BILL NUMBER: AB 1859 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 18, 2016
INTRODUCED BY Assembly Member Gallagher
FEBRUARY 10, 2016
An act to amend Section 7506.5 Sections
7500.1 and 7507.9 of the Business and Professions Code,
and to add Section 22651.03 to the Vehicle Code, relating to
collateral recovery.
LEGISLATIVE COUNSEL'S DIGEST
AB 1859, as amended, Gallagher. Collateral recovery.
recovery: release of vehicle.
(1) The Collateral Recovery Act provides for
the licensure and regulation of repossession agencies by the Bureau
of Security and Investigative Services under the supervision and
control of the Director of Consumer Affairs. The act
requires every person entering the employ of, or contracting with, a
licensee or multiple licensee to immediately complete an application
for an initial registration or a reregistration and file the
appropriate application with the chief of the bureau, as specified.
The act further requires that application to be verified and include
certain information, and provides that all information obtained on
the application is confidential, as specified. That
act defines the term "repossession" as meaning the locating or
recovering of collateral by means of an assignment. That act requires
a licensee to remove personal effects from the collateral and
requires a licensee to make a complete and accurate inventory of the
personal effects. That act makes a violation of any of its provisions
a crime.
This bill would make a nonsubstantive change to that
confidentiality provision. define the terms
"repossession" or "repossess" to mean the locating and
physical recovering of collateral by means of an assignment. The bill
would instead require a licensee to make a good faith effort to
inventory personal effects in the collateral and would prohibit a
licensee from inventorying or removing any kind of trash or from
being held responsible for hidden personal effects. The
bill would authorize a licensee to allow a debtor or person in
possession of the collateral to sign a waiver forfeiting personal
effects or other personal property not covered by a security
agreement and to waive the required inventory of personal effects,
and would require a licensee, once the waiver is signed, to
immediately dispose of the personal effects or other property. The
bill would authorize a licensee to store personal effects inside the
collateral, as specified. The bill would also prohibit a licensee
from conspiring or agreeing to release personal effects or other
personal property not covered by a security agreement to anyone other
than the debtor. By placing new prohibitions on a licensee, this
bill would expand an existing crime and would, therefore, impose a
state-mandated local program.
(2) Existing law specifies how and to whom a vehicle that has been
removed by a peace officer may be released, including to the legal
owner of the vehicle and the legal owner's agent.
This bill would, notwithstanding specified sections of law,
instead prescribe specified procedures and requirements for releasing
a vehicle to a licensed repossessor, as defined, including that the
licensed repossessor present a copy of the assignment and pay all
towing and storage fees related to the seizure of the vehicle.
Existing law exempts from registration a vehicle repossessed
pursuant to a security agreement solely for the purpose of
transporting the vehicle from the point of repossession to the
storage facilities of the repossessor or other specified places if
the repossessor transports the vehicle with appropriate documents and
makes them available to a law enforcement officer upon request.
Existing law exempts a legal owner of a vehicle from the payment of
administrative costs assessed by a city, county, or city and county
for releasing a properly impounded vehicle, unless the legal owner
who redeems the vehicle requests a poststorage hearing. Existing law
prohibits a city, county, or city and county from requiring the legal
owner or the legal owner's agent to request a poststorage hearing as
a requirement for release of the vehicle.
This bill would specify that the above exemptions apply when a
vehicle is released to a licensed repossessor.
(3) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that with regard to certain mandates no
reimbursement is required by this act for a specified reason.
With regard to any other mandates, this bill would provide that,
if the Commission on State Mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to the statutory provisions noted above.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 7500.1 of the
Business and Professions Code is amended to read:
7500.1. The following terms as used in this chapter have the
meaning expressed in this section:
(a) "Advertisement" means any written or printed communication,
including a directory listing, except a free telephone directory
listing that does not allow space for a license number.
(b) "Assignment" means 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. A photocopy of an assignment, facsimile copy of an
assignment, or electronic format of an assignment shall have the
same force and effect as an original written assignment.
(c) "Bureau" means the Bureau of Security and Investigative
Services.
(d) "Chief" means the Chief of the Bureau of Security and
Investigative Services.
(e) "Collateral" means any specific vehicle, trailer, boat,
recreational vehicle, motor home, appliance, or other property that
is subject to a security agreement.
(f) "Combustibles" means any substances or articles that are
capable of undergoing combustion or catching fire, or that are
flammable, if retained.
(g) "Dangerous drugs" means any controlled substances as defined
in Chapter 2 (commencing with Section 11053) of Division 10 of the
Health and Safety Code.
(h) "Deadly weapon" means and includes any instrument or weapon of
the kind commonly known as a blackjack, slungshot, billy, sandclub,
sandbag, metal knuckles, dirk, dagger, pistol, or revolver, or any
other firearm, any knife having a blade longer than five inches, any
razor with an unguarded blade, and any metal pipe or bar used or
intended to be used as a club.
(i) "Debtor" means any person obligated under a security
agreement.
(j) "Department" means the Department of Consumer Affairs.
(k) "Director" means the Director of Consumer Affairs.
(l) "Electronic format" includes, but is not limited to, a text
message, email, or Internet posting.
(m) "Health hazard" means any personal effects that if retained
would produce an unsanitary or unhealthful condition, or which might
damage other personal effects.
(n) "Legal owner" means 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.
(o) "Licensee" means an individual, partnership, limited liability
company, or corporation licensed under this chapter as a
repossession agency.
(p) "Multiple licensee" means a repossession agency holding more
than one repossession license under this chapter, with one fictitious
trade style and ownership, conducting repossession business from
additional licensed locations other than the location shown on the
original license.
(q) "Person" includes any individual, partnership, limited
liability company, or corporation.
(r) "Personal effects" means any property that is not the property
of the legal owner.
(s) "Private building" means and includes any dwelling,
outbuilding, or other enclosed structure.
(t) "Qualified certificate holder" or "qualified manager" is a
person who possesses a valid qualification certificate in accordance
with the provisions of Article 5 (commencing with Section 7504) and
is in active control or management of, and who is a director of, the
licensee's place of business.
(u) "Registered owner" means the individual listed in the records
of the Department of Motor Vehicles, or on a conditional sales
contract, or on a repossession assignment, as the registered owner.
(v) "Registrant" means a person registered under this chapter.
(w) "Repossession" or "repossess" means the locating
or and physical recovering of
collateral by means of an assignment.
(x) "Secured area" means and includes any fenced and locked area.
(y) "Security agreement" means an obligation, pledge, mortgage,
chattel mortgage, lease agreement, deposit, or lien, given by a
debtor as security for payment or performance of his or her debt, by
furnishing the creditor with a recourse to be used in case of failure
in the principal obligation. "Security agreement" also includes a
bailment where an employer-employee relationship exists or existed
between the bailor and the bailee.
(z) "Services" means any duty or labor to be rendered by one
person for another.
(aa) "Violent act" means any act that results in bodily harm or
injury to any party involved.
(bb)
(ab) The amendments made to this section by Chapter 418
of the Statutes of 2006 shall not be deemed to exempt any person
from the provisions of this chapter.
SEC. 2. Section 7507.9 of the Business
and Professions Code is amended to read:
7507.9. Personal Except as otherwise
provided in this section, personal effects shall be removed
from the collateral, including any personal effect that is mounted
but detachable from the collateral by a release mechanism. A
complete and accurate inventory of the personal effects shall be
made, and the licensee shall make a good faith effort
to inventory the personal effects, but shall not inventory or remove
trash of any kind or be held responsible for hidden
personal effects. The personal effects shall 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. If the licensee or the licensee's agent cannot
determine whether the property attached to the collateral is a
personal effect or a part of the collateral, then that fact shall be
noted on the inventory and the licensee or agent shall not be
obligated to remove the item from the collateral, unless the item can
be removed without the use of tools, in which case it shall be
removed and inventoried. The licensee or the licensee's agent shall
notify the debtor that if the debtor takes the position that an item
is a personal effect, then the debtor shall contact the legal owner
to resolve the issue.
(a) The date and time the inventory is made shall be indicated.
The permanent records of the licensee shall indicate the name of the
employee or registrant who performed the inventory.
(b) The following items of personal effects are items determined
to present a danger or health hazard when recovered by the licensee
and shall be disposed of in the following manner:
(1) Deadly weapons and dangerous drugs shall be turned over to any
law enforcement agency for retention. These items shall be entered
on the inventory and a notation shall be made as to the date, time,
and place the deadly weapon or dangerous drug was turned over to the
law enforcement agency, and a receipt from the law enforcement agency
shall be maintained in the records of the repossession agency.
(2) Combustibles shall be inventoried and noted as "disposed of,
dangerous combustible," and the item shall be disposed of in a
reasonable and safe manner.
(3) Food and other health hazard items shall be inventoried and
noted as "disposed of, health hazard," and disposed of in a
reasonable and safe manner.
(c) Personal effects may be disposed of after being held for at
least 60 days. The inventory, and adequate information as to how,
when, and to whom the personal effects were disposed of, shall be
filed in the permanent records of the licensee and retained for four
years.
(d) The inventory shall include the name, address, business hours,
and telephone number of the repossession agency to contact for
recovering the personal effects and an itemization of all personal
effects removal and storage charges that will be made by the
repossession agency. The inventory shall also include the following
statement: "Please be advised that the property listed on this
inventory will be disposed of by the repossession agency after being
held for 60 days from the date of this notice IF UNCLAIMED."
(e) The inventory shall be provided to a debtor not later than 48
hours after the recovery of the collateral, except that if:
(1) The 48-hour period encompasses a Saturday, Sunday, or postal
holiday, the inventory shall be provided no later than 72 hours after
the recovery of the collateral.
(2) The 48-hour period encompasses a Saturday or Sunday and a
postal holiday, the inventory shall be provided no later than 96
hours after the recovery of the collateral.
(3) Inventory resulting from repossession of a yacht, motor home,
or travel trailer is such that it shall take at least four hours to
inventory, then the inventory shall be provided no later than 96
hours after the recovery of the collateral. When the 96-hour period
encompasses a Saturday, Sunday, or postal holiday, the inventory
shall be provided no later than 120 hours after the recovery of the
collateral.
(4) The licensee is unable to open a locked compartment that is
part of the collateral, the available inventory shall be provided no
later than 96 hours after the recovery of the collateral. When the
96-hour period encompasses a Saturday, Sunday, or postal holiday, the
inventory shall be provided no later than 120 hours after the
recovery of the collateral.
(f) Environmental, Olympic, special interest, or other license
plates issued pursuant to Article 8 (commencing with Section 5000),
Article 8.4 (commencing with Section 5060), or Article 8.5
(commencing with Section 5100) of Chapter 1 of Division 3 of the
Vehicle Code that remain the personal effects of the debtor shall be
removed from the collateral and inventoried pursuant to this section.
If the plates are not claimed by the debtor within 60 days, they
shall either (1) be effectively destroyed and the licensee shall,
within 30 days thereafter, notify the Department of Motor Vehicles of
their effective destruction on a form promulgated by the chief that
has been approved as to form by the Director of the Department of
Motor Vehicles; or (2) be retained by the licensee indefinitely to be
returned to the debtor upon request, in which case the licensee
shall not charge more than 60 days' storage on the plates.
(g) The notice may be given by regular mail addressed to the last
known address of the debtor or by personal service at the option of
the repossession agency.
(h) (1) With the consent of the licensee,
the debtor waives 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 this section and signs a statement that he or she
has received all the property.
(2) A licensee may allow a debtor or a person in possession of the
collateral to sign, at the time of repossession or at a later date,
a waiver forfeiting personal effects or other personal property not
covered by a security agreement and waiving an inventory of those
personal effects or other personal property. Once the waiver has been
signed, the licensee shall immediately dispose of the personal
effects or personal property.
(i) (1) If personal effects or other
personal property not covered by a security agreement are to be
released to someone other than the debtor, the repossession agency
shall request written authorization to do so from the debtor.
(2) A licensee shall not release or conspire or agree to release
personal effects or other personal property not covered by a security
agreement to anyone other than the debtor.
(j) A licensee shall not sell personal effects or other personal
property not covered by a security agreement and remit money from the
sale to a third party, including, but not limited to, any lending
institution.
(k) The inventory shall be a confidential document. A licensee
shall only disclose the contents of the inventory under the following
circumstances:
(1) In response to the order of a court having jurisdiction to
issue the order.
(2) In compliance with a lawful subpoena issued by a court of
competent jurisdiction.
(3) When the debtor has consented in writing to the release and
the written consent is signed and dated by the debtor subsequent to
the repossession and states the entity or entities to whom the
contents of the inventory may be disclosed.
(4) To the debtor.
(l) A licensee may 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 have been removed.
SEC. 3. Section 22651.03 is added to the
Vehicle Code , immediately following Section
22651 , to read:
22651.03. (a) Notwithstanding Sections 14602.6 and 22651, this
section shall apply when collateral is released to a licensed
repossessor. For purposes of this section, "licensed repossessor"
means a licensed repossessor, licensed repossession agency, or its
officers or employees pursuant to Chapter 11 (commencing with Section
7500) of Division 3 of the Business and Professions Code.
(b) Pursuant to Section 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.
(c) 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 this
section 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.
(d) 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:
(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) (A) The legal owner or the licensed repossessor pays all
towing and storage fees related to the seizure of the vehicle. Any
person having possession of the vehicle shall not collect from the
legal owner of the type specified in paragraph (1) or a licensed
repossessor any administrative charges imposed pursuant to Section
22850.5 unless the legal owner voluntarily requested a poststorage
hearing.
(B) 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 subdivision (a)
of Section 1747.02 of the Civil Code, except, for the purposes of
this section, credit card does not include a credit card issued by a
retail seller.
(C) A person operating or in charge of a storage facility
described in subparagraph (B) who violates subparagraph (B) 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).
(D) A person operating or in charge of a storage facility
described in subparagraph (B) 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.
(E) Credit charges for towing and storage services shall comply
with Section 1748.1 of the Civil Code. 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 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 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.
No administrative costs authorized under subdivision (a) of
Section 22850.5 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
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.
(4) 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 a licensed repossessor to retrieve the vehicle,
provided all conditions required of the legal owner or licensed
repossessor under this subdivision are satisfied.
(e) (1) A legal owner or a licensed repossessor that obtains
release of a vehicle pursuant to subdivision (d) 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.
(2) 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.
SEC. 4. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution for certain costs that may be incurred by a local agency
or school district because, in that regard, this act creates a new
crime or infraction, eliminates a crime or infraction, or changes the
penalty for a crime or infraction, within the meaning of Section
17556 of the Government Code, or changes the definition of a crime
within the meaning of Section 6 of Article XIII B of the California
Constitution.
However, if the Commission on State Mandates determines that this
act contains other costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division 4 of
Title 2 of the Government Code.
SECTION 1. Section 7506.5 of the Business and
Professions Code is amended to read:
7506.5. All information obtained on the application shall be
confidential pursuant to the Information Practices Act of 1977
(Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of
Division 3 of the Civil Code) and shall not be released to the public
except for the registrant's full name, the licensee's name and
address, and the registration number. The application shall be
verified and shall include:
(a) The full name, residence address, residence telephone number,
date and place of birth, and driver's license number of the applicant
or registrant.
(b) A statement listing any and all names used by the applicant or
registrant, other than the name by which he or she is currently
known. If the applicant or registrant has never used a name other
than his or her true name, this fact shall be set forth in the
statement.
(c) The name and address of the licensee and the date the
employment or contract commenced.
(d) The title of the position occupied by the applicant or
registrant and a description of his or her duties.
(e) Two recent photographs of the applicant or registrant, of a
type prescribed by the chief, and two classifiable sets of his or her
fingerprints, one set of which shall be forwarded to the Federal
Bureau of Investigation for purposes of a background check.
(f) The bureau may impose a fee not to exceed three dollars ($3)
for processing classifiable fingerprint cards submitted by
applicants, excluding those submitted into an electronic fingerprint
system using electronic fingerprint technology.