Date of Hearing:

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Evan Low, Chair

ABPCA Bill Id:AB 2759

Author:(Obernolte) – As Introduced Ver:February 20, 2020

SUBJECT: Collateral recovery.

SUMMARY: Clarifies and updates the definitions in the Collateral Recovery Act to conform to current practices and with other provisions of law.

EXISTING LAW:

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. (Business and Professions Code (BPC) §§ 7500 – 7511)
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 (VEH) 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))
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))
Defines “debtor” as any person obligated under a security agreement. (BPC § 7500.1(i))
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))
Defines “licensee” as an individual, partnership, limited liability company, or corporation licensed under this chapter as a repossession agency. (BPC § 7500.1(o))
Defines “repossession” as the locating or recovering of collateral by means of an assignment. (BPC § 7500.1)
Requires, a licensed repossessor to remove and inventory personal effects from the collateral after repossession. The inventory of the personal effects must be complete and accurate, and the personal effects must 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)
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))
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))
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)
Provides that a vehicle removed and seized by a peace officer as specified shall 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))
1. 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.
2. The following payment requirements are met:
  1. The legal owner or the legal owner’s agent pays all towing and storage fees related to the seizure of the vehicle. No lien sale processing fees shall be charged to the legal owner who redeems the vehicle prior to the 15th day of impoundment. Neither the impounding authority nor any person having possession of the vehicle shall collect from the legal owner of the type specified in paragraph (1), or the legal owner’s agent any administrative charges imposed pursuant to VEH § 22850.5 unless the legal owner voluntarily requested a poststorage hearing.
  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 or registered owner or the 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.
  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.
3. 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 Collateral Recovery 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.
4. No administrative costs authorized under VEH § 22850.5(a) shall be charged to the legal owner of the type specified in paragraph (1), 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 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.
5. 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.
Provides that, when collateral is released to a licensed repossessor, licensed repossession agency, or its officers or employees, the following apply:
1. 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 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.
2. 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))
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))
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:

Updates the definition of “deadly weapon” to refer to a “firearm” to conform with the practices of law enforcement.
Clarifies the definition of “legal owner” to conform to the corresponding legal definition of “registered owner”.
Clarifies that personal effects left in a vehicle belong to the registered owner.
Conforms the definition of “repossession” with BPC § 7507.12 which describes when a repossession is complete.
Clarifies for a repossession that a ”private building” is one that is “locked and secured” and a “secured area” is an area that is “not open.”
Clarifies that a “violent act” which must be reported to the Bureau of Security and Investigative Services (BSIS) refers to an act that occurs during the repossession.
Intent to recruit previous repossession agency licensees back and retain family members in the industry.
Increases the time in which an expired repossession agency license may be renewed from three years to ten years.
Allows a family member of a qualified manager who has died to reinstate and retain the repossession agency license number by paying the renewal fee and meeting requirements of the chapter.
Clarifies that employees of a licensed repossession agency who perform out of office skip tracing, or who drive camera cars are not required to be licensed.
Clarifies that “unlawful entry” means entering an area that is locked and secured as defined.

FISCAL EFFECT: Unknown. This bill is keyed fiscal by Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by California Association of Licensed Repossessors. According to the Author, “[This bill] is an industry-sponsored measure that will update and clarify the laws regulating the repossession industry in California. The bill clarifies and conforms definitions used in the law, and makes it easier for those who used to be in the profession to renew their license and for family members of a qualified manager who has died to continue the business of the repossession agency. Outdated definitions in the Act lead to confusion and conflicting approaches in the repossession industry. Clarifications need to be made to ensure that consumers are protected and that the profession is able to efficiently and effectively operate. Additionally, the law requires that a repossessor license that has been expired for three years cannot be renewed, and that a new license must be obtained in order to practice in the industry. The law also does not contain a clear provision to ensure the ongoing continuity of repossession agencies by family members when the qualified manager has died. These two shortfalls in current law lead to unnecessary barriers that keep well-qualified people out of the industry.”

Background. The Collateral Recovery Act (Act) provides for the licensing and regulation of repossessors. Among other things, the Act specifies standards for education, experience, and repossession procedures. However, the sponsor notes that the Act is out of date in some instances. Therefore, this bill aims to clarify and update the Act.

Current law licenses and regulates repossession agencies under the Bureau of Security and Investigative Services (BSIS) within the Department of Consumer Affairs. The Collateral Recovery Act defines key terms relating to the repossession industry, and contains a number of definitions that are outdated, do not reflect current practices, or which need clarification.

According to the Sponsors of the bill, the outdated definitions in the Act lead to confusion and conflicting approaches in the repossession industry. Clarifications need to be made to ensure that consumers are protected and that the profession is able to efficiently and effectively operate. Additionally, the law requires that a repossessor license that has been expired for three years cannot be renewed, and that a new license must be obtained in order to practice in the industry. The law does not contain a clear provision to ensure the ongoing continuity of repossession agencies by family members when the qualified manager has died.

Prior Related Legislation. AB 281 (Gallagher), (Chapter 740, Statutes of 2015). Allows repossessors 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). Clarifies the process a repossessor follows when notifying law enforcement that he/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.

ARGUMENTS IN SUPPORT:

This bill is sponsored by the California Association of Licensed Repossessors (CALR), who writes in support, “On behalf of the California Association of Licensed Repossessors (CALR), I am writing in Support of [this bill]. CALR is the Sponsor of this bill which updates and clarifies the Collateral Recovery Act (Act) in the Business and Professions Code (BPC) and makes it easier for those who used to be in the profession to renew their license and for family members of a licensee who has died to continue the business of the repossession agency.”

ARGUMENTS IN OPPOSITION:

None on file.

REGISTERED SUPPORT:

California Association of Licensed Repossessors (Sponsor)

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Danielle Sires / B. & P. / (916) 319-3301

AB 2759: Collateral recovery.

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