Amended in Senate August 18, 2016

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 BillNo. 1859


Introduced by Assembly Member Gallagher

February 10, 2016


An act to amend Sections 7500.1, 7504,begin delete 7506.7,end delete 7507.3,begin delete 7507.6, 7507.9, 7507.13, and 7508.2end deletebegin insert and 7507.13end insert of the Business and Professionsbegin delete Code, and to add Section 22651.03 to the Vehicleend delete Code, relating to collateral recovery.

LEGISLATIVE COUNSEL’S DIGEST

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

(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.begin delete 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.end delete 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 ofbegin insert lawfulend insert experience in recovering collateralbegin delete as a registrant pursuant to the act or as a salaried employee of a financial institution or vehicle dealer, as specified.end deletebegin insert and provides that lawful experience does not include employment performing work other than skip tracing, debt collection, or actual collateral recovery.end insert That act makes a violation of any of its provisions a crime.

Thisbegin delete bill, among other things,end deletebegin insert billend insert wouldbegin delete 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.end deletebegin insert remove debt collection from the employment included under lawful experience.end insert The bill wouldbegin insert change the definition of assignment to also include any written authorization to skip trace or locate, wouldend insert define the term “repossession order” as having the same meaning asbegin delete “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, 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,end deletebegin insert “assignment,” and would make conforming changes. The bill would delete the definition for the term “repossession.” By expanding the scope of a crime, this bill wouldend insert 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.

begin delete

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

end delete
begin delete

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

end delete
begin delete

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 delete
begin delete

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-day period.

end delete
begin delete

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

end delete
begin delete

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

end delete
begin delete

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

end delete
begin delete

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

end delete
begin delete

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

end delete
begin insert

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

end insert
begin insert

This bill would provide that no reimbursement is required by this act for a specified reason.

end insert

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.

begin insert

9
(b) “Assignment” or “repossession order” means any written
10authorization by the legal owner, lienholder, lessor, lessee, or
P5    1registered owner, or the agent of any of them, to skip trace, locate,
2or repossess any collateral, including, but not limited to, collateral
3registered under the Vehicle Code that is subject to a security
4agreement that contains a repossession clause. “Assignment” or
5“repossession order” also means any written authorization by an
6employer to recover any collateral entrusted to an employee or
7former employee in possession of the collateral. A photocopy of
8an assignment or repossession order, facsimile copy of an
9assignment or repossession order, or electronic format of an
10assignment or repossession order shall have the same force and
11effect as an original written assignment or repossession order.

end insert
begin delete

12(b)

end delete

13begin insert(c)end insert “Bureau” means the Bureau of Security and Investigative
14Services.

begin delete

15(c)

end delete

16begin insert(d)end insert “Chief” means the Chief of the Bureau of Security and
17Investigative Services.

begin delete

18(d)

end delete

19begin insert(e)end insert “Collateral” means any specific vehicle, trailer, boat,
20recreational vehicle, motor home, appliance, or other property that
21is subject to a security agreement.

begin delete

22(e)

end delete

23begin insert(f)end insert “Combustibles” means any substances or articles that are
24capable of undergoing combustion or catching fire, or that are
25flammable, if retained.

begin delete

26(f)

end delete

27begin insert(g)end insert “Dangerous drugs” means any controlled substances as
28defined in Chapter 2 (commencing with Section 11053) of Division
2910 of the Health and Safety Code.

begin delete

30(g)

end delete

31begin insert(h)end insert “Deadly weapon” means and includes any instrument or
32weapon of the kind commonly known as a blackjack, slungshot,
33billy, sandclub, sandbag, metal knuckles, dirk, dagger, pistol, or
34revolver, or any other firearm, any knife having a blade longer
35than five inches, any razor with an unguarded blade, and any metal
36pipe or bar used or intended to be used as a club.

begin delete

37(h)

end delete

38begin insert(i)end insert “Debtor” means any person obligated under a security
39agreement.

begin delete

40(i)

end delete

P6    1begin insert(j)end insert “Department” means the Department of Consumer Affairs.

begin delete

2(j)

end delete

3begin insert(k)end insert “Director” means the Director of Consumer Affairs.

begin delete

4(k)

end delete

5begin insert(l)end insert “Electronic format” includes, but is not limited to, a text
6message, email, or Internet posting.

begin delete

7(l)

end delete

8begin insert(m)end insert “Health hazard” means any personal effects that if retained
9would produce an unsanitary or unhealthful condition, or which
10might damage other personal effects.

begin delete

11(m)

end delete

12begin insert(n)end insert “Legal owner” means a person holding a security interest
13in any collateralbegin delete thatend deletebegin insert where the collateralend insert is subject to a security
14agreement, a lien against any collateral,begin insert an assignment orend insert a
15repossession order, or an interest in any collateral that is subject
16to a lease agreement.

begin delete

17(n)

end delete

18begin insert(o)end insert “Licensee” means an individual, partnership, limited liability
19company, or corporation licensed under this chapter as a
20repossession agency.

begin delete

21(o) “Locate” or “locating” means searching visually, by a
22licensee, for collateral without the use of an electronic device,
23including, but not limited to, a camera, scanner, or automated
24license plate reader.

end delete

25(p) “Multiple licensee” means a repossession agency holding
26more than one repossession license under this chapter, with one
27fictitious trade style and ownership, conducting repossession
28business from additional licensed locations other than the location
29shown on the original license.

30(q) “Person” includes any individual, partnership, limited
31liability company, or corporation.

32(r) “Personal effects” means any property that is not the property
33of the legal owner.

34(s) “Private building” means and includes any dwelling,
35outbuilding, or other enclosed structure.

36(t) “Qualified certificate holder” or “qualified manager” is a
37person who possesses a valid qualification certificate in accordance
38with the provisions of Article 5 (commencing with Section 7504)
39and is in active control or management of, and who is a director
40of, the licensee’s place of business.

P7    1(u) “Registered owner” means the individual listed in the records
2of the Department of Motor Vehicles,begin delete orend delete on a conditional sales
3contract, or onbegin insert an assignment orend insert a repossession order, as the
4registered owner.

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

begin delete

6(w) “Repossession” or “repossess” means the locating or
7physically recovering of collateral by means of a repossession
8order.

9(x)


10“Repossession order” means any written authorization by the
11legal owner, lienholder, lessor, lessee, registered owner, or the
12agent of any of them, to repossess any collateral, including, but
13not limited to, collateral registered under the Vehicle Code that is
14subject to a security agreement that contains a repossession clause.
15“Repossession order” also means any written authorization by an
16employer to recover any collateral entrusted to an employee or
17former employee in possession of the collateral. A photocopy of
18a repossession order, facsimile copy of a repossession order, or
19electronic format of a repossession order shall have the same force
20and effect as an original written repossession order.

21(y)

end delete

22begin insert(w)end insert “Secured area” means and includes any fenced and locked
23area.

begin delete

24(z)

end delete

25begin insert(x)end insert “Security agreement” means an obligation, pledge, mortgage,
26chattel mortgage, lease agreement, deposit, or lien, given by a
27debtor as security for payment or performance of his or her debt,
28by furnishing the creditor with a recourse to be used in case of
29failure in the principal obligation. “Security agreement” also
30includes a bailment where an employer-employee relationship
31exists or existed between the bailor and the bailee.

begin delete

32(aa)

end delete

33begin insert(y)end insert “Services” means any duty or labor to be rendered by one
34person for another.

begin delete

35(ab)

end delete

36begin insert(z)end insert “Violent act” means any act that results in bodily harm or
37injury to any party involved.

begin delete

38(ac)

end delete

P8    1begin insert(aa)end insert The amendments made to this section by Chapter 418 of
2the Statutes of 2006 shall not be deemed to exempt any person
3from the provisions of this chapter.

4

SEC. 2.  

Section 7504 of the Business and Professions Code is
5amended to read:

6

7504.  

(a) Except as otherwise provided in this chapter, an
7applicant for a qualification certificate shall comply with all of the
8following:

9(1) Be at least 18 years of age.

10(2) Have been, for at least two years of lawful experience, during
11the five years preceding the date on which his or her application
12is filed, a registrant or have had two years of lawful experience in
13recovering collateral within this state. Lawful experience means
14experience in recovering collateral as a registrant pursuant to this
15chapter or as a salaried employee of abegin insert financial institution orend insert
16 vehicle dealer. Lawful experience does not include any employment
17performing work other thanbegin insert skip tracing orend insert actual collateral
18recovery.

19Two years’ experience shall consist of not less than 4,000 hours
20of actual compensated work performed by the applicant preceding
21the filing of an application.

22An applicant shall certify that he or she has completed the
23claimed hours of qualifying experience and the exact details as to
24the character and nature thereof by written certifications from the
25employer, licensee,begin insert financial institution,end insert or vehicle dealer, subject
26to independent verification by the director as he or she may
27determine. In the event of the inability of an applicant to supply
28the written certifications from the employer, licensee,begin insert financial
29institution,end insert
or vehicle dealer, in whole or in part, applicants may
30offer other written certifications from other persons substantiating
31their experience for consideration by the director. All certifications
32shall include a statement that representations made are true, correct,
33and contain no material omissions of fact to the best knowledge
34and belief of the applicant or the person submitting the certification.
35An applicant or person submitting the certification who declares
36as true any material matter pursuant to this paragraph that he or
37she knows to be false is guilty of a misdemeanor.

38(3) Complete and forward to the bureau a qualified certificate
39holder application which shall be on a form prescribed by the
40director and signed by the applicant. An applicant who declares
P9    1as true any material matter pursuant to this paragraph that he or
2she knows to be false is guilty of a misdemeanor. The application
3shall be accompanied by two recent photographs of the applicant,
4of a type prescribed by the director, and two classifiable sets of
5his or her fingerprints. The residence address, residence telephone
6number, and driver’s license number of each qualified certificate
7holder or applicant for a qualification certificate, if requested, shall
8be confidential pursuant to the Information Practices Act of 1977
9(Chapter 1 (commencing with Section 1798) of Title 1.8 of Part
104 of Division 3 of the Civil Code) and shall not be released to the
11public.

12(4) Pass the required examination.

13(5) Pay the required application and examination fees to the
14bureau.

15(b) Upon the issuance of the initial qualification certificate or
16renewal qualification certificate, the bureau shall issue to the
17certificate holder a suitable pocket identification card which
18includes a photograph of the certificate holder. The photograph
19shall be of a size prescribed by the bureau. The card shall contain
20the name of the licensee with whom the certificate holder is
21employed.

22(c) The application form shall contain a statement informing
23the applicant that a false or dishonest answer to a question may be
24grounds for denial or subsequent suspension or revocation of a
25qualification certificate.

begin delete26

SEC. 3.  

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

28

7506.7.  

(a) Employees of a licensee who are engaged
29exclusively in stenographic, typing, filing, clerical, or other office
30activities are not required to register under this article.

31(b) Employees of a licensee who are operating electronic
32devices, including, but not limited to, cameras, scanners, and
33automated license plate readers, for the purpose of locating
34collateral or documenting the location of collateral are not required
35to register under this article.

end delete
36

begin deleteSEC. 4.end delete
37
begin insertSEC. 3.end insert  

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

39

7507.3.  

A repossession agency shall be required to keep and
40maintain adequate records of all transactions, including, but not
P10   1limited to,begin insert assignment orend insert repossession order forms; vehicle report
2of repossession required by Section 28 of the Vehicle Code; vehicle
3condition reports, including odometer readings, if available;
4personal effects inventory; notice of seizure; and records of all
5transactions pertaining to the sale of collateral that has been
6repossessed, including, but not limited to, bids solicited and
7received, cash received, deposits made to the trust account,
8remittances to the seller, and allocation of any moneys not so
9remitted to appropriate ledger accounts. Records, including bank
10statements of the trust account, shall be retained for a period of
11not less than four years and shall be available for examination by
12the bureau upon demand. In addition, collateral and personal effects
13storage areas shall be made accessible for inspection by the bureau
14upon demand.begin delete Aend deletebegin insert An assignment orend insert repossession order form may
15be an original, a photocopy, a facsimile copy, or a copy stored in
16an electronic format.

begin delete
17

SEC. 5.  

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

19

7507.6.  

(a) Within seven days after a violent act has occurred
20involving a licensee, or any officer, partner, qualified certificate
21holder, registrant, or employee of a licensee, while acting within
22the course and scope of his or her employment or contract, that
23results in a police report or bodily harm or bodily injury, the
24licensee or the licensee’s qualified certificate holder or registrant,
25shall mail or deliver to the chief a notice concerning the incident
26upon a form provided by the bureau.

27(b) Within seven days after the occurrence of a violent act or a
28threatened violent act involving a licensee, or any officer, partner,
29qualified certificate holder, registrant, or employee of a licensee,
30while acting within the course and scope of his or her employment
31or contract, that results in a police report or bodily harm or bodily
32injury, the licensee or the licensee’s qualified certificate holder or
33registrant shall send by certified mail, return receipt requested, a
34notice containing information about the incident to the person or
35individual who made the repossession order. If the assignor is not
36the legal owner, the assignor shall notify the legal owner of the
37contents of the notice.

38(c) A licensee, qualified certificate holder, or registrant may
39send the notice set forth in subdivision (b) for a violent act or
40threatened violent act even if a police report is not made or no
P11   1bodily harm or bodily injury occurs. Any notice of a threatened
2violent act provided pursuant to subdivision (b) may only be used
3to notify a subsequent assignee and not for any collateral purpose.
4Nothing in this subdivision or subdivision (b) shall be construed
5to provide immunity against any claim for defamation.

6

SEC. 6.  

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

8

7507.9.  

Except as otherwise provided in this section, personal
9effects shall be removed from the collateral, including any personal
10effect that is mounted but detachable from the collateral by a
11release mechanism. A complete and accurate inventory of the
12personal effects shall be made, and the personal effects shall be
13labeled and stored by the licensee for a minimum of 60 days in a
14secure manner, except those personal effects removed by or in the
15presence of the debtor or the party in possession of the collateral
16at the time of the repossession. If the licensee or the licensee’s
17agent cannot determine whether the property attached to the
18collateral is a personal effect or a part of the collateral, then that
19fact shall be noted on the inventory and the licensee or agent shall
20not be obligated to remove the item from the collateral, unless the
21item can be removed without the use of tools, in which case it shall
22be removed and inventoried. The licensee or the licensee’s agent
23shall notify the debtor that if the debtor takes the position that an
24item is a personal effect, then the debtor shall contact the legal
25owner to resolve the issue. If the collateral is locked, the licensee
26shall inventory the personal effects within 15 days, if possible.

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

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

33(1) Deadly weapons and dangerous drugs shall be turned over
34to any law enforcement agency for retention. These items shall be
35entered on the inventory and a notation shall be made as to the
36date, time, and place the deadly weapon or dangerous drug was
37turned over to the law enforcement agency, and a receipt from the
38law enforcement agency shall be maintained in the records of the
39repossession agency.

P12   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
P13   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 interest within the time period for the notices required
25by this section or prior to completion of the inventory, whichever
26is earlier, and signs a statement that reads only as follows:


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


31(2) No other signature or document shall be required to waive
32the preparation and presentation of an inventory. If the debtor
33claims there are personal effects or personal property missing, the
34licensee shall provide the debtor with the phone number of the
35licensed repossession agency. A licensee shall not require the
36person retrieving the personal effects to sign any other documents
37or waivers prior to the return of the personal effects. No other
38documents or signatures shall be required for the person to receive
39the personal effects. Any fees paid for clerical, handling,
40administering, inventorying, or storage of personal effects are
P14   1confidential and shall only be disclosed by the licensed
2 repossession agency as ordered by a court of competent
3jurisdiction.

4(i) (1) If personal effects or other personal property not covered
5by a security agreement are to be released to someone other than
6the debtor, the repossession agency shall receive written
7authorization to do so from the debtor.

8(2) Subject to paragraph (1), a licensee shall not release or
9conspire or agree to release personal effects or other personal
10property not covered by a security agreement to anyone other than
11the debtor.

12(j) A licensee shall not sell personal effects or other personal
13property not covered by a security agreement and remit money
14from the sale to a third party, including, but not limited to, any
15lending institution.

16(k) The inventory or waiver of inventory, as provided in
17subdivision (h), shall be a confidential document. A licensee shall
18only disclose the contents of the inventory under the following
19circumstances:

20(1) In response to the order of a court having jurisdiction to
21issue the order.

22(2) In compliance with a lawful subpoena issued by a court of
23competent jurisdiction.

24(3) When the debtor has consented in writing to the release and
25the written consent is signed and dated by the debtor subsequent
26to the repossession and states the entity or entities to whom the
27contents of the inventory may be disclosed.

28(4) To the debtor.

29(l) A licensee who has been notified that collateral will be
30retrieved may store personal effects or personal property inside
31the collateral until the collateral is no longer in the possession of
32the licensee. If a licensee stores personal effects pursuant to this
33subdivision, the notice and inventory provisions of this section
34shall apply, the licensee shall be liable for the security of the
35personal effects, and the collateral shall not be released by the
36licensee until all personal effects or personal property have been
37removed.

end delete
38

begin deleteSEC. 7.end delete
39
begin insertSEC. 4.end insert  

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

P15   1

7507.13.  

(a) A licensed repossession agency is not liable for
2the act or omission of a legal owner, debt collector, debtor,
3lienholder, lessor, lessee,begin insert orend insert registered owner, or an agent of any
4of them, in makingbegin delete aend deletebegin insert an assignment orend insert repossession order to it or
5for acceptingbegin delete aend deletebegin insert an assignment orend insert repossession order from any legal
6owner, debt collector, debtor, lienholder, lessor, lessee,begin insert orend insert
7 registered owner, or an agent of any of them, and is entitled to
8indemnity from the legal owner, debt collector, debtor, lienholder,
9lessor, lessee, or registered owner for any loss, damage, cost, or
10expense, including court costs and attorney’s fees, that it may
11reasonably incur as a result thereof. Nothing in this subdivision
12limits the liability of any person for his or her tortious conduct.

13(b) The legal owner, debt collector, debtor, lienholder, lessor,
14lessee,begin insert orend insert registered owner, or the agent of any of them, is not
15liable for any act or omission by a licensed repossession agency,
16or its agent, in carrying outbegin delete aend deletebegin insert an assignment orend insert repossession order
17and is entitled to indemnity from the repossession agency for any
18loss, damage, cost, or expense, including court costs and attorney’s
19fees, that the legal owner, debt collector, debtor, lienholder, lessor,
20lessee,begin insert orend insert registered owner, or the agent of any of them, may
21reasonably incur as a result thereof. Nothing in this subdivision
22limits the liability of any person for his or her tortious conduct.

23(c) The legal owner, debtor, lienholder, lessor, lessee,begin insert orend insert
24 registered owner, or the agent of any of them, is not guilty of a
25violation of Section 7502.1 or 7502.2 if, at the time of the
26begin insert assignment orend insert repossession order, the party making thebegin insert assignment
27orend insert
repossession order has in its possession a copy of the
28repossessor’s current, unexpired repossession agency license, and
29a copy of the current, unexpired repossession agency’s qualified
30manager’s certificate, and does not have actual knowledge of any
31order of suspension or revocation of the license or certificate.

32(d) Neither a licensed repossession agency nor a legal owner,
33debtor, lienholder, lessor, lessee,begin insert orend insert registered owner, or an agent
34of any of them may, by any means, direct or indirect, express or
35implied, instruct or attempt to coerce the other to violate any law,
36regulation, or rule regarding the recovery of any collateral,
37including, but not limited to, the provisions of this chapter or
38Section 9609 of the Commercial Code.

39(e) A licensed repossession agency, at least annually, on or
40before January 31 of each year, shall provide a legal owner from
P16   1which the agency acceptsbegin delete aend deletebegin insert an assignment orend insert repossession order
2with a copy of this section, Sections 7500.2, 7507.4, 7507.115,
37507.12, and 7507.125 of this code, and Section 28 of the Vehicle
4Code.

begin delete
5

SEC. 8.  

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

7

7508.2.  

The director may assess administrative fines for any
8of the following prohibited acts:

9(a) Recovering collateral or making any money demand in lieu
10thereof, including, but not limited to, collateral registered under
11the Vehicle Code, that has been sold under a security agreement
12before a signed or telegraphic authorization has been received from
13the legal owner, debtor, lienholder, lessor, or repossession agency
14acting on behalf of the legal owner, debtor, lienholder, or lessor
15of the collateral. A telephonic repossession order is acceptable if
16the legal owner, debtor, lienholder, lessor, or repossession agency
17acting on behalf of the legal owner, debtor, lienholder, or lessor
18is known to the licensee and a written authorization from the legal
19owner, debtor, lienholder, lessor, or repossession agency acting
20on behalf of the legal owner, debtor, lienholder, or lessor is
21received by the licensee within 10 working days or a request by
22the licensee for a written authorization from the legal owner,
23debtor, lienholder, lessor, or repossession agency acting on behalf
24of the legal owner, debtor, lienholder, or lessor is made in writing
25within 10 working days. Referrals of repossession orders from one
26licensee to another licensee are acceptable. The referral of a
27repossession order shall be made under the same terms and
28conditions as in the original repossession order. The fine shall be
29twenty-five dollars ($25) for each of the first five violations and
30one hundred dollars ($100) for each violation thereafter, per audit.

31(b) Using collateral or personal effects, which have been
32recovered, for the personal benefit of a licensee, or officer, partner,
33manager, registrant, or employee of a licensee. The fine shall be
34twenty-five dollars ($25) for the first violation and one hundred
35dollars ($100) for each violation thereafter. This subdivision does
36not apply to personal effects disposed of pursuant to subdivision
37(c) of Section 7507.9. Nothing in this subdivision prohibits the
38using or taking of personal property connected, adjoined, or affixed
39to the collateral through an unbroken sequence if that use or taking
P17   1is reasonably necessary to effectuate the recovery in a safe manner
2or to protect the collateral or personal effects.

3(c) Selling collateral recovered under this chapter, or making a
4demand for payment in lieu of repossession. The fine shall be two
5hundred fifty dollars ($250) for the first violation and one thousand
6dollars ($1,000) for each subsequent violation.

7(d) Unlawfully entering any private building or secured area
8without the consent of the owner, or of the person in legal
9possession thereof, at the time of repossession. The fine shall be
10five hundred dollars ($500) for each violation.

11(e) Committing unlawful assault or battery on another person.
12The fine shall be five hundred dollars ($500) for each violation.

13(f) Falsification or alteration of an inventory. The fine shall be
14twenty-five dollars ($25) for each violation.

15(g) Soliciting from the legal owner the recovery of specific
16collateral registered under the Vehicle Code or under the motor
17vehicle licensing laws of other states after the collateral has been
18seen or located on a public street or on public or private property
19without divulging the location of the vehicle. The fine shall be one
20hundred dollars ($100) for the first violation and two hundred fifty
21dollars ($250) for each violation thereafter.

22

SEC. 9.  

Section 22651.03 is added to the Vehicle Code, 23immediately following Section 22651, to read:

24

22651.03.  

(a) Notwithstanding Sections 14602.6 and 22651,
25this section shall apply when collateral is released to a licensed
26repossessor. For purposes of this section, “licensed repossessor”
27means a licensed repossessor, licensed repossession agency, or its
28officers or employees pursuant to Chapter 11 (commencing with
29Section 7500) of Division 3 of the Business and Professions Code.

30(b) Pursuant to Section 4022, a vehicle obtained by a licensed
31repossessor as a release of collateral is exempt from registration
32for purposes of the repossessor removing the vehicle to his or her
33storage facility or the facility of the legal owner. A law enforcement
34agency, impounding authority, tow yard, storage facility, or any
35other person in possession of the collateral shall release the vehicle
36without requiring current registration and pursuant to this section.
37The law enforcement agency shall be open to issue a release to the
38legal owner or a licensed repossessor whenever the agency is open
39to serve the public for nonemergency business.

P18   1(c) The law enforcement agency and the impounding agency,
2including any storage facility acting on behalf of the law
3enforcement agency or impounding agency, shall comply with this
4section and shall not be liable to the registered owner for the
5improper release of the vehicle to the legal owner or a licensed
6repossessor provided the release complies with this section. A law
7enforcement agency shall not refuse to issue a release to a legal
8owner or a licensed repossessor on the grounds that it previously
9issued a release.

10(d) A vehicle removed and seized for any reason shall be
11released to the legal owner of the vehicle or to a licensed
12repossessor if all of the following conditions are met:

13(1) The legal owner is a motor vehicle dealer, bank, credit union,
14acceptance corporation, or other licensed financial institution
15legally operating in this state or is another person, not the registered
16owner, holding a security interest in the vehicle.

17(2) (A) The legal owner or the licensed repossessor pays all
18towing and storage fees related to the seizure of the vehicle. Any
19person having possession of the vehicle shall not collect from the
20 legal owner of the type specified in paragraph (1) or a licensed
21repossessor any administrative charges imposed pursuant to Section
2222850.5 unless the legal owner voluntarily requested a poststorage
23hearing.

24(B) A person operating or in charge of a storage facility where
25vehicles are stored pursuant to this section shall accept a valid
26bank credit card or cash for payment of towing, storage, and related
27fees by a legal owner or a licensed repossessor claiming the vehicle.
28A credit card shall be in the name of the person presenting the
29card. “Credit card” means “credit card” as defined in subdivision
30(a) of Section 1747.02 of the Civil Code, except, for the purposes
31of this section, credit card does not include a credit card issued by
32a retail seller.

33(C) A person operating or in charge of a storage facility
34described in subparagraph (B) who violates subparagraph (B) shall
35be civilly liable to the owner of the vehicle or to the person who
36tendered the fees for four times the amount of the towing, storage,
37and related fees, but not to exceed five hundred dollars ($500).

38(D) A person operating or in charge of a storage facility
39described in subparagraph (B) shall have sufficient funds on the
40premises of the primary storage facility during normal business
P19   1hours to accommodate, and make change in, a reasonable monetary
2transaction.

3(E) Credit charges for towing and storage services shall comply
4with Section 1748.1 of the Civil Code. Law enforcement agencies
5may include the costs of providing for payment by credit when
6making agreements with towing companies on rates.

7(3) The legal owner or licensed repossessor presents a copy of
8the repossession order, as defined in Section 7500.1 of the Business
9and Professions Code; a release from the one responsible
10governmental agency to give to the tow yard, only if required by
11the agency; a government-issued photographic identification card;
12and any one of the following, as determined by the legal owner or
13the licensed repossessor: a certificate of repossession for the
14vehicle, a security agreement for the vehicle, or title, whether paper
15or electronic, showing proof of legal ownership for the vehicle.
16Any documents presented may be originals, photocopies, or
17facsimile copies, or may be transmitted electronically. The law
18enforcement agency, impounding agency, or any other
19governmental agency, or any person acting on behalf of those
20agencies, shall not require any documents to be notarized. The law
21enforcement agency, impounding agency, or any person acting on
22behalf of those agencies may require the licensed repossessor to
23produce a photocopy or facsimile copy of its repossession agency
24license or registration issued pursuant to Chapter 11 (commencing
25with Section 7500) of Division 3 of the Business and Professions
26Code.

27No administrative costs authorized under subdivision (a) of
28Section 22850.5 shall be charged to the legal owner, of the type
29specified in paragraph (1), who redeems the vehicle unless the
30legal owner voluntarily requests a poststorage hearing. No city,
31county, city and county, or state agency shall require a legal owner
32or a licensed repossessor to request a poststorage hearing as a
33requirement for release of the vehicle to the legal owner or the
34licensed repossessor. The law enforcement agency, impounding
35agency, or other governmental agency, or any person acting on
36behalf of those agencies, shall not require any documents other
37than those specified in this paragraph. The law enforcement agency,
38impounding agency, or other governmental agency, or any person
39acting on behalf of those agencies, shall not require any documents
40to be notarized. The legal owner or the licensed repossessor shall
P20   1be given a copy of any documents he or she is required to sign,
2except for a vehicle evidentiary hold logbook. The law enforcement
3agency, impounding agency, or any person acting on behalf of
4those agencies, or any person in possession of the vehicle may
5photocopy and retain the copies of any documents presented by
6the legal owner or licensed repossessor.

7(4) A failure by a storage facility to comply with any applicable
8conditions set forth in this subdivision shall not affect the right of
9the legal owner or a licensed repossessor to retrieve the vehicle,
10provided all conditions required of the legal owner or licensed
11repossessor under this subdivision are satisfied.

12(e) A legal owner or a licensed repossessor that obtains release
13of a vehicle pursuant to subdivision (d) shall not release the vehicle
14to the registered owner of the vehicle, the person who was listed
15as the registered owner when the vehicle was impounded, or any
16 agents of the registered owner, unless the registered owner is a
17rental car agency.

18(f) The legal owner of collateral shall, by operation of law and
19without requiring further action, indemnify and hold harmless a
20law enforcement agency, city, county, city and county, the state,
21a tow yard, storage facility, or an impounding yard from a claim
22arising out of the release of the collateral to a licensed repossessor
23and from any damage to the collateral after its release, including
24reasonable attorney’s fees and costs associated with defending a
25claim, if the collateral was released in compliance with this section.

26(g) A law enforcement agency may require a signed
27acknowledgment from a licensed repossessor stating that the
28repossessed vehicle impounded pursuant to Section 14602.6 for
2930 days will not, under any circumstances, be released by the
30licensed repossessor to the registered owner prior to the expiration
31of the 30-day period without the law enforcement agency’s
32approval.

33

SEC. 10.  

No reimbursement is required by this act pursuant to
34Section 6 of Article XIII B of the California Constitution for certain
35costs that may be incurred by a local agency or school district
36because, in that regard, this act creates a new crime or infraction,
37eliminates a crime or infraction, or changes the penalty for a crime
38or infraction, within the meaning of Section 17556 of the
39Government Code, or changes the definition of a crime within the
P21   1meaning of Section 6 of Article XIII B of the California
2Constitution.

3However, if the Commission on State Mandates determines that
4this act contains other costs mandated by the state, reimbursement
5to local agencies and school districts for those costs shall be made
6pursuant to Part 7 (commencing with Section 17500) of Division
74 of Title 2 of the Government Code.

end delete
8begin insert

begin insertSEC. 5.end insert  

end insert
begin insert

No reimbursement is required by this act pursuant to
9Section 6 of Article XIII B of the California Constitution because
10the only costs that may be incurred by a local agency or school
11district will be incurred because this act creates a new crime or
12infraction, eliminates a crime or infraction, or changes the penalty
13for a crime or infraction, within the meaning of Section 17556 of
14the Government Code, or changes the definition of a crime within
15the meaning of Section 6 of Article XIII B of the California
16Constitution.

end insert


O

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