General Provisions - Repossessors - Business & Professions - CA

Section § 7500

This section introduces a part of the Business and Professions Code specifically dealing with repossessors, and it is officially called the Collateral Recovery Act.

This chapter of the Business and Professions Code constitutes the chapter on repossessors. It may be cited as the “Collateral Recovery Act.”

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Section § 7500.1

This section of the Business and Professions Code defines a bunch of terms used in rules about repossession. An 'advertisement' covers most written and printed communications but not simple phone book listings without license numbers. An 'assignment' or 'repossession order' is a written approval from someone like the vehicle's legal owner to find or take back an item, which could be a car, boat, or other property promised as collateral for a loan. It can be given by various formats like a photocopy or email. The 'Bureau' and 'Chief' are roles related to security services. Important definitions include 'collateral,' which refers to anything used to secure a loan, like vehicles or appliances, and 'debtor,' the one who owes on a loan. The 'legal owner' holds a stake in the property, and a 'licensee' refers to an authorized repossession agency. Other terms explain conditions around repossession processes, including what's considered 'personal effects,' 'dangerous drugs,' 'deadly weapons,' and various structures and areas involved in repossession.

The law also mentions who qualifies to manage a repossession business, what counts as a 'secured area,' and what constitutes a 'violent act' during repossession.

As used in this chapter:

(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” or “repossession order” means any written authorization by the legal owner, lienholder, lessor, lessee, or registered owner, or the agent of any of them, to skip trace, locate, or 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” or “repossession order” 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 or repossession order, facsimile copy of an assignment or repossession order, or electronic format of an assignment or repossession order shall have the same force and effect as an original written assignment or repossession order.

(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 firearm.

(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 any of the following:

(1) A security interest in any collateral if the collateral is subject to a security agreement.

(2) A lien against any collateral.

(3) An assignment or a repossession order.

(4) An interest in any collateral that is subject to a lease agreement or on an assignment or repossession order as the legal owner.

(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 and is not listed on the repossession assignment.

(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, on a conditional sales contract, or on an assignment or a repossession order, as the registered owner.

(v) “Registrant” means a person registered under this chapter.

(w) “Repossession” means any of the following:

(1) When the repossessor gains entry to the collateral.

(2) The collateral becomes connected to a tow truck or to a repossessor’s tow vehicle.

(3) The repossessor moves the entire collateral present.

(4) The repossessor gains control of the collateral.

(5) The repossessor disconnects any part of the collateral from any surface where it is mounted or attached.

(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 a 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 during the repossession up until the time the repossessor is back in their vehicle.

(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.

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Section § 7500.2

This law defines a repossession agency as anyone who gets paid to find or take back collateral like vehicles, unless they're registered elsewhere under certain rules. Such agencies must always operate independently when doing business with others. Only specific people, like qualified certificate holders or certain owners or officers, are allowed to manage or run the day-to-day tasks of the agency's business.

(a) A repossession agency means and includes any person who, for any consideration whatsoever, engages in business or accepts employment to locate or recover collateral, whether voluntarily or involuntarily, including, but not limited to, collateral registered under the provisions of the Vehicle Code which is subject to a security agreement, except for any person registered pursuant to Article 7 (commencing with Section 7506).

(b) A repossession agency licensed pursuant to this chapter shall only transact business with another person or entity as an independent contractor.

(c) A repossession agency shall not allow a person or entity other than the qualified certificate holder, as provided in Section 7505.1, or the owner or officer of the repossession agency, to manage the day-to-day operations, operate, control, or transact business covered by this act, except as provided in Section 7503.3.

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Section § 7500.3

This California law outlines entities that are not considered repossession agencies. These include banks, licensed loan entities, attorneys doing their legal duties, legal owners of collateral or their employees, government officers on duty, and certain qualified certificate holders and dealers. Specifically, dealers handling particular types of collateral, like agricultural equipment, must keep thorough records and handle personal property meticulously. The law also stresses that none of these entities should encourage anyone to break laws related to collateral recovery.

(a) A repossession agency shall not include any of the following:

(1) Any bank subject to the jurisdiction of the Commissioner of Financial Protection and Innovation of the State of California under Division 1 (commencing with Section 99) of the Financial Code or the Comptroller of the Currency of the United States.

(2) Any person organized, chartered, or holding a license or authorization certificate to make loans pursuant to the laws of this state or the United States who is subject to supervision by any official or agency of this state or the United States.

(3) An attorney at law in performing their duties as an attorney at law.

(4) The legal owner of collateral that is subject to a security agreement or a bona fide employee employed exclusively and regularly by the legal owner of collateral that is subject to a security agreement. With regard to collateral subject to registration under the Vehicle Code, the legal owner shall be the legal owner listed on the records of the Department of Motor Vehicles or the seller or lessor named on a valid conditional sales contract or rental or lease agreement if the seller or lessor is a licensed vehicle dealer as defined in Section 285 of the Vehicle Code.

(5) An officer or employee of the United States of America, or of this state or a political subdivision thereof, while the officer or employee is engaged in the performance of their official duties.

(6) A qualified certificate holder or a registrant when performing services for, or on behalf of, a licensee.

(7) A dealer, including its bona fide employees, regularly engaged in the sale of collateral designed primarily for agricultural use, as defined in subdivision (b) of Section 51201 of the Government Code, for use in the care of lawns and gardens, or for use as special construction equipment, as defined in subdivision (b) of Section 565 of the Vehicle Code, or for use in the production, generation, storage, or transmission of mechanical or electric energy, that is subject to a security agreement of the manufacturer or an affiliate of that manufacturer, provided the following requirements are met:

(A) The dealer or the secured party maintains adequate records of all repossessions.

(B) The dealer or the secured party completes a collateral condition report.

(D) The dealer or the secured party creates records of all transactions pertaining to the sale of the collateral, including, but not limited to, bids solicited and received, cash received, remittances to the seller, and allocation of any moneys not so remitted to appropriate ledger accounts.

(E) The dealer removes and stores any personal effects that were taken with the collateral for a minimum of 60 days in a secure manner, completes an inventory of the personal effects, and notes the date that inventory is taken.

(F) If personal effects that were taken with the collateral are to be released to someone other than the debtor, the dealer shall request written authorization to do so from the debtor. The dealer may dispose of personal effects after storing them for at least 60 days pursuant to subparagraph (E).

(b) Entities described in paragraph (7) of subdivision (a), or a debtor, lienholder, lessor, lessee, registered owner, or an agent thereof shall not by any means, directly or indirectly, expressed or implied, instruct, coerce, or attempt to coerce another person to violate any law, regulation, or rule regarding the recovery of collateral, including, but not limited to, the provisions of this chapter or Section 9609 of the Commercial Code.

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