BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                       AB 1859|
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                                    THIRD READING


          Bill No:  AB 1859
          Author:   Gallagher (R)
          Amended:  8/2/16 in Senate
          Vote:     21  

           SENATE BUS., PROF. & ECON. DEV. COMMITTEE:  9-0, 6/27/16
           AYES: Hill, Bates, Block, Gaines, Galgiani, Hernandez, Jackson,  
            Mendoza, Wieckowski

          SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

           ASSEMBLY FLOOR:  76-0, 5/19/16 (Consent) - See last page for  
            vote

           SUBJECT:   Collateral recovery:  release of vehicle


          SOURCE:    California Association of Licensed Repossessors

          DIGEST:  This bill 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.

          ANALYSIS:  
          
          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)








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           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  
             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)

           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)








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           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))

          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.

           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  








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             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.

           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:








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              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.

              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 related to the  
                     seizure of the vehicle, as requested.








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                   (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.

                   (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  








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                     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.

                   (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  








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                     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.

              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.

              g)    Law enforcement may require a signed acknowledgement  
                from a repossessor stating that the repossessed vehicle  
                impounded for 30 days will not, under any circumstances,  
                be released to the registered owner prior to the 30-day  








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                period without the law enforcement agencies approval.

           11)Makes other technical and clarifying changes.  



          
          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes


          SUPPORT:   (Verified8/2/16)




          California Association of Licensed Repossessors (source)




          OPPOSITION:   (Verified8/2/16)


          None received


          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."




           ASSEMBLY FLOOR:  76-0, 5/19/16
           AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker,  
            Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke,  
            Calderon, Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper,  
            Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines,  
            Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson,  








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            Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger  
            Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey,  
            Levine, Linder, Lopez, Low, Maienschein, Mayes, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,  
            Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Wood, Rendon
           NO VOTE RECORDED: Chang, Mathis, McCarty, Williams



          Prepared by:  Mark Mendoza / B., P. & E.D. / (916) 651-4104
          8/3/16 18:11:08


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