BILL ANALYSIS Ó
SENATE COMMITTEE ON
BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT
Senator Jerry Hill, Chair
2015 - 2016 Regular
Bill No: AB 1859 Hearing Date: June 27,
2016
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|Author: |Gallagher |
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|Version: |June 21, 2016 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Mark Mendoza |
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Subject: Collateral recovery: release of vehicle
SUMMARY: Makes several substantive and clarifying changes to
repossession, inventory, and release procedures for collateral
recovery involving licensed repossessors, including consumer
waivers of inventory presentation, storage of personal effects,
collateral release procedures, inventory procedures, and
registration requirements.
Existing law:
1) Establishes the Bureau of Security and Investigative Services
(BSIS) within the Department of Consumer Affairs (DCA) to
license and regulate repossessors under the Collateral
Recovery Act (Act). (Business and Professions (BPC) §§ 7500
- 7511)
2) Defines "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,
including, but not limited to, collateral registered under
the Vehicle Code that is subject to a security agreement that
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contains a repossession clause. "Assignment" also means any
written authorization by an employer to recover any
collateral entrusted to an employee or former employee in
possession of the collateral. (BPC § 7500.1(a))
3) Defines "collateral" as any specific vehicle, trailer, boat,
recreational vehicle, motor home, appliance, or other
property that is subject to a security agreement. (BPC §
7500.1(e))
4) Defines "debtor" as any person obligated under a security
agreement. (BPC § 7500.1(i))
5) Defines "legal owner" as a person holding a security interest
in any collateral that is subject to a security agreement, a
lien against any collateral, or an interest in any collateral
that is subject to a lease agreement. (BPC § 7500.1(n))
6) Defines "licensee" as an individual, partnership, limited
liability company, or corporation licensed under this chapter
as a repossession agency. (BPC § 7500.1(o))
7) Defines "repossession" as the locating or recovering of
collateral by means of an assignment. (BPC § 7500.1)
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8) Requires a licensed repossessor to remove and inventory
personal effects from the collateral after repossession.
Requires the inventory of the personal effects be complete
and accurate, and the personal effects 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. (BPC § 7507.9)
9) Authorizes a debtor, with the consent of the licensee, to
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 the Act and signs a
statement that the debtor has received all the property.
(BPC § 7507.9(h))
10)Requires a repossession agency to request written
authorization from the debtor before releasing personal
effects or other personal property not covered by a security
agreement. (BPC § 7507.9(i))
11)Exempts a vehicle repossessed pursuant to the terms of a
security agreement from registration solely for the purpose
of transporting the vehicle from the point of repossession to
the storage facilities of the repossessor, and from the
storage facilities to the legal owner or a licensed motor
vehicle auction, provided that the repossessor transports
with the vehicle the appropriate documents authorizing the
repossession and makes them available to a law enforcement
officer on request. (Vehicle Code (VEH) § 4022)
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12)Provides that a vehicle removed and seized by a peace officer
as specified be released to the legal owner of the vehicle or
the legal owner's agent prior to the end of 30 days'
impoundment if all of the following conditions are met: (VEH
§ 14602.6(f))
a) 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.
b) The following payment requirements are met:
i) The legal owner or the legal owner's agent
pays all towing and storage fees related to the
seizure of the vehicle, as specified.
ii) 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 or registered owner or the
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owner's agent 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 Civil Code (CIV) § 1747.02(a), except, for the
purposes of this section, credit card does not
include a credit card issued by a retail seller.
iii) A person operating or in charge of a
storage facility described above who violates the
requirements 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).
iv) A person operating or in charge of a
storage facility described above 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.
v) Requires credit charges for towing and
storage services comply with CIV § 1748.1. Law
enforcement agencies may include the costs of
providing for payment by credit when making
agreements with towing companies on rates.
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c) The legal owner or the legal owner's agent
presents a copy of the assignment, as defined in BPC §
7500.1(b); a release from the one responsible
governmental agency, 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 legal owner's agent: 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 agent of the legal owner to
produce a photocopy or facsimile copy of its
repossession agency license or registration issued
pursuant to the Act, or to demonstrate, to the
satisfaction of the law enforcement agency, impounding
agency, or any person acting on behalf of those
agencies, that the agent is exempt from licensure
pursuant to BPC §§ 7500.2 or 7500.3.
d) No administrative costs authorized under VEH §
22850.5(a) shall be charged to the legal owner, 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 legal owner's agent to request a
poststorage hearing as a requirement for release of
the vehicle to the legal owner or the legal owner's
agent. 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
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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
legal owner's agent 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 legal
owner's agent.
e) 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 the legal owner's agent to retrieve the
vehicle, provided all conditions required of the legal
owner or legal owner's agent under this subdivision
are satisfied.
13)Provides that, when collateral is released to a licensed
repossessor, licensed repossession agency, or its officers or
employees, the following apply:
a) 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 the release requirements of
VEH § 14602.6 and shall not be liable to the
registered owner for the improper release of the
vehicle to the legal owner or the legal owner's agent
provided the release complies with the provisions of
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this section. A law enforcement agency shall not
refuse to issue a release to a legal owner or the
agent of a legal owner on the grounds that it
previously issued a release.
b) 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 or licensed repossession agency,
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. (VEH §
14602.6(j))
14)Provides that, pursuant to VEH § 4022 and to VEH §
22651(o)(3)(B), a vehicle obtained by a licensed repossessor
as a release of collateral is exempt from registration
pursuant 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 VEH §14602.6(f). (VEH §
4000(g)(1))
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15)Provides that 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 licensee, 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 subdivision. (VEH § 4000(g)(2))
This bill:
1) Deletes and reinstates the definition of "assignment" as
"repossession order". Makes technical changes throughout the
bill to reflect this new terminology.
2) Defines "locate" or "locating" to mean 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.
3) Redefines "repossession" or "repossess" as the locating and
physical recovering of collateral by means of repossession
order.
4) Exempts employees of a licensee who are operating electronic
devises, including, but not limited to, cameras, scanners,
and automated license plate readers, for the purpose of
locating collateral or documenting the location of collateral
from complying with the Act.
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5) Requires, if the collateral is locked, the licensee inventory
the personal effects within 15 days, if possible.
6) Authorizes, with the consent of the licensee, the debtor to
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 or prior to the completion of
the inventory, whichever is earlier, and signs a statement
that reads only as follows:
a) "I, [insert debtor's name here], have received
all personal effects that were in the vehicle at the
time of the repossession."
b) "Requires that no other signature or document
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."
7) Prohibits a licensee from releasing or conspiring or agreeing
to release personal effects or other personal property not
covered by a security agreement to anyone other than the
debtor.
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8) Authorizes a licensee, who has been notified that collateral
will be retrieved, to store personal effects or personal
property inside the collateral until the collateral is no
longer in the possession of the licensee. The collateral
shall not leave the possession of the licensee until all
personal effects or personal property has been removed.
9) Clarifies that a licensed repossession agency is not liable
for the act or omission of a debt collector in making a
repossession order.
10)Provides that, when collateral is released to a licensed
repossessor, as specified, the following apply:
a) Pursuant to VEH § 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.
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b) 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 the registration exemption
and release requirements 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.
c) 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:
i) 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.
ii) The following payment requirements are
met:
(1) The legal owner or the licensed
repossessor pays all towing and storage fees
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related to the seizure of the vehicle, as
requested.
(2) 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 CIV § 1747.02(a), except, for
the purposes of this section, credit card does
not include a credit card issued by a retail
seller.
(3) A person operating or in charge of a
storage facility described above who violates the
requirements 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).
(4) A person operating or in charge of a
storage facility described above 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.
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(5) Credit charges for towing and
storage services shall comply with CIV § 1748.1.
Law enforcement agencies may include the costs of
providing for payment by credit when making
agreements with towing companies on rates.
(6) The legal owner or licensed
repossessor presents a copy of the assignment, as
defined in subdivision (b) of Section 7500.1 of
the Business and Professions Code; a release from
the one responsible governmental agency, 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.
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(7) No administrative costs authorized
under subdivision VEH § 22850.5(a) shall be
charged to the legal owner, of the type specified
above, 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.
(8) 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.
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d) A legal owner or a licensed repossessor that
obtains release of a vehicle 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.
e) The legal owner or the licensed repossessor
shall not relinquish the vehicle to the registered
owner or the person who was listed as the registered
owner when the vehicle was impounded until the
registered owner or that owner's agent presents his or
her valid driver's license or valid temporary driver's
license to the legal owner or the licensed
repossessor. The legal owner, licensed repossessor,
or person in possession of the vehicle shall make
every reasonable effort to ensure that the license
presented is valid and that possession of the vehicle
will not be given to the driver who was involved in
the original impoundment proceeding until the
expiration of the impoundment period.
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.
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11)Makes other technical and clarifying changes.
FISCAL
EFFECT: This bill has been keyed "fiscal" by Legislative
Counsel. According to the Assembly Appropriations Committee
analysis dated on May 11, 2016, this bill will minor and
absorbable costs to DCA.
COMMENTS:
1. Purpose. The California Association of Licensed Repossessors
is the sponsor of this bill. According to the Author, this
bill "clarifies and updates the Collateral Recovery Act so
that 'repossession' includes 'repossess' and means the
'locating or physically recovering of collateral by means of
a repossession order' and so that the commonly-used and
understood term 'repossession order' is used rather than the
outdated term 'assignment.'
The measure also adds consumer protection by addressing the
inventory process in situations where the collateral is
locked, so that the licensee will have 15 days to inventory
the personal effects if possible. Additional consumer
protection is provided in instances when individuals decide
to waive the preparation and presentation of inventory.
These protections include a prohibition against additional
signatures or documents being required for them to receive
the personal effects.
The bill also ensures that a licensee storing personal
effects inside the collateral must comply with the notice and
inventory provisions of the Act. Lastly, the measure adds a
new section to the Vehicle Code setting forth the procedures
and liability provisions that are currently in separate
sections of that code and that apply when a vehicle is
released to a licensee."
2. Background. The Collateral Recovery Act provides for the
licensing and regulation of repossessors. Among other
things, the Act specifies standards for education,
experience, and repossession procedures. However, the
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sponsor notes that the Act is out of date in some instances.
Therefore, this bill aims to clarify and update the Act.
3. Requirements for Inventory of Personal Effects. According to
the sponsor, the requirements pertaining to the inventory of
personal effects in repossessed collateral do not address the
situation where the collateral is locked and the personal
effects cannot be inventoried. The Act currently requires a
licensed repossessor to remove all personal effects from the
collateral and make a "complete and accurate inventory of the
personal effects." Further, all items must be labeled and
stored for at least 60 days.
The sponsor notes that "personal effects that are locked in
collateral cannot be inventoried. As a result, compiling a
complete and accurate inventory in compliance with the Act as
written cannot be accomplished." Therefore, this bill allows
the licensee 15 days to complete the inventory of personal
effects, if possible. Within this time, the licensee has the
opportunity to contact the legal owner, registered owner or
person in possession of the vehicle at the time or
repossession, to obtain a key to the vehicle. The licensee
will then be able to inventory the personal effects in
compliance with the Act.
4. Presentation of Inventory. After an inventory, licensees
must either hold onto personal effects for the statutorily
mandated period or present the inventory and provide the
personal effects to the debtor upon request. However,
sometimes a debtor does not want the presentation or some of
the items. Therefore, this bill clarifies the procedures
surrounding waiver of presentation and adds additional
requirements, including requiring the licensee to keep the
waiver confidential and prohibiting the release of personal
effects to others besides the debtor.
5. Release of Collateral. The sponsors also state that
repossessors regularly face difficulty obtaining collateral
because of registration requirements. Many storage
facilities and impounding agencies require proof of current
registration to release a vehicle. However, repossessors (as
agents of the legal owner) are sometimes denied the
collateral because the DMV records do not list the legal
owner as the registrant. This can occur when the debtor, who
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is no longer the legal owner, is still listed as the
registered owner. In those situations, the legal owner is
unable to obtain the vehicle. In order to remedy those
situations, this bill combines relevant sections from VEH §§
4000 and 14602.6 into a new Vehicle Code section to clarify
that a licensed repossessor is exempt from registration
requirements when acting as the legal owner's agent.
6. Prior Related Legislation. AB 281 (Gallagher, Chapter 740,
Statutes of 2015) allowed reposessors to show proof of their
license via various media, established a disciplinary review
committee to review the request of a licensee to contest the
assessment of an administrative fine or appeal a denial of a
license, and made other technical changes.
AB 2503 (Hagman, Chapter 390, Statutes of 2014) amended the
definition of a "repossession agency," updated law
enforcement notification requirements, updated condition
report requirements, exempted registration of a vehicle for
the purpose of removing the vehicle to their storage facility
or the facility of the owner, held storage facilities
harmless for any liability associated with the release of the
collateral, and made other technical changes.
7. Arguments in Support. The California Association of Licensed
Repossessors (Sponsor) underscores that "this legislation
would revise the Collateral Recovery Act and the Vehicle Code
to enhance the consumer protections set forth in current
laws, and update the laws where appropriate."
SUPPORT AND OPPOSITION:
Support:
The California Association of Licensed Repossessors (Sponsor)
Opposition:
None on file as June 21, 2016.
-- END --
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