Amended in Senate August 2, 2016

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 Bill No. 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. 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. That act makes a violation of any of its provisions a crime.

This 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. The 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 begin delete bill would instead require a licensee to make a complete and accurate inventory of the personal effects in the collateral and, end delete begin insert bill, end insert 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.

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.

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

(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.

begin insert Existing law requires that a vehicle removed or seized by a peace officer pursuant to specified provisions of law be impounded for 30 days. end insert

begin insert This bill would authorize a law enforcement agency to require a licensed repossessor to provide a signed acknowledgment that the repossessed vehicle impounded under those provisions will not be released to the registered owner prior to the expiration of the 30 end insert begin insert -day period. end 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.

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:

SECTION 1.  

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

7500.1.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(o) “Locate” or “locating” means 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SEC. 2.  

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

7504.  

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

(1) Be at least 18 years of age.

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

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

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

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

(4) Pass the required examination.

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

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

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

SEC. 3.  

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

7506.7.  

(a) Employees of a licensee who are engaged
exclusively in stenographic, typing, filing, clerical, or other office
activities are not required to register under this article.

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

SEC. 4.  

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

7507.3.  

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

SEC. 5.  

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

7507.6.  

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

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

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

SEC. 6.  

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

7507.9.  

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

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

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

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

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

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

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

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

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

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

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

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

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

(f) Environmental, Olympic, special interest, or other license
plates issued pursuant to Article 8 (commencing with Section
5000), Article 8.4 (commencing with Section 5060), or Article 8.5
(commencing with Section 5100) of Chapter 1 of Division 3 of
the Vehicle Code that remain the personal effects of the debtor
shall be removed from the collateral and inventoried pursuant to
this section. If the plates are not claimed by the debtor within 60
days, they shall either (1) be effectively destroyed and the licensee
shall, within 30 days thereafter, notify the Department of Motor
Vehicles of their effective destruction on a form promulgated by
the chief that has been approved as to form by the Director of the
Department of Motor Vehicles; or (2) be retained by the licensee
indefinitely to be returned to the debtor upon request, in which
case the licensee shall not charge more than 60 days’ storage on
the plates.

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

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

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

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

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

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

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

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

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

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

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

(4) To the debtor.

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

SEC. 7.  

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

7507.13.  

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

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

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

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

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

SEC. 8.  

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

7508.2.  

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

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

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

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

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

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

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

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

SEC. 9.  

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

22651.03.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

begin insert

(g) A law enforcement agency may require a signed
acknowledgment from a licensed repossessor stating that the
repossessed vehicle impounded pursuant to Section 14602.6 for
30 days will not, under any circumstances, be released by the
licensed repossessor to the registered owner prior to the expiration
of the 30-day period without the law enforcement agency’s
approval.

end insert

SEC. 10.  

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

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