Business and Professions
38Code
is amended to read:

39

7506.5.  

All information obtained on the application shall be
40confidential pursuant to the Information Practices Act of 1977
P13   1(Chapter 1 (commencing with Section 1798) of Title 1.8 of Part
24 of Division 3 of the Civil Code) and shall not be released to the
3public except for the registrant’s full name, the licensee’s name
4and address, and the registration number. The application shall be
5verified and shall include:

6(a) The full name, residence address, residence telephone
7number, date and place of birth, and driver’s license number of
8the applicant or registrant.

9(b) A statement listing any and all names used by the applicant
10or registrant, other than the name by which he or she is currently
11 known. If the applicant or registrant has never used a name other
12than his or her true name, this fact shall be set forth in the
13statement.

14(c) The name and address of the licensee and the date the
15employment or contract commenced.

16(d) The title of the position occupied by the applicant or
17registrant and a description of his or her duties.

18(e) Two recent photographs of the applicant or registrant, of a
19type prescribed by the chief, and two classifiable sets of his or her
20fingerprints, one set of which shall be forwarded to the Federal
21Bureau of Investigation for purposes of a background check.

22(f) The bureau may impose a fee not to exceed three dollars
23($3) for processing classifiable fingerprint cards submitted by
24applicants, excluding those submitted into an electronic fingerprint
25system using electronic fingerprint technology.

end delete


O

    98