BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 1859|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
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)
AB 1859
Page 2
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)
AB 1859
Page 3
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
AB 1859
Page 4
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:
AB 1859
Page 5
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.
AB 1859
Page 6
(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
AB 1859
Page 7
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
AB 1859
Page 8
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
AB 1859
Page 9
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,
AB 1859
Page 10
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
**** END ****