Amended in Senate June 21, 2016

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, 7506.7, 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.begin insert That act provides for the issuance of qualification certificates, required for the management of the places of business of licensed repossession agencies, to applicants who meet certain requirements, including, among others, 2 years of experience in recovering collateral as a registrant pursuant to the act or as a salaried employee of a financial institution or vehicle dealer, as specified.end insert That act makes a violation of any of its provisions a crime.

Thisbegin insert bill, among other things, would exclude experience as an employee of a financial institution from experience that may be applied toward that requirement for qualification certification. Theend insert bill would define the terms “repossession” or “repossess” to mean the locating or physically recovering of collateral by means of a repossession order. The bill would define the term “repossession order” as having the same meaning as “assignment” and would change references to “assignment” in the act to “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. The bill would instead require a licensee to make a complete and accurate inventory of the personal effects in the collateralbegin delete unless the collateral is lockedend delete and, if the collateral is locked, would require a licensee to inventory the personal effects within 15 days, if possible. 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, within the time period for specified notices or prior to the completion of the inventory, whichever is earlier, if the debtor signs a specified statement. 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. 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.

begin insert

Under the Collateral Recovery Act, licensed repossession agencies are not liable for specified acts or omissions of a legal owner, debtor, lienholder, lessor, lessee, registered owner, or agent of any of them, and are entitled to indemnity from the legal owner, debtor, lienholder, lessor, lessee, or registered owner for losses incurred as a result of those acts or omissions. Under the act, those persons or their agents are not liable for acts or omissions by a licensed repossession agency or its agent in carrying out a repossession order and are entitled to indemnity from the licensed repossession agency for losses incurred as a result of those acts or omissions, as specified.

end insert
begin insert

This bill would extend the above-described provisions applicable to a legal owner, debtor, lienholder, lessor, lessee, or registered owner to a debt collector.

end 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.

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:

P4    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.

9(b) “Bureau” means the Bureau of Security and Investigative
10Services.

11(c) “Chief” means the Chief of the Bureau of Security and
12Investigative Services.

13(d) “Collateral” means any specific vehicle, trailer, boat,
14recreational vehicle, motor home, appliance, or other property that
15is subject to a security agreement.

16(e) “Combustibles” means any substances or articles that are
17capable of undergoing combustion or catching fire, or that are
18flammable, if retained.

19(f) “Dangerous drugs” means any controlled substances as
20defined in Chapter 2 (commencing with Section 11053) of Division
2110 of the Health and Safety Code.

22(g) “Deadly weapon” means and includes any instrument or
23weapon of the kind commonly known as a blackjack, slungshot,
24billy, sandclub, sandbag, metal knuckles, dirk, dagger, pistol, or
25revolver, or any other firearm, any knife having a blade longer
26than five inches, any razor with an unguarded blade, and any metal
27pipe or bar used or intended to be used as a club.

28(h) “Debtor” means any person obligated under a security
29agreement.

30(i) “Department” means the Department of Consumer Affairs.

31(j) “Director” means the Director of Consumer Affairs.

P5    1(k) “Electronic format” includes, but is not limited to, a text
2message, email, or Internet posting.

3(l) “Health hazard” means any personal effects that if retained
4would produce an unsanitary or unhealthful condition, or which
5might damage other personal effects.

6(m) “Legal owner” means a person holding a security interest
7in any collateral that is subject to a security agreement, a lien
8against any collateral, a repossession order, or an interest in any
9collateral that is subject to a lease agreement.

10(n) “Licensee” means an individual, partnership, limited liability
11company, or corporation licensed under this chapter as a
12repossession agency.

13(o) “Locate” or “locating” means searching visually, by a
14licensee, for collateral without the use of an electronic device,
15including, but not limited to, a camera, scanner, or automated
16license plate reader.

17(p) “Multiple licensee” means a repossession agency holding
18more than one repossession license under this chapter, with one
19fictitious trade style and ownership, conducting repossession
20business from additional licensed locations other than the location
21shown on the original license.

22(q) “Person” includes any individual, partnership, limited
23liability company, or corporation.

24(r) “Personal effects” means any property that is not the property
25of the legal owner.

26(s) “Private building” means and includes any dwelling,
27outbuilding, or other enclosed structure.

28(t) “Qualified certificate holder” or “qualified manager” is a
29person who possesses a valid qualification certificate in accordance
30with the provisions of Article 5 (commencing with Section 7504)
31and is in active control or management of, and who is a director
32of, the licensee’s place of business.

33(u) “Registered owner” means the individual listed in the records
34of the Department of Motor Vehicles, or on a conditional sales
35contract, or on a repossession order, as the registered owner.

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

37(w) “Repossession” or “repossess” means the locating or
38physically recovering of collateral by means of a repossession
39order.

P6    1(x) “Repossession order” means any written authorization by
2the legal owner, lienholder, lessor, lessee, registered owner, or the
3agent of any of them, to repossess any collateral, including, but
4not limited to, collateral registered under the Vehicle Code that is
5subject to a security agreement that contains a repossession clause.
6“Repossession order” also means any written authorization by an
7employer to recover any collateral entrusted to an employee or
8former employee in possession of the collateral. A photocopy of
9a repossession order, facsimile copy of a repossession order, or
10electronic format of a repossession order shall have the same force
11and effect as an original written repossession order.

12(y) “Secured area” means and includes any fenced and locked
13area.

14(z) “Security agreement” means an obligation, pledge, mortgage,
15chattel mortgage, lease agreement, deposit, or lien, given by a
16debtor as security for payment or performance of his or her debt,
17by furnishing the creditor with a recourse to be used in case of
18failure in the principal obligation. “Security agreement” also
19includes a bailment where an employer-employee relationship
20exists or existed between the bailor and the bailee.

21(aa) “Services” means any duty or labor to be rendered by one
22person for another.

23(ab) “Violent act” means any act that results in bodily harm or
24injury to any party involved.

25(ac) The amendments made to this section by Chapter 418 of
26the Statutes of 2006 shall not be deemed to exempt any person
27from the provisions of this chapter.

28

SEC. 2.  

Section 7504 of the Business and Professions Code is
29amended to read:

30

7504.  

(a) Except as otherwise provided in this chapter, an
31applicant for a qualification certificate shall comply with all of the
32following:

33(1) Be at least 18 years of age.

34(2) Have been, for at least two years of lawful experience, during
35the five years preceding the date on which his or her application
36is filed, a registrant or have had two years of lawful experience in
37recovering collateral within this state. Lawful experience means
38experience in recovering collateral as a registrant pursuant to this
39chapter or as a salaried employee of abegin delete financial institution orend delete
P7    1 vehicle dealer. Lawful experience does not include any employment
2performing work other than actual collateral recovery.

3Two years’ experience shall consist of not less than 4,000 hours
4of actual compensated work performed by the applicant preceding
5the filing of an application.

6An applicant shall certify that he or she has completed the
7claimed hours of qualifying experience and the exact details as to
8the character and nature thereof by written certifications from the
9employer, licensee,begin delete financial institution,end delete or vehicle dealer, subject
10to independent verification by the director as he or she may
11determine. In the event of the inability of an applicant to supply
12the written certifications from the employer, licensee, begin delete financial
13 institution,end delete
or vehicle dealer, in whole or in part, applicants may
14offer other written certifications from other persons substantiating
15their experience for consideration by the director. All certifications
16shall include a statement that representations made are true, correct,
17and contain no material omissions of fact to the best knowledge
18and belief of the applicant or the person submitting the certification.
19An applicant or person submitting the certification who declares
20as true any material matter pursuant to this paragraph that he or
21she knows to be false is guilty of a misdemeanor.

22(3) Complete and forward to the bureau a qualified certificate
23holder application which shall be on a form prescribed by the
24director and signed by the applicant. An applicant who declares
25as true any material matter pursuant to this paragraph that he or
26she knows to be false is guilty of a misdemeanor. The application
27shall be accompanied by two recent photographs of the applicant,
28of a type prescribed by the director, and two classifiable sets of
29his or her fingerprints. The residence address, residence telephone
30number, and driver’s license number of each qualified certificate
31holder or applicant for a qualification certificate, if requested, shall
32be confidential pursuant to the Information Practices Act of 1977
33(Chapter 1 (commencing with Section 1798) of Title 1.8 of Part
344 of Division 3 of the Civil Code) and shall not be released to the
35public.

36(4) Pass the required examination.

37(5) Pay the required application and examination fees to the
38bureau.

39(b) Upon the issuance of the initial qualification certificate or
40renewal qualification certificate, the bureau shall issue to the
P8    1certificate holder a suitable pocket identification card which
2includes a photograph of the certificate holder. The photograph
3shall be of a size prescribed by the bureau. The card shall contain
4the name of the licensee with whom the certificate holder is
5employed.

6(c) The application form shall contain a statement informing
7the applicant that a false or dishonest answer to a question may be
8grounds for denial or subsequent suspension or revocation of a
9qualification certificate.

10

SEC. 3.  

Section 7506.7 of the Business and Professions Code
11 is amended to read:

12

7506.7.  

(a) Employees of a licensee who are engaged
13exclusively in stenographic, typing, filing, clerical,begin delete in-office skip
14tracing,end delete
or other office activities are not required to register under
15this article.

16(b) Employees of a licensee who are operating electronic
17devices, including, but not limited to, cameras, scanners, and
18automated license plate readers, for the purpose of locating
19collateral or documenting the location of collateral are not required
20to register under this article.

21

SEC. 4.  

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

23

7507.3.  

A repossession agency shall be required to keep and
24maintain adequate records of all transactions, including, but not
25limited to, repossession order forms; vehicle report of repossession
26required by Section 28 of the Vehicle Code; vehicle condition
27reports, including odometer readings, if available; personal effects
28inventory; notice of seizure; and records of all transactions
29pertaining to the sale of collateral that has been repossessed,
30including, but not limited to, bids solicited and received, cash
31received, deposits made to the trust account, remittances to the
32seller, and allocation of any moneys not so remitted to appropriate
33ledger accounts. Records, including bank statements of the trust
34account, shall be retained for a period of not less than four years
35and shall be available for examination by the bureau upon demand.
36In addition, collateral and personal effects storage areas shall be
37made accessible for inspection by the bureau upon demand. A
38repossession order form may be an original, a photocopy, a
39facsimile copy, or a copy stored in an electronic format.

P9    1

SEC. 5.  

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

3

7507.6.  

(a) Within seven days after a violent act has occurred
4involving a licensee, or any officer, partner, qualified certificate
5holder, registrant, or employee of a licensee, while acting within
6the course and scope of his or her employment or contract, that
7results in a police report or bodily harm or bodily injury, the
8licensee or the licensee’s qualified certificate holder or registrant,
9shall mail or deliver to the chief a notice concerning the incident
10upon a form provided by the bureau.

11(b) Within seven days after the occurrence of a violent act or a
12threatened violent act involving a licensee, or any officer, partner,
13qualified certificate holder, registrant, or employee of a licensee,
14while acting within the course and scope of his or her employment
15or contract, that results in a police report or bodily harm or bodily
16injury, the licensee or the licensee’s qualified certificate holder or
17registrant shall send by certified mail, return receipt requested, a
18notice containing information about the incident to the person or
19individual who made the repossession order. If the assignor is not
20the legal owner, the assignor shall notify the legal owner of the
21contents of the notice.

22(c) A licensee, qualified certificate holder, or registrant may
23send the notice set forth in subdivision (b) for a violent act or
24threatened violent act even if a police report is not made or no
25bodily harm or bodily injury occurs. Any notice of a threatened
26violent act provided pursuant to subdivision (b) may only be used
27to notify a subsequent assignee and not for any collateral purpose.
28Nothing in this subdivision or subdivision (b) shall be construed
29to provide immunity against any claim for defamation.

30

SEC. 6.  

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

32

7507.9.  

Except as otherwise provided in this section, personal
33effects shall be removed from the collateral, including any personal
34effect that is mounted but detachable from the collateral by a
35release mechanism. A complete and accurate inventory of the
36personal effects shall be made,begin delete unless the collateral is locked,end delete and
37the personal effects shall be labeled and stored by the licensee for
38a minimum of 60 days in a secure manner, except those personal
39effects removed by or in the presence of the debtor or the party in
40possession of the collateral at the time of the repossession. If the
P10   1licensee or the licensee’s agent cannot determine whether the
2property attached to the collateral is a personal effect or a part of
3the collateral, then that fact shall be noted on the inventory and
4the licensee or agent shall not be obligated to remove the item
5from the collateral, unless the item can be removed without the
6use of tools, in which case it shall be removed and inventoried.
7The licensee or the licensee’s agent shall notify the debtor that if
8the debtor takes the position that an item is a personal effect, then
9the debtor shall contact the legal owner to resolve the issue. If the
10collateral is locked, the licensee shall inventory the personal effects
11within 15 days, if possible.

12(a) The date and time the inventory is made shall be indicated.
13The permanent records of the licensee shall indicate the name of
14the employee or registrant who performed the inventory.

15(b) The following items of personal effects are items determined
16to present a danger or health hazard when recovered by the licensee
17and shall be disposed of in the following manner:

18(1) Deadly weapons and dangerous drugs shall be turned over
19to any law enforcement agency for retention. These items shall be
20entered on the inventory and a notation shall be made as to the
21date, time, and place the deadly weapon or dangerous drug was
22turned over to the law enforcement agency, and a receipt from the
23law enforcement agency shall be maintained in the records of the
24repossession agency.

25(2) Combustibles shall be inventoried and noted as “disposed
26of, dangerous combustible,” and the item shall be disposed of in
27a reasonable and safe manner.

28(3) Food and other health hazard items shall be inventoried and
29noted as “disposed of, health hazard,” and disposed of in a
30reasonable and safe manner.

31(c) Personal effects may be disposed of after being held for at
32least 60 days. The inventory, and adequate information as to how,
33when, and to whom the personal effects were disposed of, shall
34be filed in the permanent records of the licensee and retained for
35four years.

36(d) The inventory shall include the name, address, business
37hours, and telephone number of the repossession agency to contact
38for recovering the personal effects and an itemization of all
39personal effects removal and storage charges that will be made by
40the repossession agency. The inventory shall also include the
P11   1following statement: “Please be advised that the property listed
2on this inventory will be disposed of by the repossession agency
3after being held for 60 days from the date of this notice IF
4UNCLAIMED.”

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

7(1) The 48-hour period encompasses a Saturday, Sunday, or
8postal holiday, the inventory shall be provided no later than 72
9hours after the recovery of the collateral.

10(2) The 48-hour period encompasses a Saturday or Sunday and
11a postal holiday, the inventory shall be provided no later than 96
12hours after the recovery of the collateral.

13(3) Inventory resulting from repossession of a yacht, motor
14home, or travel trailer is such that it shall take at least four hours
15to inventory, then the inventory shall be provided no later than 96
16hours after the recovery of the collateral. When the 96-hour period
17encompasses a Saturday, Sunday, or postal holiday, the inventory
18shall be provided no later than 120 hours after the recovery of the
19collateral.

20(4) The licensee is unable to open a locked compartment that
21is part of the collateral, the available inventory shall be provided
22no later than 96 hours after the recovery of the collateral. When
23the 96-hour period encompasses a Saturday, Sunday, or postal
24holiday, the inventory shall be provided no later than 120 hours
25after the recovery of the collateral.

26(f) Environmental, Olympic, special interest, or other license
27plates issued pursuant to Article 8 (commencing with Section
285000), Article 8.4 (commencing with Section 5060), or Article 8.5
29(commencing with Section 5100) of Chapter 1 of Division 3 of
30the Vehicle Code that remain the personal effects of the debtor
31shall be removed from the collateral and inventoried pursuant to
32this section. If the plates are not claimed by the debtor within 60
33days, they shall either (1) be effectively destroyed and the licensee
34shall, within 30 days thereafter, notify the Department of Motor
35Vehicles of their effective destruction on a form promulgated by
36the chief that has been approved as to form by the Director of the
37Department of Motor Vehicles; or (2) be retained by the licensee
38indefinitely to be returned to the debtor upon request, in which
39case the licensee shall not charge more than 60 days’ storage on
40the plates.

P12   1(g) The notice may be given by regular mail addressed to the
2last known address of the debtor or by personal service at the option
3of the repossession agency.

4(h) (1) With the consent of the licensee, the debtor may waive
5the preparation and presentation of an inventory if the debtor
6redeems the personal effects or other personal property not covered
7by a security interest within the time period for the notices required
8by this section or prior to completion of the inventory, whichever
9is earlier, and signs a statement that reads only as follows:


11“I, [insert debtor’s name here], have received all personal effects
12that were in the vehicle at the time of the repossession.”


14(2) No other signature or document shall be required to waive
15the preparation and presentation of an inventory. If the debtor
16claims there are personal effects or personal property missing, the
17licensee shall provide the debtor with the phone number of the
18licensed repossession agency. A licensee shall not require the
19person retrieving the personal effects to sign any other documents
20or waivers prior to the return of the personal effects. No other
21documents or signatures shall be required for the person to receive
22the personal effects. Any fees paid for clerical, handling,
23administering, inventorying, or storage of personal effects are
24confidential and shall only be disclosed by the licensed
25 repossession agency as ordered by a court of competent
26jurisdiction.

27(i) (1) If personal effects or other personal property not covered
28by a security agreement are to be released to someone other than
29the debtor, the repossession agency shall receive written
30authorization to do so from the debtor.

31(2) Subject to paragraph (1), a licensee shall not release or
32conspire or agree to release personal effects or other personal
33property not covered by a security agreement to anyone other than
34the debtor.

35(j) A licensee shall not sell personal effects or other personal
36property not covered by a security agreement and remit money
37from the sale to a third party, including, but not limited to, any
38lending institution.

39(k) The inventory or waiver of inventory, as provided in
40subdivision (h), shall be a confidential document. A licensee shall
P13   1only disclose the contents of the inventory under the following
2circumstances:

3(1) In response to the order of a court having jurisdiction to
4issue the order.

5(2) In compliance with a lawful subpoena issued by a court of
6competent jurisdiction.

7(3) When the debtor has consented in writing to the release and
8the written consent is signed and dated by the debtor subsequent
9to the repossession and states the entity or entities to whom the
10contents of the inventory may be disclosed.

11(4) To the debtor.

12(l) A licensee who has been notified that collateral will be
13retrieved may store personal effects or personal property inside
14the collateral until the collateral is no longer in the possession of
15the licensee. If a licensee stores personal effects pursuant to this
16subdivision, the notice and inventory provisions of this section
17shall apply, the licensee shall be liable for the security of the
18personal effects, and the collateral shall not be released by the
19licensee until all personal effects or personal property have been
20removed.

21

SEC. 7.  

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

23

7507.13.  

(a) A licensed repossession agency is not liable for
24the act or omission of a legal owner, debt collector, debtor,
25lienholder, lessor, lessee, registered owner, or an agent of any of
26them, in making a repossession order to it or for accepting a
27repossession order from any legal owner,begin insert debt collector,end insert debtor,
28lienholder, lessor, lessee, registered owner, or an agent of any of
29them, and is entitled to indemnity from the legal owner,begin insert debt
30collector,end insert
debtor, lienholder, lessor, lessee, or registered owner for
31any loss, damage, cost, or expense, including court costs and
32attorney’s fees, that it may reasonably incur as a result thereof.
33Nothing in this subdivision limits the liability of any person for
34his or her tortious conduct.

35(b) The legal owner,begin insert debt collector,end insert debtor, lienholder, lessor,
36lessee, registered owner, or the agent of any of them, is not liable
37for any act or omission by a licensed repossession agency, or its
38agent, in carrying out a repossession order and is entitled to
39indemnity from the repossession agency for any loss, damage,
40cost, or expense, including court costs and attorney’s fees, that the
P14   1legal owner,begin insert debt collector,end insert debtor, lienholder, lessor, lessee,
2registered owner, or the agent of any of them, may reasonably
3incur as a result thereof. Nothing in this subdivision limits the
4liability of any person for his or her tortious conduct.

5(c) The legal owner, debtor, lienholder, lessor, lessee, registered
6owner, or the agent of any of them, is not guilty of a violation of
7Section 7502.1 or 7502.2 if, at the time of the repossession order,
8the party making the repossession order has in its possession a
9copy of the repossessor’s current, unexpired repossession agency
10license, and a copy of the current, unexpired repossession agency’s
11qualified manager’s certificate, and does not have actual knowledge
12of any order of suspension or revocation of the license or
13certificate.

14(d) Neither a licensed repossession agency nor a legal owner,
15debtor, lienholder, lessor, lessee, registered owner, or an agent of
16any of them may, by any means, direct or indirect, express or
17implied, instruct or attempt to coerce the other to violate any law,
18regulation, or rule regarding the recovery of any collateral,
19including, but not limited to, the provisions of this chapter or
20Section 9609 of the Commercial Code.

21(e) A licensed repossession agency, at least annually, on or
22before January 31 of each year, shall provide a legal owner from
23which the agency accepts a repossession order with a copy of this
24section, Sections 7500.2, 7507.4, 7507.115, 7507.12, and 7507.125
25of this code, and Section 28 of the Vehicle Code.

26

SEC. 8.  

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

28

7508.2.  

The director may assess administrative fines for any
29of the following prohibited acts:

30(a) Recovering collateral or making any money demand in lieu
31thereof, including, but not limited to, collateral registered under
32the Vehicle Code, that has been sold under a security agreement
33before a signed or telegraphic authorization has been received from
34the legal owner, debtor, lienholder, lessor, or repossession agency
35acting on behalf of the legal owner, debtor, lienholder, or lessor
36of the collateral. A telephonic repossession order is acceptable if
37the legal owner, debtor, lienholder, lessor, or repossession agency
38acting on behalf of the legal owner, debtor, lienholder, or lessor
39is known to the licensee and a written authorization from the legal
40owner, debtor, lienholder, lessor, or repossession agency acting
P15   1on behalf of the legal owner, debtor, lienholder, or lessor is
2received by the licensee within 10 working days or a request by
3the licensee for a written authorization from the legal owner,
4debtor, lienholder, lessor, or repossession agency acting on behalf
5of the legal owner, debtor, lienholder, or lessor is made in writing
6within 10 working days. Referrals of repossession orders from one
7licensee to another licensee are acceptable. The referral of a
8repossession order shall be made under the same terms and
9conditions as in the original repossession order. The fine shall be
10twenty-five dollars ($25) for each of the first five violations and
11one hundred dollars ($100) for each violation thereafter, per audit.

12(b) Using collateral or personal effects, which have been
13recovered, for the personal benefit of a licensee, or officer, partner,
14manager, registrant, or employee of a licensee. The fine shall be
15twenty-five dollars ($25) for the first violation and one hundred
16dollars ($100) for each violation thereafter. This subdivision does
17not apply to personal effects disposed of pursuant to subdivision
18(c) of Section 7507.9. Nothing in this subdivision prohibits the
19using or taking of personal property connected, adjoined, or affixed
20to the collateral through an unbroken sequence if that use or taking
21is reasonably necessary to effectuate the recovery in a safe manner
22or to protect the collateral or personal effects.

23(c) Selling collateral recovered under this chapter, or making a
24demand for payment in lieu of repossession. The fine shall be two
25hundred fifty dollars ($250) for the first violation and one thousand
26dollars ($1,000) for each subsequent violation.

27(d) Unlawfully entering any private building or secured area
28without the consent of the owner, or of the person in legal
29possession thereof, at the time of repossession. The fine shall be
30five hundred dollars ($500) for each violation.

31(e) Committing unlawful assault or battery on another person.
32The fine shall be five hundred dollars ($500) for each violation.

33(f) Falsification or alteration of an inventory. The fine shall be
34twenty-five dollars ($25) for each violation.

35(g) Soliciting from the legal owner the recovery of specific
36collateral registered under the Vehicle Code or under the motor
37vehicle licensing laws of other states after the collateral has been
38seen or located on a public street or on public or private property
39without divulging the location of the vehicle. The fine shall be one
P16   1hundred dollars ($100) for the first violation and two hundred fifty
2dollars ($250) for each violation thereafter.

3

SEC. 9.  

Section 22651.03 is added to the Vehicle Code, 4immediately following Section 22651, to read:

5

22651.03.  

(a) Notwithstanding Sections 14602.6 and 22651,
6this section shall apply when collateral is released to a licensed
7repossessor. For purposes of this section, “licensed repossessor”
8means a licensed repossessor, licensed repossession agency, or its
9officers or employees pursuant to Chapter 11 (commencing with
10Section 7500) of Division 3 of the Business and Professions Code.

11(b) Pursuant to Section 4022, a vehicle obtained by a licensed
12repossessor as a release of collateral is exempt from registration
13for purposes of the repossessor removing the vehicle to his or her
14storage facility or the facility of the legal owner. A law enforcement
15agency, impounding authority, tow yard, storage facility, or any
16other person in possession of the collateral shall release the vehicle
17without requiring current registration and pursuant to this section.
18The law enforcement agency shall be open to issue a release to the
19legal owner or a licensed repossessor whenever the agency is open
20to serve the public for nonemergency business.

21(c) The law enforcement agency and the impounding agency,
22including any storage facility acting on behalf of the law
23enforcement agency or impounding agency, shall comply with this
24section and shall not be liable to the registered owner for the
25improper release of the vehicle to the legal owner or a licensed
26repossessor provided the release complies with this section. A law
27enforcement agency shall not refuse to issue a release to a legal
28owner or a licensed repossessor on the grounds that it previously
29issued a release.

30(d) A vehicle removed and seized for any reason shall be
31released to the legal owner of the vehicle or to a licensed
32repossessor if all of the following conditions are met:

33(1) The legal owner is a motor vehicle dealer, bank, credit union,
34acceptance corporation, or other licensed financial institution
35legally operating in this state or is another person, not the registered
36owner, holding a security interest in the vehicle.

37(2) (A) The legal owner or the licensed repossessor pays all
38towing and storage fees related to the seizure of the vehicle. Any
39person having possession of the vehicle shall not collect from the
40legal owner of the type specified in paragraph (1) or a licensed
P17   1repossessor any administrative charges imposed pursuant to Section
222850.5 unless the legal owner voluntarily requested a poststorage
3hearing.

4(B) A person operating or in charge of a storage facility where
5vehicles are stored pursuant to this section shall accept a valid
6bank credit card or cash for payment of towing, storage, and related
7fees by a legal owner or a licensed repossessor claiming the vehicle.
8A credit card shall be in the name of the person presenting the
9card. “Credit card” means “credit card” as defined in subdivision
10(a) of Section 1747.02 of the Civil Code, except, for the purposes
11of this section, credit card does not include a credit card issued by
12a retail seller.

13(C) A person operating or in charge of a storage facility
14described in subparagraph (B) who violates subparagraph (B) shall
15be civilly liable to the owner of the vehicle or to the person who
16tendered the fees for four times the amount of the towing, storage,
17and related fees, but not to exceed five hundred dollars ($500).

18(D) A person operating or in charge of a storage facility
19described in subparagraph (B) shall have sufficient funds on the
20premises of the primary storage facility during normal business
21hours to accommodate, and make change in, a reasonable monetary
22transaction.

23(E) Credit charges for towing and storage services shall comply
24with Section 1748.1 of the Civil Code. Law enforcement agencies
25may include the costs of providing for payment by credit when
26making agreements with towing companies on rates.

27(3) The legal owner or licensed repossessor presents a copy of
28the repossession order, as defined in Section 7500.1 of the Business
29and Professions Code; a release from the one responsible
30governmental agency to give to the tow yard, only if required by
31the agency; a government-issued photographic identification card;
32and any one of the following, as determined by the legal owner or
33the licensed repossessor: a certificate of repossession for the
34vehicle, a security agreement for the vehicle, or title, whether paper
35or electronic, showing proof of legal ownership for the vehicle.
36Any documents presented may be originals, photocopies, or
37facsimile copies, or may be transmitted electronically. The law
38enforcement agency, impounding agency, or any other
39governmental agency, or any person acting on behalf of those
40agencies, shall not require any documents to be notarized. The law
P18   1enforcement agency, impounding agency, or any person acting on
2behalf of those agencies may require the licensed repossessor to
3produce a photocopy or facsimile copy of its repossession agency
4license or registration issued pursuant to Chapter 11 (commencing
5with Section 7500) of Division 3 of the Business and Professions
6Code.

7No administrative costs authorized under subdivision (a) of
8Section 22850.5 shall be charged to the legal owner, of the type
9specified in paragraph (1), who redeems the vehicle unless the
10legal owner voluntarily requests a poststorage hearing. No city,
11county, city and county, or state agency shall require a legal owner
12or a licensed repossessor to request a poststorage hearing as a
13requirement for release of the vehicle to the legal owner or the
14licensed repossessor. The law enforcement agency, impounding
15agency, or other governmental agency, or any person acting on
16behalf of those agencies, shall not require any documents other
17than those specified in this paragraph. The law enforcement agency,
18impounding agency, or other governmental agency, or any person
19acting on behalf of those agencies, shall not require any documents
20to be notarized. The legal owner or the licensed repossessor shall
21be given a copy of any documents he or she is required to sign,
22except for a vehicle evidentiary hold logbook. The law enforcement
23agency, impounding agency, or any person acting on behalf of
24those agencies, or any person in possession of the vehicle may
25photocopy and retain the copies of any documents presented by
26the legal owner or licensed repossessor.

27(4) A failure by a storage facility to comply with any applicable
28conditions set forth in this subdivision shall not affect the right of
29the legal owner or a licensed repossessor to retrieve the vehicle,
30provided all conditions required of the legal owner or licensed
31repossessor under this subdivision are satisfied.

32(e) A legal owner or a licensed repossessor that obtains release
33of a vehicle pursuant to subdivision (d) shall not release the vehicle
34to the registered owner of the vehicle, the person who was listed
35as the registered owner when the vehicle was impounded, or any
36 agents of the registered owner, unless the registered owner is a
37rental car agency.

38(f) The legal owner of collateral shall, by operation of law and
39without requiring further action, indemnify and hold harmless a
40law enforcement agency, city, county, city and county, the state,
P19   1a tow yard, storage facility, or an impounding yard from a claim
2arising out of the release of the collateral to a licensed repossessor
3and from any damage to the collateral after its release, including
4reasonable attorney’s fees and costs associated with defending a
5claim, if the collateral was released in compliance with this section.

6

SEC. 10.  

No reimbursement is required by this act pursuant to
7Section 6 of Article XIII B of the California Constitution for certain
8costs that may be incurred by a local agency or school district
9because, in that regard, this act creates a new crime or infraction,
10eliminates a crime or infraction, or changes the penalty for a crime
11or infraction, within the meaning of Section 17556 of the
12Government Code, or changes the definition of a crime within the
13meaning of Section 6 of Article XIII B of the California
14Constitution.

15However, if the Commission on State Mandates determines that
16this act contains other costs mandated by the state, reimbursement
17to local agencies and school districts for those costs shall be made
18pursuant to Part 7 (commencing with Section 17500) of Division
194 of Title 2 of the Government Code.



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