In California, repossession agencies must comply with the state's licensing and consumer protection laws. To conduct business as a repossession agency within the state, the agency must first apply for a license with the Bureau of Security and Investigative Services. California's consumer protection law also governs the rights that buyers have when they default on their vehicle loans.
Repossession Licenses and Rights
Although the state requires that third-party repossession agencies possess a valid license before they can legally conduct business within the state, it does not impose a licensing restriction on financial institutions that do not rely upon third-party agencies. If a lender performs a self-help repossession or directs an employee to repossess its property, then it does not need a license from the Bureau of Security and Investigative Services. Both lenders and repossession agencies have a legal right to proceed with repossession on private property, public property or secured lots, and car buyers who attempt to interfere with their legal repossession rights are in violation of California law.
Notification
Repossession agencies and banks must provide the local law enforcement agency with notice of repossession after towing the vehicle. They must provide this notice within an hour after repossessing a buyer's vehicle. After notifying the police, repossession agencies must also notify borrowers within 48 hours following repossession. However, banks do not have to comply with the 48-hour rule to notify its borrowers who are in default of their loan obligations. Additionally, lenders must provide their borrowers with a written redemption letter notifying them of their rights to redeem their cars after they pay the outstanding loan, interest, any late charges, finance charges, legal fees and costs of repossession.
Bailments
Both third-party agencies and banks must comply with the California bailment laws. The bailment laws impose personal custodial duties on repossession agencies and banks to safeguard property. Any personal property remaining in the vehicle must be safeguarded for at least 60 days, and the vehicle driver must be able to retrieve his personal effects. After 60 days, agencies and lenders no longer have bailment duties and may dispose of them or sell personal property. Although California requires repossession agencies to maintain a written inventory or accounting of all personal effects, the state does not require lenders to inventory their items. A repossession agency's written inventory must record the date of disposal, sale and sale proceeds.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.
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