BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 2503
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: hagman
VERSION: 8/4/14
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: August 5, 2014 URGENCY: YES
SUBJECT:
Repossessors
DESCRIPTION:
This bill makes various changes to state law governing licensed
repossessors, including clarifying that a repossessed vehicle is
not subject to registration.
ANALYSIS:
A repossessor is a person who gets paid to locate or recover
collateral, including collateral registered under the Vehicle
Code, which is subject to a security agreement. A security
agreement is a promise, given by a debtor as security for the
debt, that provides the lender with recourse should the debtor
fail to repay the loan. An example is a lien against a motor
vehicle that the purchaser bought on credit.
Existing law, known as the Collateral Recovery Act, provides for
the licensing and regulation of repossession agencies and
repossessors by the Bureau of Security and Investigative
Services (BSIS) under the Department of Consumer Affairs (DCA).
The Collateral Recovery Act governs collateral repossessions by
a legal owner, lienholder, lessor or lessee, or the agent of any
of them based on written authorization and a security agreement.
Further, the Collateral Recovery Act makes a financial
institution that knowingly engages a nonexempt unlicensed person
to repossess collateral on its behalf guilty of a misdemeanor,
punishable by a $5,000 fine.
Existing law contained in the state Vehicle Code prohibits a
person from driving, moving, or parking along a road or in a
public parking facility a motor vehicle or trailer unless the
motor vehicle or trailer is registered. To register a vehicle,
the owner provides the Department of Motor Vehicles (DMV) with
specified information and pays DMV a basic registration fee,
AB 2503 (HAGMAN) Page 2
plus various additional state and local charges, including a
vehicle license fee that is based on the value of the vehicle.
Existing law exempts a repossessed vehicle from registration
solely for the purpose of transporting the vehicle from the
point of repossession to the repossessor's storage facility and
from a storage facility to an auction.
When a repossessor takes a vehicle through a repossession, the
repossessor must within one hour notify the city police
department or the county sheriff's department within the
jurisdiction where the repossessor picked up the vehicle.
Existing law defines "buy-here-pay-here dealers" to mean a
vehicle dealer who both sells (or leases) motor vehicles and
provides the financing on a large portion of those sales.
This bill :
1.Adds buy-here-pay-here dealers to the financial institutions
that are subject to a misdemeanor for knowingly engaging an
unlicensed person to repossess collateral on its behalf and
also specifies that DMV may take disciplinary action against a
buy-here-pay-here dealer who hires an unlicensed repossessor.
2.Provides that a repossessor must contact the local police or
sheriff within one hour of taking possession of a vehicle, but
if that notification cannot be completed, then the repossessor
shall continue to attempt contact until he or she can provide
notification. The bill further specifies that the
notification shall include all of the following information
provided in this order:
The approximate location from which the vehicle was taken
The date and approximate time when the vehicle was taken
The vehicle year, make, and model
The last six digits of the vehicle identification number
The registered owner as provided on the repossession
assignment
The legal owner requesting the repossession as provided on the
repossession assignment
The name and telephone number of the repossession agency
1.Requires a legal owner of a vehicle (typically a bank or other
financing entity) to indemnify and hold harmless a law
enforcement agency, local or state government, an impound or
tow yard, or any other storage facility from any claim arising
AB 2503 (HAGMAN) Page 3
out of that entity releasing a vehicle to a repossessor and
from any damage occurring to the vehicle after its release.
2.Exempts a licensed repossessor from vehicle registration
solely for obtaining a release from a law enforcement agency,
impounding authority, tow yard, storage facility, or any
person that has possession of the collateral. To obtain
release of collateral, the repossessor need only present his
or her repossessor license and a copy of the repossessor
assignment.
3.Requires DMV to waive penalties for late vehicle registration
payment for a repossessed vehicle in the possession of a
licensed repossessor.
4.Makes it illegal to interfere with an employee of a
repossession agency's transport of a vehicle to a storage
facility, auction, or dealer.
5.Makes it illegal for any tow yard, impounding agency, or
government agency to refuse to release a vehicle or other
collateral to anyone that is legally entitled to that vehicle
or other collateral.
6.Makes various changes to law governing the operations of
repossession agencies, including requiring that a licensed
repossession agency:
May transact business only as an independent contractor
May not allow any other entity to transact business
under the license of the repossession agency
May operate for 180 days - rather than 120 - after the
death of the licensee, provided an immediate family member
is in charge of running the day-to-day operations of the
business and it provides written notice to the state
identifying that person
Need not maintain records of all transactions pertaining
to the sale of collateral that has been repossessed
1.Makes other clarifying and minor changes to the Collateral
Recovery Act, including exempting a badge, cap insignia, or
jacket patch from the prohibition on using any identification
to indicate registration as a repossessor.
2.Is an urgency measure.
AB 2503 (HAGMAN) Page 4
COMMENTS:
1.Purpose . The author introduced this bill at the request of
the California Association of Licensed Repossessors to clarify
the process a repossessor follows when notifying law
enforcement that he or she has picked up a vehicle; to ensure
that impound yards do not require repossessors to renew a
vehicle's registration when repossessing it; and to ensure
that repossessors are able to complete repossessions without
undue interference. Specifically, the proponents note that
repossessors have experienced difficulty due to varying
interpretations of the Vehicle Code, which this bill attempts
to clarify. These are as follows:
Notification of law enforcement. Repossessors report
that while a repossessor will call law enforcement within
the one hour required in existing law to report that he or
she has picked up a vehicle, sometimes during busy times,
particularly after regular business hours, law enforcement
is unable to take the required notification report from the
repossessor within that first hour. This bill requires
that the repossessor attempt the notification within an
hour but that if law enforcement cannot receive it in that
hour, the repossessor is still in compliance with state
law.
Exempt from registration. Repossessors report cases
where they have been burdened with paying registration fees
(ultimately the responsibility of the vehicle owner) or
have been unable to obtain a vehicle due to the vehicle not
being registered. This bill clarifies that registration is
not due from the repossessor or at the time of
repossession.
Penalty for interfering with repossession. Existing law
provides no penalty for attempting to interfere with the
transport of a vehicle being repossessed. This bill would
prohibit a person from interfering with the transport of a
vehicle being repossessed by making interference an
infraction. Proponents assert that this is necessary to
ensure the safety of all involved in the repossession of a
vehicle.
1.Vehicle registration . State law subjects motor vehicles to
registration with DMV. This bill exempts repossessors from
vehicle registration, which makes it unclear as to which
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vehicles it is exempting and could be interpreted as any
vehicle in the possession of a repossessor, including his or
her personal vehicle or tow truck or a vehicle he or she is
towing for another purpose. The committee may, therefore,
wish to amend the bill to clarify that it is exempting from
registration any vehicle that a licensed repossessor is
repossessing.
2.Waiver of registration penalties . This bill requires DMV to
waive penalties for late vehicle registrations on a
repossessed vehicle in the possession of a licensed
repossessor. Because repossessors do not register the
vehicles they are repossessing, it is unnecessary to exempt
them from the penalties that DMV imposes for late
registration. The committee may wish to consider deleting the
portion of the bill that requires DMV to waive late penalties
when a repossessor registers a vehicle.
3.Opposition . Writing in opposition to the bill, the Official
Police Garage Association of Los Angeles points out that
repossessors are already exempt from vehicle registration
requirements while transporting the vehicle from the point of
repossession to the storage facilities of the repossessor and
from the storage facilities to a motor vehicle auction. The
opponent asserts that the current language of the bill is
overly broad because a repossessor could also conduct
non-repossession towing business and receive the benefit of
the exemption, creating an unfair competitive advantage over
licensed tow operators.
4.Committee of second referral . The Rules Committee referred
this bill to the Business, Professions, and Economic
Development Committee and to the Transportation and Housing
Committee. This bill passed that committee on June 16 by an 8
to 0 vote. That committee's analysis and hearing of the bill
dealt primarily with the provisions of the bill amending the
Collateral Recovery Act, leaving the Vehicle Code provisions
for review in this committee.
Assembly Votes:
Floor: 78-0
Appr: 17-0
Trans: 15-0
B&P: 14-0
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POSITIONS: (Communicated to the committee before noon on
Wednesday, July 30,
2014.)
SUPPORT: California Association of Licensed Repossessors
(sponsor)
OPPOSED: Official Police Garage Association of Los Angeles