Amended in Senate June 14, 2016

Amended in Assembly April 18, 2016

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 amend Sections 7500.1, 7504,begin insert 7506.7,end insert 7507.3, 7507.6, 7507.9, 7507.13, and 7508.2 of the Business and Professions Code, and to add Section 22651.03 to the Vehicle Code, relating to collateral recovery.

LEGISLATIVE COUNSEL’S DIGEST

AB 1859, as amended, Gallagher. Collateral recovery: release of vehicle.

(1) The 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. That act defines the term “repossession” as meaning the locating or recovering of collateral by means of an assignment. That act defines the term “assignment” as any written authorization by the legal owner, lienholder, lessor, lessee, registered owner, or the agent of any of them, to repossess any collateral or any written authorization by an employer to recover any collateral entrusted to an employee or former employee in possession of the collateral. 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.

This bill would define the terms “repossession” or “repossess” to mean the locatingbegin delete and physicalend deletebegin insert or physicallyend insert recovering of collateral by means ofbegin delete an assignment.end deletebegin insert a repossession order.end insert The bill would define the termbegin delete “order”end deletebegin insert “repossession orderend insertbegin insertend insert as having the same meaning as “assignment” and would change references to “assignment” in the act tobegin delete “order.”end deletebegin insert “repossession order.” The bill would also define “locate” or “locating” as searching visually, by a licensee, for collateral without the use of an electronic device, including, but not limited to, a camera, scanner, or automated license plate reader. The bill would exempt an employee of a licensee who is operating an electronic device for the purpose of locating collateral or documenting the location of collateral from registration, as specified.end insert The bill would instead require a licensee to make a complete and accurate inventory of the personal effects in the collateralbegin delete that are not locked and not retrievable without a key, combination, or damage to the collateral or personal effects.end deletebegin insert unless the collateral is locked and, if the collateral is locked, would require a licensee to inventory the personal effects within 15 days, if possible.end insert The bill would authorize a debtor, with the consent of the licensee, to waive the preparation and presentation of an inventory of the personal effects not covered by a security interest,begin insert within the time period for specified notices orend insert prior to the completion of the inventory,begin insert whichever is earlier,end insert if the debtor signs a specified statement.begin insert The bill would require a licensee to give the debtor the phone number of the licensed repossession agency if the debtor claims any personal effects or personal property are missing.end insert 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.

(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.

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.

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.

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

(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.

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

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.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

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

P3    1

SECTION 1.  

Section 7500.1 of the Business and Professions
2Code
is amended to read:

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.

begin delete

9(b) “Assignment” or “order” means any written authorization
10by the legal owner, lienholder, lessor, lessee, registered owner, or
P4    1the agent of any of them, to repossess any collateral, including,
2but not limited to, collateral registered under the Vehicle Code
3that is subject to a security agreement that contains a repossession
4clause. “Assignment” or “order” also means any written
5authorization by an employer to recover any collateral entrusted
6to an employee or former employee in possession of the collateral.
7A photocopy of an assignment or order, facsimile copy of an
8assignment or order, or electronic format of an assignment or order
9shall have the same force and effect as an original written
10assignment or order.

11(c)

end delete

12begin insert(b)end insert “Bureau” means the Bureau of Security and Investigative
13Services.

begin delete

14(d)

end delete

15begin insert(end insertbegin insertc)end insert “Chief” means the Chief of the Bureau of Security and
16Investigative Services.

begin delete

17(e)

end delete

18begin insert(end insertbegin insertd)end insert “Collateral” means any specific vehicle, trailer, boat,
19recreational vehicle, motor home, appliance, or other property that
20is subject to a security agreement.

begin delete

21(f)

end delete

22begin insert(e)end insert “Combustibles” means any substances or articles that are
23capable of undergoing combustion or catching fire, or that are
24flammable, if retained.

begin delete

25(g)

end delete

26begin insert(f)end insert “Dangerous drugs” means any controlled substances as
27defined in Chapter 2 (commencing with Section 11053) of Division
2810 of the Health and Safety Code.

begin delete

29(h)

end delete

30begin insert(g)end insert “Deadly weapon” means and includes any instrument or
31weapon of the kind commonly known as a blackjack, slungshot,
32billy, sandclub, sandbag, metal knuckles, dirk, dagger, pistol, or
33revolver, or any other firearm, any knife having a blade longer
34than five inches, any razor with an unguarded blade, and any metal
35pipe or bar used or intended to be used as a club.

begin delete

36(i)

end delete

37begin insert(h)end insert “Debtor” means any person obligated under a security
38agreement.

begin delete

39(j)

end delete

40begin insert(i)end insert “Department” means the Department of Consumer Affairs.

begin delete

P5    1(k)

end delete

2begin insert(j)end insert “Director” means the Director of Consumer Affairs.

begin delete

3(l)

end delete

4begin insert(k)end insert “Electronic format” includes, but is not limited to, a text
5message, email, or Internet posting.

begin delete

6(m)

end delete

7begin insert(l)end insert “Health hazard” means any personal effects that if retained
8would produce an unsanitary or unhealthful condition, or which
9might damage other personal effects.

begin delete

10(n)

end delete

11begin insert(m)end insert “Legal owner” means a person holding a security interest
12in any collateral that is subject to a security agreement, a lien
13against any collateral, a repossession order, or an interest in any
14collateral that is subject to a lease agreement.

begin delete

15(o)

end delete

16begin insert(n)end insert “Licensee” means an individual, partnership, limited liability
17company, or corporation licensed under this chapter as a
18repossession agency.

begin insert

19
(o) “Locate” or “locating” means searching visually, by a
20licensee, for collateral without the use of an electronic device,
21 including, but not limited to, a camera, scanner, or automated
22license plate reader.

end insert

23(p) “Multiple licensee” means a repossession agency holding
24more than one repossession license under this chapter, with one
25fictitious trade style and ownership, conducting repossession
26business from additional licensed locations other than the location
27shown on the original license.

28(q) “Person” includes any individual, partnership, limited
29liability company, or corporation.

30(r) “Personal effects” means any property that is not the property
31of the legal owner.

32(s) “Private building” means and includes any dwelling,
33outbuilding, or other enclosed structure.

34(t) “Qualified certificate holder” or “qualified manager” is a
35person who possesses a valid qualification certificate in accordance
36with the provisions of Article 5 (commencing with Section 7504)
37and is in active control or management of, and who is a director
38of, the licensee’s place of business.

39(u) “Registered owner” means the individual listed in the records
40of the Department of Motor Vehicles, or on a conditional sales
P6    1contract, or on a repossessionbegin delete assignment orend delete order, as the registered
2owner.

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

4(w) “Repossession” or “repossess” means the locatingbegin delete and
5physicalend delete
begin insert or physicallyend insert recovering of collateral by means ofbegin delete an
6assignment orend delete
begin insert a repossessionend insert order.

begin insert

7
(x) “Repossession order” means any written authorization by
8the legal owner, lienholder, lessor, lessee, registered owner, or
9the agent of any of them, to repossess any collateral, including,
10but not limited to, collateral registered under the Vehicle Code
11that is subject to a security agreement that contains a repossession
12clause. “Repossession order” also means any written authorization
13by an employer to recover any collateral entrusted to an employee
14or former employee in possession of the collateral. A photocopy
15of a repossession order, facsimile copy of a repossession order,
16or electronic format of a repossession order shall have the same
17force and effect as an original written repossession order.

end insert
begin delete

18(x)

end delete

19begin insert(y)end insert “Secured area” means and includes any fenced and locked
20area.

begin delete

21(y)

end delete

22begin insert(z)end insert “Security agreement” means an obligation, pledge, mortgage,
23chattel mortgage, lease agreement, deposit, or lien, given by a
24debtor as security for payment or performance of his or her debt,
25by furnishing the creditor with a recourse to be used in case of
26failure in the principal obligation. “Security agreement” also
27includes a bailment where an employer-employee relationship
28exists or existed between the bailor and the bailee.

begin delete

29(z)

end delete

30begin insert(aa)end insert “Services” means any duty or labor to be rendered by one
31person for another.

begin delete

32(aa)

end delete

33begin insert(aend insertbegin insertb)end insert “Violent act” means any act that results in bodily harm or
34injury to any party involved.

begin delete

35(ab)

end delete

36begin insert(aend insertbegin insertc)end insert The amendments made to this section by Chapter 418 of
37the Statutes of 2006 shall not be deemed to exempt any person
38from the provisions of this chapter.

39

SEC. 2.  

Section 7504 of the Business and Professions Code is
40amended to read:

P7    1

7504.  

(a) Except as otherwise provided in this chapter, an
2applicant for a qualification certificate shall comply with all of the
3following:

4(1) Be at least 18 years of age.

5(2) Have been, for at least two years of lawful experience, during
6the five years preceding the date on which his or her application
7is filed, a registrant or have had two years of lawful experience in
8recovering collateral within this state. Lawful experience means
9experience in recovering collateral as a registrant pursuant to this
10chapter or as a salaried employee of a financial institution or
11vehicle dealer. Lawful experience does not include any employment
12performing work other thanbegin delete debt collection orend delete actual collateral
13recovery.

14Two years’ experience shall consist of not less than 4,000 hours
15of actual compensated work performed by the applicant preceding
16the filing of an application.

17An applicant shall certify that he or she has completed the
18claimed hours of qualifying experience and the exact details as to
19the character and nature thereof by written certifications from the
20employer, licensee, financial institution, or vehicle dealer, subject
21to independent verification by the director as he or she may
22determine. In the event of the inability of an applicant to supply
23the written certifications from the employer, licensee, financial
24begin delete institutionend deletebegin insert institution,end insert or vehicle dealer, in whole or in part,
25applicants may offer other written certifications from other persons
26substantiating their experience for consideration by the director.
27All certifications shall include a statement that representations
28made are true, correct, and contain no material omissions of fact
29to the best knowledge and belief of the applicant or the person
30submitting the certification. An applicant or person submitting the
31certification who declares as true any material matter pursuant to
32this paragraph that he or she knows to be false is guilty of a
33misdemeanor.

34(3) Complete and forward to the bureau a qualified certificate
35holder application which shall be on a form prescribed by the
36director and signed by the applicant. An applicant who declares
37as true any material matter pursuant to this paragraph that he or
38she knows to be false is guilty of a misdemeanor. The application
39shall be accompanied by two recent photographs of the applicant,
40of a type prescribed by the director, and two classifiable sets of
P8    1his or her fingerprints. The residence address, residence telephone
2number, and driver’s license number of each qualified certificate
3holder or applicant for a qualification certificate, if requested, shall
4be confidential pursuant to the Information Practices Act of 1977
5(Chapter 1 (commencing with Section 1798) of Title 1.8 of Part
64 of Division 3 of the Civil Code) and shall not be released to the
7public.

8(4) Pass the required examination.

9(5) Pay the required application and examination fees to the
10bureau.

11(b) Upon the issuance of the initial qualification certificate or
12renewal qualification certificate, the bureau shall issue to the
13certificate holder a suitable pocket identification card which
14includes a photograph of the certificate holder. The photograph
15shall be of a size prescribed by the bureau. The card shall contain
16the name of the licensee with whom the certificate holder is
17employed.

18(c) The application form shall contain a statement informing
19the applicant that a false or dishonest answer to a question may be
20grounds for denial or subsequent suspension or revocation of a
21qualification certificate.

22begin insert

begin insertSEC. 3.end insert  

end insert

begin insertSection 7506.7 of the end insertbegin insertBusiness and Professions Codeend insert
23
begin insert is amended to read:end insert

24

7506.7.  

begin insert(a)end insertbegin insertend insert Employees of a licensee who are engaged
25exclusively in stenographic, typing, filing, clerical, in-office skip
26tracing, or other office activities are not required to register under
27this article.

begin insert

28
(b) Employees of a licensee who are operating electronic
29devices, including, but not limited to, cameras, scanners, and
30automated license plate readers, for the purpose of locating
31collateral or documenting the location of collateral are not
32required to register under this article.

end insert
33

begin deleteSEC. 3.end delete
34
begin insertSEC. 4.end insert  

Section 7507.3 of the Business and Professions Code
35 is amended to read:

36

7507.3.  

A repossession agency shall be required to keep and
37maintain adequate records of all transactions, including, but not
38limited to,begin insert repossessionend insert order forms; vehicle report of repossession
39required by Section 28 of the Vehicle Code; vehicle condition
40reports, including odometer readings, if available; personal effects
P9    1inventory; notice of seizure; and records of all transactions
2pertaining to the sale of collateral that has been repossessed,
3including, but not limited to, bids solicited and received, cash
4received, deposits made to the trust account, remittances to the
5seller, and allocation of any moneys not so remitted to appropriate
6ledger accounts. Records, including bank statements of the trust
7account, shall be retained for a period of not less than four years
8and shall be available for examination by the bureau upon demand.
9In addition, collateral and personal effects storage areas shall be
10made accessible for inspection by the bureau upon demand.begin delete Anend deletebegin insert A
11repossessionend insert
order form may be an original, a photocopy, a
12facsimile copy, or a copy stored in an electronic format.

13

begin deleteSEC. 4.end delete
14
begin insertSEC. 5.end insert  

Section 7507.6 of the Business and Professions Code
15 is amended to read:

16

7507.6.  

(a) Within seven days after a violent act has occurred
17involving a licensee, or any officer, partner, qualified certificate
18holder,begin delete registrantend deletebegin insert registrant,end insert or employee of a licensee, while acting
19within the course and scope of his or her employment or contract,
20that results in a police report or bodily harm or bodily injury, the
21licensee or the licensee’s qualified certificate holder or registrant,
22shall mail or deliver to the chief a notice concerning the incident
23upon a form provided by the bureau.

24(b) Within seven days after the occurrence of a violent act or a
25threatened violent act involving a licensee, or any officer, partner,
26qualified certificate holder, registrant, or employee of abegin delete licenseeend delete
27begin insert licensee,end insert while acting within the course and scope of his or her
28employment or contract, that results in a police report or bodily
29harm or bodily injury, the licensee or the licensee’s qualified
30certificate holder or registrant shall send by certified mail, return
31receipt requested, a notice containing information about the
32incident to the person or individual who made thebegin insert repossessionend insert
33 order. If the assignor is not the legal owner, the assignor shall
34notify the legal owner of the contents of the notice.

35(c) A licensee, qualified certificate holder, or registrant may
36send the notice set forth in subdivision (b) for a violent act or
37threatened violent act even if a police report is not made or no
38bodily harm or bodily injury occurs. Any notice of a threatened
39violent act provided pursuant to subdivision (b) may only be used
40to notify a subsequent assignee and not for any collateral purpose.
P10   1Nothing in this subdivision or subdivision (b) shall be construed
2to provide immunity against any claim for defamation.

3

begin deleteSEC. 5.end delete
4
begin insertSEC. 6.end insert  

Section 7507.9 of the Business and Professions Code
5 is amended to read:

6

7507.9.  

Except as otherwise provided in this section, personal
7effects shall be removed from the collateral, including any personal
8effect that is mounted but detachable from the collateral by a
9release mechanism. A complete and accurate inventory of the
10personal effectsbegin delete that are not locked and not retrievable without a
11key, combination, or damage to the collateral or personal effectsend delete

12 shall be made,begin insert unless the collateral is locked,end insert and the personal
13effects shall be labeled and stored by the licensee for a minimum
14of 60 days in a secure manner, except those personal effects
15removed by or in the presence of the debtor or the party in
16possession of the collateral at the time of the repossession. If the
17licensee or the licensee’s agent cannot determine whether the
18property attached to the collateral is a personal effect or a part of
19the collateral, then that fact shall be noted on the inventory and
20the licensee or agent shall not be obligated to remove the item
21from the collateral, unless the item can be removed without the
22use of tools, in which case it shall be removed and inventoried.
23The licensee or the licensee’s agent shall notify the debtor that if
24the debtor takes the position that an item is a personal effect, then
25the debtor shall contact the legal owner to resolve the issue.begin insert If the
26collateral is locked, the licensee shall inventory the personal effects
27within 15 days, if possible.end insert

28(a) The date and time the inventory is made shall be indicated.
29The permanent records of the licensee shall indicate the name of
30the employee or registrant who performed the inventory.

31(b) The following items of personal effects are items determined
32to present a danger or health hazard when recovered by the licensee
33and shall be disposed of in the following manner:

34(1) Deadly weapons and dangerous drugs shall be turned over
35to any law enforcement agency for retention. These items shall be
36entered on the inventory and a notation shall be made as to the
37date, time, and place the deadly weapon or dangerous drug was
38turned over to the law enforcement agency, and a receipt from the
39law enforcement agency shall be maintained in the records of the
40repossession agency.

P11   1(2) Combustibles shall be inventoried and noted as “disposed
2of, dangerous combustible,” and the item shall be disposed of in
3a reasonable and safe manner.

4(3) Food and other health hazard items shall be inventoried and
5noted as “disposed of, health hazard,” and disposed of in a
6reasonable and safe manner.

7(c) Personal effects may be disposed of after being held for at
8least 60 days. The inventory, and adequate information as to how,
9when, and to whom the personal effects were disposed of, shall
10be filed in the permanent records of the licensee and retained for
11four years.

12(d) The inventory shall include the name, address, business
13hours, and telephone number of the repossession agency to contact
14for recovering the personal effects and an itemization of all
15personal effects removal and storage charges that will be made by
16the repossession agency. The inventory shall also include the
17following statement: “Please be advised that the property listed
18on this inventory will be disposed of by the repossession agency
19after being held for 60 days from the date of this notice IF
20UNCLAIMED.”

21(e) The inventory shall be provided to a debtor not later than
2248 hours after the recovery of the collateral, except that if:

23(1) The 48-hour period encompasses a Saturday, Sunday, or
24postal holiday, the inventory shall be provided no later than 72
25hours after the recovery of the collateral.

26(2) The 48-hour period encompasses a Saturday or Sunday and
27a postal holiday, the inventory shall be provided no later than 96
28hours after the recovery of the collateral.

29(3) Inventory resulting from repossession of a yacht, motor
30home, or travel trailer is such that it shall take at least four hours
31to inventory, then the inventory shall be provided no later than 96
32hours after the recovery of the collateral. When the 96-hour period
33encompasses a Saturday, Sunday, or postal holiday, the inventory
34shall be provided no later than 120 hours after the recovery of the
35collateral.

36(4) The licensee is unable to open a locked compartment that
37is part of the collateral, the available inventory shall be provided
38no later than 96 hours after the recovery of the collateral. When
39the 96-hour period encompasses a Saturday, Sunday, or postal
P12   1holiday, the inventory shall be provided no later than 120 hours
2after the recovery of the collateral.

3(f) Environmental, Olympic, special interest, or other license
4plates issued pursuant to Article 8 (commencing with Section
55000), Article 8.4 (commencing with Section 5060), or Article 8.5
6(commencing with Section 5100) of Chapter 1 of Division 3 of
7the Vehicle Code that remain the personal effects of the debtor
8shall be removed from the collateral and inventoried pursuant to
9this section. If the plates are not claimed by the debtor within 60
10days, they shall either (1) be effectively destroyed and the licensee
11shall, within 30 days thereafter, notify the Department of Motor
12Vehicles of their effective destruction on a form promulgated by
13the chief that has been approved as to form by the Director of the
14Department of Motor Vehicles; or (2) be retained by the licensee
15indefinitely to be returned to the debtor upon request, in which
16case the licensee shall not charge more than 60 days’ storage on
17the plates.

18(g) The notice may be given by regular mail addressed to the
19last known address of the debtor or by personal service at the option
20of the repossession agency.

21(h) (1) With the consent of the licensee, the debtor may waive
22the preparation and presentation of an inventory if the debtor
23redeems the personal effects or other personal property not covered
24by a security interestbegin insert within the time period for the notices required
25by this section orend insert
prior to completion of thebegin delete inventoryend deletebegin insert inventory,
26whichever is earlier,end insert
and signs a statement that reads only as
27follows:


29“I, [insert debtor’s name here], have received all personal effects
30that were in the vehicle at the time of the repossession.”


32(2) No other signature or document shall be required to waive
33the preparation and presentation of an inventory.begin delete The document
34shall be subject to the confidentiality provision of subdivision (k).end delete

35
begin insert If the debtor claims there are personal effects or personal property
36missing, the licensee shall provide the debtor with the phone
37number of the licensed repossession agency. A licensee shall not
38require the person retrieving the personal effects to sign any other
39documents or waivers prior to the return of the personal effects.
40No other documents or signatures shall be required for the person
P13   1to receive the personal effects. Any fees paid for clerical, handling,
2administering, inventorying, or storage of personal effects are
3confidential and shall only be disclosed by the licensed
4repossession agency as ordered by a court of competent
5jurisdiction.end insert

6(i) (1) If personal effects or other personal property not covered
7by a security agreement are to be released to someone other than
8the debtor, the repossession agency shallbegin delete requestend deletebegin insert receiveend insert written
9authorization to do so from the debtor.

10(2) Subject to paragraph (1), a licensee shall not release or
11conspire or agree to release personal effects or other personal
12property not covered by a security agreement to anyone other than
13the debtor.

14(j) A licensee shall not sell personal effects or other personal
15property not covered by a security agreement and remit money
16from the sale to a third party, including, but not limited to, any
17lending institution.

18(k) The inventory or waiver of inventory, as provided in
19subdivision (h), shall be a confidential document. A licensee shall
20only disclose the contents of the inventory under the following
21circumstances:

22(1) In response to the order of a court having jurisdiction to
23issue the order.

24(2) In compliance with a lawful subpoena issued by a court of
25competent jurisdiction.

26(3) When the debtor has consented in writing to the release and
27the written consent is signed and dated by the debtor subsequent
28to the repossession and states the entity or entities to whom the
29contents of the inventory may be disclosed.

30(4) To the debtor.

begin delete

31(5) No other signatures, conditions, documents, or information
32regarding the inventory, personal effects, or statement may be
33required or given except as provided in this section or as ordered
34by a court of competent jurisdiction.

end delete

35(l) A licensee who has been notified that collateral will be
36retrieved may store personal effects or personalbegin delete property, in
37compliance with the security standards of this chapter,end delete
begin insert propertyend insert
38 inside the collateral until the collateral is no longer in the
39possession of the licensee. If a licensee stores personal effects
40pursuant to this subdivision,begin insert the notice and inventory provisions
P14   1of this section shall apply, the licensee shall be liable for the
2security of the personal effects, andend insert
the collateral shall notbegin delete leave
3the possession ofend delete
begin insert be released byend insert the licensee until all personal
4effects or personal property have been removed.

5

begin deleteSEC. 6.end delete
6
begin insertSEC. 7.end insert  

Section 7507.13 of the Business and Professions Code
7 is amended to read:

8

7507.13.  

(a) A licensed repossession agency is not liable for
9the act or omission of a legal owner,begin insert debt collector,end insert debtor,
10lienholder, lessor, lessee, registered owner, or an agent of any of
11them, in makingbegin delete anend deletebegin insert a repossessionend insert order to it or for acceptingbegin delete anend delete
12begin insert a repossessionend insert order from any legal owner, debtor, lienholder,
13 lessor, lessee, registered owner, or an agent of any of them, and is
14entitled to indemnity from the legal owner, debtor, lienholder,
15lessor, lessee, or registered owner for any loss, damage, cost, or
16expense, including court costs and attorney’s fees, that it may
17reasonably incur as a result thereof. Nothing in this subdivision
18limits the liability of any person for his or her tortious conduct.

19(b) The legal owner, debtor, lienholder, lessor, lessee, registered
20owner, or the agent of any of them, is not liable for any act or
21omission by a licensed repossession agency, or its agent, in carrying
22outbegin delete anend deletebegin insert a repossessionend insert order and is entitled to indemnity from the
23repossession agency for any loss, damage, cost, or expense,
24including court costs and attorney’s fees, that the legal owner,
25debtor, lienholder, lessor, lessee, registered owner, or the agent of
26any of them, may reasonably incur as a result thereof. Nothing in
27this subdivision limits the liability of any person for his or her
28tortious conduct.

29(c) The legal owner, debtor, lienholder, lessor, lessee, registered
30owner, or the agent of any of them, is not guilty of a violation of
31Section 7502.1 or 7502.2 if, at the time of thebegin insert repossessionend insert order,
32 the party making thebegin insert repossessionend insert order has in its possession a
33copy of the repossessor’s current, unexpired repossession agency
34license, and a copy of the current, unexpired repossession agency’s
35qualified manager’s certificate, and does not have actual knowledge
36of any order of suspension or revocation of the license or
37certificate.

38(d) Neither a licensed repossession agency nor a legal owner,
39debtor, lienholder, lessor, lessee, registered owner, or an agent of
40any of them may, by any means, direct or indirect, express or
P15   1implied, instruct or attempt to coerce the other to violate any law,
2regulation, or rule regarding the recovery of any collateral,
3including, but not limited to, the provisions of this chapter or
4Section 9609 of the Commercial Code.

5(e) A licensed repossession agency, at least annually, on or
6before January 31 of each year, shall provide a legal owner from
7which the agency acceptsbegin delete anend deletebegin insert a repossessionend insert order with a copy of
8this section, Sections 7500.2, 7507.4, 7507.115, 7507.12, and
97507.125 of this code, and Section 28 of the Vehicle Code.

10

begin deleteSEC. 7.end delete
11
begin insertSEC. 8.end insert  

Section 7508.2 of the Business and Professions Code
12 is amended to read:

13

7508.2.  

The director may assess administrative fines for any
14of the following prohibited acts:

15(a) Recovering collateral or making any money demand in lieu
16thereof, including, but not limited to, collateral registered under
17the Vehicle Code, that has been sold under a security agreement
18before a signed or telegraphic authorization has been received from
19the legal owner, debtor, lienholder, lessor, or repossession agency
20acting on behalf of the legal owner, debtor, lienholder, or lessor
21of the collateral. A telephonicbegin insert repossessionend insert order is acceptable if
22the legal owner, debtor, lienholder, lessor, or repossession agency
23acting on behalf of the legal owner, debtor, lienholder, or lessor
24is known to the licensee and a written authorization from the legal
25owner, debtor, lienholder, lessor, or repossession agency acting
26on behalf of the legal owner, debtor, lienholder, or lessor is
27received by the licensee within 10 working days or a request by
28the licensee for a written authorization from the legal owner,
29debtor, lienholder, lessor, or repossession agency acting on behalf
30of the legal owner, debtor, lienholder, or lessor is made in writing
31within 10 working days. Referrals ofbegin insert repossessionend insert orders from one
32licensee to another licensee are acceptable. The referral ofbegin delete anend deletebegin insert a
33 repossessionend insert
order shall be made under the same terms and
34conditions as in the originalbegin insert repossessionend insert order. The fine shall be
35twenty-five dollars ($25) for each of the first five violations and
36one hundred dollars ($100) for each violation thereafter, per audit.

37(b) Using collateral or personal effects, which have been
38recovered, for the personal benefit of a licensee, or officer, partner,
39manager, registrant, or employee of a licensee. The fine shall be
40twenty-five dollars ($25) for the first violation and one hundred
P16   1dollars ($100) for each violation thereafter. This subdivision does
2not apply to personal effects disposed of pursuant to subdivision
3(c) of Section 7507.9. Nothing in this subdivision prohibits the
4using or taking of personal property connected, adjoined, or affixed
5to the collateral through an unbroken sequence if that use or taking
6is reasonably necessary to effectuate the recovery in a safe manner
7or to protect the collateral or personal effects.

8(c) Selling collateral recovered under this chapter, or making a
9demand for payment in lieu of repossession. The fine shall be two
10hundred fifty dollars ($250) for the first violation and one thousand
11dollars ($1,000) for each subsequent violation.

12(d) Unlawfully entering any private building or secured area
13without the consent of the owner, or of the person in legal
14possession thereof, at the time of repossession. The fine shall be
15five hundred dollars ($500) for each violation.

16(e) Committing unlawful assault or battery on another person.
17The fine shall be five hundred dollars ($500) for each violation.

18(f) Falsification or alteration of an inventory. The fine shall be
19twenty-five dollars ($25) for each violation.

20(g) Soliciting from the legal owner the recovery of specific
21collateral registered under the Vehicle Code or under the motor
22vehicle licensing laws of other states after the collateral has been
23seen or located on a public street or on public or private property
24without divulging the location of the vehicle. The fine shall be one
25hundred dollars ($100) for the first violation and two hundred fifty
26dollars ($250) for each violation thereafter.

27

begin deleteSEC. 8.end delete
28
begin insertSEC. 9.end insert  

Section 22651.03 is added to the Vehicle Code, 29immediately following Section 22651, to read:

30

22651.03.  

(a) Notwithstanding Sections 14602.6 and 22651,
31this section shall apply when collateral is released to a licensed
32repossessor. For purposes of this section, “licensed repossessor”
33means a licensed repossessor, licensed repossession agency, or its
34officers or employees pursuant to Chapter 11 (commencing with
35Section 7500) of Division 3 of the Business and Professions Code.

36(b) Pursuant to Section 4022, a vehicle obtained by a licensed
37repossessor as a release of collateral is exempt from registration
38for purposes of the repossessor removing the vehicle to his or her
39storage facility or the facility of the legal owner. A law enforcement
40agency, impounding authority, tow yard, storage facility, or any
P17   1other person in possession of the collateral shall release the vehicle
2without requiring current registration and pursuant to this section.
3The law enforcement agency shall be open to issue a release to the
4legal owner or a licensed repossessor whenever the agency is open
5to serve the public for nonemergency business.

6(c) The law enforcement agency and the impounding agency,
7including any storage facility acting on behalf of the law
8enforcement agency or impounding agency, shall comply with this
9section and shall not be liable to the registered owner for the
10improper release of the vehicle to the legal owner or a licensed
11repossessor provided the release complies with this section. A law
12enforcement agency shall not refuse to issue a release to a legal
13owner or a licensed repossessor on the grounds that it previously
14issued a release.

15(d) A vehicle removed and seized for any reason shall be
16released to the legal owner of the vehicle or to a licensed
17repossessor if all of the following conditions are met:

18(1) The legal owner is a motor vehicle dealer, bank, credit union,
19acceptance corporation, or other licensed financial institution
20legally operating in this state or is another person, not the registered
21owner, holding a security interest in the vehicle.

22(2) (A) The legal owner or the licensed repossessor pays all
23towing and storage fees related to the seizure of the vehicle. Any
24person having possession of the vehicle shall not collect from the
25legal owner of the type specified in paragraph (1) or a licensed
26repossessor any administrative charges imposed pursuant to Section
2722850.5 unless the legal owner voluntarily requested a poststorage
28hearing.

29(B) A person operating or in charge of a storage facility where
30vehicles are stored pursuant to this section shall accept a valid
31bank credit card or cash for payment of towing, storage, and related
32fees by a legal owner or a licensed repossessor claiming the vehicle.
33A credit card shall be in the name of the person presenting the
34card. “Credit card” means “credit card” as defined in subdivision
35(a) of Section 1747.02 of the Civil Code, except, for the purposes
36of this section, credit card does not include a credit card issued by
37a retail seller.

38(C) A person operating or in charge of a storage facility
39described in subparagraph (B) who violates subparagraph (B) shall
40be civilly liable to the owner of the vehicle or to the person who
P18   1tendered the fees for four times the amount of the towing, storage,
2and related fees, but not to exceed five hundred dollars ($500).

3(D) A person operating or in charge of a storage facility
4described in subparagraph (B) shall have sufficient funds on the
5premises of the primary storage facility during normal business
6hours to accommodate, and make change in, a reasonable monetary
7transaction.

8(E) Credit charges for towing and storage services shall comply
9with Section 1748.1 of the Civil Code. Law enforcement agencies
10may include the costs of providing for payment by credit when
11making agreements with towing companies on rates.

12(3) The legal owner or licensed repossessor presents a copy of
13thebegin delete assignment orend deletebegin insert repossessionend insert order, as defined inbegin delete subdivision
14(b) ofend delete
Section 7500.1 of the Business and Professions Code; a
15release from the one responsible governmentalbegin delete agency,end deletebegin insert agency to
16give to the tow yard,end insert
only if required by the agency; a
17government-issued photographic identification card; and any one
18of the following, as determined by the legal owner or the licensed
19repossessor: a certificate of repossession for the vehicle, a security
20agreement for the vehicle, or title, whether paper or electronic,
21showing proof of legal ownership for the vehicle. Any documents
22presented may be originals, photocopies, or facsimile copies, or
23may be transmitted electronically. The law enforcement agency,
24impounding agency, or any other governmental agency, or any
25person acting on behalf of those agencies, shall not require any
26documents to be notarized. The law enforcement agency,
27impounding agency, or any person acting on behalf of those
28agencies may require the licensed repossessor to produce a
29photocopy or facsimile copy of its repossession agency license or
30registration issued pursuant to Chapter 11 (commencing with
31Section 7500) of Division 3 of the Business and Professions Code.

32No administrative costs authorized under subdivision (a) of
33Section 22850.5 shall be charged to the legal owner, of the type
34specified in paragraph (1), who redeems the vehicle unless the
35legal owner voluntarily requests a poststorage hearing. No city,
36county, city and county, or state agency shall require a legal owner
37or a licensed repossessor to request a poststorage hearing as a
38requirement for release of the vehicle to the legal owner or the
39licensed repossessor. The law enforcement agency, impounding
40agency, or other governmental agency, or any person acting on
P19   1behalf of those agencies, shall not require any documents other
2than those specified in this paragraph. The law enforcement agency,
3impounding agency, or other governmental agency, or any person
4acting on behalf of those agencies, shall not require any documents
5to be notarized. The legal owner or the licensed repossessor shall
6be given a copy of any documents he or she is required to sign,
7except for a vehicle evidentiary hold logbook. The law enforcement
8agency, impounding agency, or any person acting on behalf of
9those agencies, or any person in possession of the vehicle may
10photocopy and retain the copies of any documents presented by
11the legal owner or licensed repossessor.

12(4) A failure by a storage facility to comply with any applicable
13conditions set forth in this subdivision shall not affect the right of
14the legal owner or a licensed repossessor to retrieve the vehicle,
15provided all conditions required of the legal owner or licensed
16repossessor under this subdivision are satisfied.

17(e) A legal owner or a licensed repossessor that obtains release
18of a vehicle pursuant to subdivision (d) shall not release the vehicle
19to the registered owner of the vehicle, the person who was listed
20as the registered owner when the vehicle was impounded, or any
21agents of the registered owner, unless the registered owner is a
22rental car agency.

23(f) The legal owner of collateral shall, by operation of law and
24without requiring further action, indemnify and hold harmless a
25law enforcement agency, city, county, city and county, the state,
26a tow yard, storage facility, or an impounding yard from a claim
27arising out of the release of the collateral to a licensed repossessor
28and from any damage to the collateral after its release, including
29reasonable attorney’s fees and costs associated with defending a
30claim, if the collateral was released in compliance with this section.

31

begin deleteSEC. 9.end delete
32
begin insertSEC. 10.end insert  

No reimbursement is required by this act pursuant to
33Section 6 of Article XIII B of the California Constitution for certain
34costs that may be incurred by a local agency or school district
35because, in that regard, this act creates a new crime or infraction,
36eliminates a crime or infraction, or changes the penalty for a crime
37or infraction, within the meaning of Section 17556 of the
38Government Code, or changes the definition of a crime within the
39meaning of Section 6 of Article XIII B of the California
40Constitution.

P20   1However, if the Commission on State Mandates determines that
2this act contains other costs mandated by the state, reimbursement
3to local agencies and school districts for those costs shall be made
4pursuant to Part 7 (commencing with Section 17500) of Division
54 of Title 2 of the Government Code.



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