BILL ANALYSIS �
AB 1877
Page 1
Date of Hearing: May 16, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1877 (Ma) - As Amended: April 24, 2012
Policy Committee: Business and
Professions Vote: 8 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill exempts agricultural, forestry, lawn care, and
construction equipment manufacturers and dealers from licensure
as a repossession agency if they sell equipment that is subject
to a security agreement of the manufacturer or a manufacturer's
affiliate. The provisions of this bill sunset on January 1,
2018.
FISCAL EFFECT
There are no significant costs for the Bureau of Security and
Investigative Services (BSIS).
COMMENTS
1)Rationale . Current law generally requires entities to be
licensed as a repossession agency in order to recover property
that is the subject of a security agreement. Banks, and under
specific circumstances auto dealerships and financial lenders,
can send employees to repossess property without having to be
licensed. This bill would exempt authorized dealers of
agricultural, forestry, construction and lawn care products
from licensure as well.
According to the sponsors, Deere & Company (John Deere
Tractors), "Repossessions represent a very small portion of a
dealer's business. Thanks to the state's strong agricultural
economy, they happen on a relatively infrequent basis, hence
requiring a dealer to become a full-time repossession agent
for this purpose makes no sense. In order to become licensed,
current law would require them to have at least two years of
AB 1877
Page 2
experience in the field, pay an $825 licensing fee, submit to
fingerprinting, and renew their license every two years.
Further, being licensed would require the dealer to notify
local law enforcement after a product has been recovered,
thereby establishing a negative public record for the poor
customer who is already suffering the embarrassment of having
equipment taken on their property by an unknown third party in
broad daylight. Customers would prefer to work directly with
a dealer because he or she is someone they know, and there is
no social stigma attached to them."
2)Background . The Collateral Recovery Act requires authorized
dealers who repossess collateral to hold a repossession agency
license issued by BSIS. A repossession agency is defined as
any person paid or employed to locate or recover collateral,
whether voluntarily or involuntarily, including, but not
limited to, collateral registered under the provisions of a
security agreement.
Existing law allows legal owners of collateral and their
employees, banks, individuals licensed or authorized to issue
loans, attorneys, government employees, repossession agencies
and their employees, to repossess collateral when enforcing
the terms of a security agreement.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081