Truth in Lending
9.3 Breach of Conditional Sales Contract
- Breach by dealer:
- Dealer must refund the total amount paid by buyer
- Dealer must refund any trade-in or the agreed value of the trade in
as set forth in the contract, or the fair market value of the vehicle
at the time of the contract, whichever is greater. [C.C. §§2983
- Repossession (Default by the buyer)
- Repossession has five basic steps:
- Sending the buyer a written notice demanding payment off all overdue
amounts within 15 days of receipt of the notice. This is commonly
called “The 15 Day Notice.” It can be sent by registered
mail, certified mail, or a process server so you have proof the day
the buyer received the notice.
- Accelerating the remaining balance due. This allows the dealer
to collect the entire amount left owing on the loan as soon as the
15 day notice expires and the buyer has not yet paid the overdue amount.
- Repossessing the vehicle.
- Selling the vehicle, and
- Suing the buyer for all related losses.
- The Deficiency:
A deficiency is the amount the buyer is behind in their payments to the
dealer/financier. To collect deficiency, a dealer must provide 15 day
right of redemption, a 15 day right to reinstate (or explain why no right
exists) and may have to provide other notices set forth in [C.C. §2983.2].
In other words, you have to provide the buyer written notice that you
are giving them a 15 day “second chance” to come up with the
money they owe you before you repossess the vehicle and sell it to someone
else. You must give this notice if you want to keep your right to later
sue the buyer for all your losses related to the deal. If the buyer comes
up with the money and you have already repossessed the car, you must give
it back and reinstate the original contract.
- Dealer does not have to provide right to reinstate and may accelerate
the amount due upon buyer's default where any of the following conditions
- Buyer provided false material information on credit application
- Buyer concealing vehicle
- Buyer threatening destruction/abuse of vehicle
- Buyer threatening physical harm to repossessor
- Buyer used vehicle in commission of a crime
- Vehicle has been seized by Federal, State, or local agency
pursuant to law. [C.C. §2983.3]
- Repossession Forms:
In addition to the foregoing rules, you must:
- Submit a Certificate of Repossession (REG 119) with your transfer
application when re-selling the vehicle to the next buyer. You can
obtain the REG 119 form at http://www.dmv.ca.gov/forms/reg/reg119.htm
- Print "Repossession" on Line 1 of the Title, where the
registered owner would normally sign off.
- Any renewal fees must be paid within 60 days of the date of
repossession to avoid penalties.
- Basic Repossession Rules:
Only the legal owner or licensed repossession company can repossess vehicles.
Repossession agencies are licensed by the Dept. of Consumer Affairs. Employees
hired by the repossession agency must also be registered with the Department
of Consumer Affairs
Vehicles cannot be repossessed while they are on private property.
The legal owner is not required to notify the buyer before the vehicle
is repossessed. However, the legal owner must notify the buyer in writing
within 60 days of the repossession that the buyer has 15 days from the
date they got the 15 day notice to arrange to get the car back before
it is sold. If the vehicle was repossessed by a licensed repossession
agency, the agency must notify the buyer within 48 hours of the repossession
that they have repossessed the vehicle and they must furnish the buyer
with a list of the personal items in the vehicle at the time it was repossessed.
Repossession agencies are required to make a list of all personal belongings
found in a vehicle at the time of repossession. They are required to send
this list to the buyer within 48 hours of the repossession informing them
how to recover their personal belongings and the amount of storage fees
owed, if any.
- Further Repossession Rules & Information:
For further rules and information on repossessing vehicles, go
to the California Department of Consumer Affairs, Bureau of Security and
Investigative Services website, www.dca.ca.gov/bsis/repo,
or call them at 916-322-4000.