Q: My car was just repossessed. What are my rights?
A: Your rights are set forth in California's Rees-Levering
Automobile Sales and Finance Act.
The Act requires at least 15 days' written notice of intent to dispose of a repossessed or surrendered
motor vehicle be given to all persons liable on the contract, served personally, by certified mail, or first-class mail, postage
prepaid, to the last known address of the persons liable on the contract. In order to collect a deficiency, the notice must
be given within 60 days of repossession, AND must include the following:
- The right to redeem the vehicle by paying in full the entire outstanding balance within 15 days, and provides an itemization
of the balance, any delinquency, collection or repossession costs and fees, and sets forth the amount of any credit for unearned
finance charges or canceled insurance;
- That there is a conditional right to reinstate (pay the past due amounts and repossession costs/fees; allowed once every
12 months and twice total) within 15 days or that there is no right of reinstatement and provides reasons therefor (e.g.,
lied on credit application, hid, failed to care for the car, threatened to or did commit acts of violence on repossessor);
- That upon written request the redemption (or reinstatement, if applicable) period will be extended 10 days (with a form/instructions
- Where the vehicle will be returned upon redemption or reinstatement;
- The name and address of whom payment shall be made;
- The intent to dispose of the vehicle after 15 days;
- That upon written request a written accounting regarding the disposition of the vehicle will be provided;
- Includes notice, in at least 10-point bold type if the notice is printed, reading as follows: "NOTICE. YOU MAY BE SUBJECT
TO SUIT AND LIABILITY IF THE AMOUNT OBTAINED UPON DISPOSITION OF THE VEHICLE IS INSUFFICIENT TO PAY THE CONTRACT BALANCE AND
ANY OTHER AMOUNTS DUE;" and
- That upon disposition of the vehicle, they will be liable for the deficiency balance plus interest at the contract rate
until entry of judgment.
Further, unless automatically provided to buyer within 45 days after disposition, a written accounting
regarding the disposition, itemizing gross proceeds, reasonable and necessary expenses incurred for retaking, holding, preparing
for and conducting the sale, reasonable attorney fees and legal expenses (if allowed in the contract), satisfaction of any
subordinate lien or encumbrance (if properly demanded), shall be provided to any other person liable on the contract within
45 days after written request, if made within one year.
This law does not apply to a lender licensed under Section 22000. et seq. or 24000, et seq. of
the California Financial Code.
Still further, a deficiency judgment may not be had unless the court determines that this Act
AND relevant portions of the California Commercial Code were complied with. The Commercial Code requires that the creditor
act in good faith and in a commercially reasonable manner in the sale, and requires the debtor be given notice in writing
of the time and place of any public sale or of the time on or after which any private sale or other intended disposition is
to be made. Notice of a public sale's time and place must be published in a newspaper of general circulation before the sale.
Lastly, unlike a commercial transaction, any defenses that existed against the seller (e.g., fraud,
breach of warranty, wrongful forced-placed insurance, etc.) can be used against the creditor.
Assuming the creditor is entitled to the deficiency, the entire amount is now due, with no automatic
right to installment payments.