QUESTIONS AND ANSWERS PERTAINING TO VEHICLE REPOSSESSIONS
PUBLISHED BY CALIFORNIA ASSOCIATION OF LICENSED REPOSSESSORS
California Association of Licensed Repossessors (CALR) has listed some common questions posed by interested persons. The CALR’s
legal counsel has assisted in framing general answers to some of these questions.
Note references are as follows:
B&P = Business & Professions Code; VC = Vehicle Code; PC = Penal Code; GC = Government Code; CC = Civil Code.
CAUTION: The answers provided in this section are for general reference only and CALR warns that they should not be relied upon as legal authority. Minor differences in the facts may require different answers. The law is also subject to change at any time. Therefore, consult your legal counsel concerning individual problems.
1. Q. What is a “repossession agency” as defined by the State of California?
A. A repossession agency means and includes any person who, for any consideration whatsoever, engages in the repossession business or accepts employment to locate or recover personal property, including but not limited to, personal property registered under provisions of the Motor Vehicle Code which is subject to a security agreement (B&P 7500.2).
2. Q. What is not a “repossession agency” as defined by the State of California?
A. The following are exempt from the definition of a “repossession agency:”
1. Banks.
2. Licensed lending institutions.
3. Attorneys performing legal duties.
4. Legal owners of collateral which is subject to a security agreement.
5. Federal, state or municipal officers or employees performing official duties.
6. Persons employed exclusively and regularly by one employer in connection with the affairs of that employer only
and where there exists an employer/employee relationship (B&P 7500.3).
3. Q. Who may legally undertake repossession assignments?
A. Unless exempted pursuant to B&P Code 7500.3, only persons holding a valid repossession agency license or registration, issued by the State of California, may engage in the activities of a repossession agency (B&P 7500.3).
4. Q. May a tow service, auto drive away service or transport company, not specifically licensed as a “repossession agency,” repossess collateral VOLUNTARILY or INVOLUNTARILY?
A. NO! These businesses are not exempt under B&P Code 7500.3 and would therefore be in violation relating to unlicensed activity. Violators are subject to fines of $5,000 and/or one year in the county jail (B&P 7502.1).
5. Q. How may it be determined whether or not a person or agency holds a valid repossessor’s license?
A. This informational directory includes a numerical list of licensed repossession agencies who are licensed by the State of California and current CALR members as of January, 2005. Any person may contact the Bureau of Security and Investigative Services at 400 “S” Street, Sacramento, CA 95814, (916) 322-4000, to deter mine whether or not a particular person or agency is licensed. Or visit the Bureau’s website at www.dca.ca.gov/bsis.
6. Q. May unlicensed repossession activity be penalized?
A. Yes! Any person who engages in repossession activity (other than a licensed repossessor), is guilty of a misdemeanor which is punishable by a fine of $5,000 or by imprisonment in the county jail for not more than one
year, or both [B&P 7502.1(a)].
7. Q. May a financial institution be penalized for using an unlicensed repossession agency or person?
A. Yes! Any person who knowingly engages an unlicensed repossession agency or person to repossess personal property is guilty of a misdemeanor which is punishable by a fine of $5,000 or by imprisonment in the county jail for not more than one year, or both (B&P 7502.2).
8. Q. At what point has a motor vehicle been legally repossessed?
A. With regard to collateral subject to registration under the Vehicle Code, a repossession occurs when the repossessor gains entry to the collateral, or when the collateral becomes connected to a tow truck (B&P 7507.12).
9. Q. May a repossessor lawfully enter any area for purposes of repossession?
A. Yes, with the exception of a private building which means and includes any dwelling, outbuilding, other enclosed structure or any secured area which means and includes any fenced and locked area. Entry into these areas with the consent of the owner or person in legal possession is permissible [B&P 7500.1(s)].
10. Q. When may a vehicle secured by a contractual agreement be repossessed?
A. Normally, only when the buyer has defaulted in the performance of any obligation under the contract. Ordinarily a default occurs when an installment payment is delinquent. However, if the consumer is required by the contract to maintain insurance, a failure to do so may constitute a default, as allowing the collateral to be jeopardized (CC 2983.3).
11. Q. Is police notification required prior to an attempted repossession?
A. No. Some jurisdictions, however, request a courtesy call prior to a repossession to eliminate the possibility of a repossessor being stopped at gunpoint in the event someone telephones in a report of a stolen vehicle or a prowler.
12. Q. Is a police report required on all repossessions?
A. Yes. Whenever possession is taken of any vehicle by or on behalf of any
legal owner thereof under the terms of a security agreement or lease
agreement, the person taking possession shall:
a) notify, within one hour after taking possession of the vehicle, and by the most expeditious means available, the city police department
where the taking of possession occurred, if within an incorporated city, or the sheriff’s department of the county where the taking
of the possession occurred, if outside an incorporated city, or the police department of a campus of the University of California or the
California State University, if the taking of possession occurred on that campus, and shall within one business day forward a written
notice to the city police or the sheriff’s department.
b) any person failing to notify the city police department, sheriff’s department or campus police department as required by this section is
guilty of an infraction, and shall be fined a minimum of $300 and up to $500. The district attorney, city attorney, or city prosecutor shall
promptly notify the Bureau of Security and Investigative Services of any conviction resulting from a violation of this section (VC 28).
A. Yes. Whenever possession is taken of any vehicle by or on behalf of any
legal owner thereof under the terms of a security agreement or lease
agreement, the person taking possession shall:
a) notify, within one hour after taking possession of the vehicle, and by the most expeditious means available, the city police department
where the taking of possession occurred, if within an incorporated city, or the sheriff’s department of the county where the taking
of the possession occurred, if outside an incorporated city, or the police department of a campus of the University of California or the
California State University, if the taking of possession occurred on that campus, and shall within one business day forward a written
notice to the city police or the sheriff’s department.
b) any person failing to notify the city police department, sheriff’s department or campus police department as required by this section is
guilty of an infraction, and shall be fined a minimum of $300 and up to $500. The district attorney, city attorney, or city prosecutor shall
promptly notify the Bureau of Security and Investigative Services of any conviction resulting from a violation of this section (VC 28).
13. Q. May a licensed repossessor accept an assignment to repossess from a registered owner?
A. Yes. Assignment also means an authorization by the registered owner to recover collateral registered under the Vehicle Code where an employer/employee relationship exists or existed between the registered owner and the possessor of the property and the possessor is wrongfully in possession of the property [B&P 7500.1(0)].
14. Q. Must licensees make condition reports of repossessions?
A. Yes. Repossession agencies are required to keep and maintain adequate records of all transactions including condition reports reflecting the condition of a vehicle at the time of repossession and its odometer reading (B&P 7507.3).
15. Q. What is to be done with personal effects or other personal property?
A. Personal property shall be removed and a complete and accurate inventory shall be made. Said items shall be securely stored for a minimum of 60 days. It is required that the repossession agency notify the consumer of
this inventory by written notice or by personal service within time limits prescribed by law (B&P 7507.9).
16. Q. What is to be done with deadly weapons contained in or on collateral at time of repossession?
A. Deadly weapons and dangerous drugs shall be turned over to a local 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. Areceipt from the law enforcement agency shall be maintained in the records of the repossession agency [B&P 7507.9(b)(1)].17. Q. What is to be done with combustibles after being removed from a repossession?
A. Combustibles shall be inventoried and noted as “disposed of dangerous
combustible” and disposed of in a reasonable and safe manner [B&P
7507.9(b)(2)].
17. Q. What is to be done with combustibles after being removed from a repossession?
A. Combustibles shall be inventoried and noted as “disposed of dangerous
combustible” and disposed of in a reasonable and safe manner [B&P
7507.9(b)(2)].
A. Combustibles shall be inventoried and noted as “disposed of dangerous
combustible” and disposed of in a reasonable and safe manner [B&P
7507.9(b)(2)].
18. Q. Is it a crime to conceal a motor vehicle or other collateral?
A. Yes. Any person in possession of collateral who conceals property with
the intent to defraud a creditor may be guilty of a felony (PC 154, 504a
or 538).
19. Q. May a repossession agency charge a fee for storing personal effects
(referring to inventory of effects from a repossession)?
A. Yes. A licensee may charge the debtor for storing personal effects since
B&P Code 7507.9 and 9(d) states in part, “The inventory shall include…
an itemization of all personal effects and storage charges that will be
made by the repossession agency.” A licensee may not charge a legal
owner for storage of personal effects unless specifically agreed to at the
time of the assignment or at a subsequent time.
20. Q. When a vehicle has been impounded by a public agency, who should
notify the legal owner?
A. Within 48 hours of the storage, unless the vehicle is in a vehicle abatement
program, or abandoned, the public agency is required to notify both legal
and registered owners [VC 22852(a)].
21. Q. What is the maximum amount a repair garage may charge on a repair
or storage to a legal owner?
A. On work or services performed, up to $750 is allowed and the garage must
have permission from the legal owner to exceed that amount [CC3068(c)].
Storage is allowed up to $400 for a vehicle under $4000 in value and $500
if the vehicle is valued over $4000 [CC 3068(c)]. There are also a require-
ment to notify the legal owner by the 16th day of possession if storage fees
are charged and if legal owner is not notified, storage is limited to 15 days
(VC 10652.5 and CC 3071 & 3072).
22. Q. Are there any reporting requirements when a vehicle is stored in a
private building?
A. Yes. Every person other than the keeper of a garage renting any private
building used as a private garage or space, therein, for the storage of a
vehicle of a type subject to registration under this code, when the
agreement to rent includes only the building or space therein, shall, within
24 hours after the vehicle is stored therein, report such fact together with
the name of the tenant and a description of the vehicle, including the name
or make, the VIN and the license number to the sheriff’s office of the
county or the police department of the city wherein the building is located.
“Private garage” as used in this section does not include a public ware-
house or public garage (VC 10654)
23. Q. What can happen to a tow company if the legal owner is not notified?
A. Under Civil Code Section 3070, a legal owner has a right to accuse the
tow company of “improperly causing a vehicle to be towed.” If the tow
company tries to collect storage over 15 days when VC 10652.5 is
violated. A notice must be sent to the legal owner by the 16th day of
possession in order to collect over 15 days of storage fees [CC 3070(d1),
(d2), (A)].
24. Q. Are there limits on the number of days storage can be charged by lien
holders?
A. Yes, Civil Code 3068.1 limits public agency and private tows to a certain
number of days chargeable for storage. A vehicle under $4000 in value
shall not accrue storage charges beyond the 15th day unless lien sale
proceedings have commenced. If the lien is filed by the 15th day of
possession, the storage is limited to 60 days. This would include a required
notice to be signed by the legal owner before the 16th day of possession
(VC 10652.5). A vehicle with a value over $4000, the lien sale shall
commence by the 30th day of storage and allowing the storing party to
collect for storage up to 120 days. If the lien sale commenced after 30
days, 60 days of storage, then Vehicle Code 10652.5 applies and the
storing party may only collect up to the 16th day of storage.
25. Q. May a repossessor’s tow vehicle be cited by law enforcement for
violations of Vehicle Code sections 25253(a), 27700, or 27907, which
all pertain to a tow truck?
A. No. Vehicle Code sections 615(a) and (b) (definitions of “tow Trucks”)
states a “tow truck” does not include a “repossessor’s tow vehicle.”
26. Q. Must a repossessor’s tow truck be equipped with signs on the door of
the truck and other requirements?
A. No. A person licensed as a repossession agency pursuant to the B&P Code
(commencing with Section 7500), or a registered employee of the agency
may use the state issued repossession license number in lieu of a sign
containing a name, business address, and telephone number (VC 27907)
27. Q. May a law enforcement officer force a repossessor to give up
possession of an automobile or property?
A. Peace officers may not advance or hinder repossessions. Because they are
acting under “color of State law.” They may no more force a debtor to
surrender a car than they may, after a car has been repossessed, force the
repossessor to return it. Without a court order, both things violate the “due
process” requirements of the 14th Amendment of the United States
Constitution and Article 1, Section 13 and 15 of the California
Constitution. 28. Q. Should a repossessor have a police officer accompany him/her on a
repossession?
A. Self-help repossession provisions of UCC 9-609 do not violate the
Fourteenth Amendment if it is the conduct of a private individual dealing
with a private individual. However, the presence of a police officer or a
patrol car accompanying a repossessor has been found by several courts to
constitute “color of law” and has taken the repossession out of the area of
“purely private conduct without state assistance.” Do not take a sheriff or
Police officer out on a self-help repossession.
28. Q. Should a repossessor have a police officer accompany him/her on a
repossession?
A. Self-help repossession provisions of UCC 9-609 do not violate the
Fourteenth Amendment if it is the conduct of a private individual dealing
with a private individual. However, the presence of a police officer or a
patrol car accompanying a repossessor has been found by several courts to
constitute “color of law” and has taken the repossession out of the area of
“purely private conduct without state assistance.” Do not take a sheriff or
Police officer out on a self-help repossession.
repossession?
A. Self-help repossession provisions of UCC 9-609 do not violate the
Fourteenth Amendment if it is the conduct of a private individual dealing
with a private individual. However, the presence of a police officer or a
patrol car accompanying a repossessor has been found by several courts to
constitute “color of law” and has taken the repossession out of the area of
“purely private conduct without state assistance.” Do not take a sheriff or
Police officer out on a self-help repossession.
29. Q. Must a debtor pay a fee (normally $15) to a police department or
Sheriff’s department before redeeming the repossessed vehicle?
A. Yes, pursuant to Government Code sections 26751 and 41612. This fee is
not the obligation of the lien holder or repossessor.
30. Q. Is a repossessed vehicle exempt from current registration?
A. A vehicle repossessed pursuant to the terms of a security agreement is
exempt from the 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 of 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 (VC 4022).
31. Q. Does the mandatory 30 day vehicle impoundment for driving with a
suspended, revoked or invalid license apply to the legal owner?
A. No. A legal owner or its agent may obtain a release from impoundment
prior to the 30 days if they meet three conditions:
1) They are legally operating in this state.
2) They pay all towing & storage fees related to the seizure of this
vehicle.
3) Provide foreclosure document or affidavit of repossession
[14602.6(f)(3)].
32. Q. Should a legal owner have a copy of the repossessor’s state issued
licensed number on file prior to assigning an account to them?
A. Although, it is not required by law, it would provide a positive defense to
any allegation of having assigned an account to a nonexempt unlicensed
person in violation of B&P Code section 7502.2 which is punishable by a
fine of $5,000. 33. Q. Is possession by a registered repossessor of tools described as
“burglary tools” and of vehicle or wheel lock master keys as defined
in section 466 and 466.5 of the California Penal Code prohibited by
law?
A. No. Those sections specify that possession with the “intent feloniously to
break or enter any building or vehicle” is a misdemeanor, and that
possession of vehicle master keys with the intent to use them “in the
commission of an unlawful act” is a misdemeanor. Tools used by
repossessors are “tools of trade” and are legally possessed without any
intent to commit a crime.
33. Q. Is possession by a registered repossessor of tools described as
“burglary tools” and of vehicle or wheel lock master keys as defined
in section 466 and 466.5 of the California Penal Code prohibited by
law?
A. No. Those sections specify that possession with the “intent feloniously to
break or enter any building or vehicle” is a misdemeanor, and that
possession of vehicle master keys with the intent to use them “in the
commission of an unlawful act” is a misdemeanor. Tools used by
repossessors are “tools of trade” and are legally possessed without any
intent to commit a crime.
34. Q. May local law enforcement collect an administrative fee from a legal
owner or their agent to release impounded collateral?
A. No. Effective on January 1, 2000 the administrative fee may be collected
only from the registered owner only or agent of said registered owner
[VC 22850.5(b)(2)].
“burglary tools” and of vehicle or wheel lock master keys as defined
in section 466 and 466.5 of the California Penal Code prohibited by
law?
A. No. Those sections specify that possession with the “intent feloniously to
break or enter any building or vehicle” is a misdemeanor, and that
possession of vehicle master keys with the intent to use them “in the
commission of an unlawful act” is a misdemeanor. Tools used by
repossessors are “tools of trade” and are legally possessed without any
intent to commit a crime.
34. Q. May local law enforcement collect an administrative fee from a legal
owner or their agent to release impounded collateral?
A. No. Effective on January 1, 2000 the administrative fee may be collected
only from the registered owner only or agent of said registered owner
[VC 22850.5(b)(2)].
The Question and Answer section is revised annually and is prepared with the assistance of many CALR members and its counsel in
the hope that it will enlighten and benefit individuals and firms concerned with the repossession industry. This was last updated in January,
2005.
For all laws referred to in the Question and Answer section, please refer to the full sections of the Business and Professions Code,
Vehicle Code, Penal Code, Civil Code, California and United States Constitution for further clarification.
the hope that it will enlighten and benefit individuals and firms concerned with the repossession industry. This was last updated in January,
2005.
For all laws referred to in the Question and Answer section, please refer to the full sections of the Business and Professions Code,
Vehicle Code, Penal Code, Civil Code, California and United States Constitution for further clarification.