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AB-913 Collateral recovery.(2021-2022)

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Date Published: 07/12/2021 09:00 PM
AB913:v98#DOCUMENT

Amended  IN  Senate  July 12, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 913


Introduced by Assembly Member Smith

February 17, 2021


An act to amend Sections 7500.1, 7504.4, 7506.7, 7507.9, 7507.10, and 7508.2 of the Business and Professions Code, relating to collateral recovery.


LEGISLATIVE COUNSEL'S DIGEST


AB 913, as amended, Smith. Collateral recovery.
The Collateral Recovery Act, a violation of which is punishable as a misdemeanor, 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 authorizes the director to suspend or revoke a repossession agency license, a qualification certificate, or registration if the director determines that the licensee or the licensee’s manager, if an individual, or if the licensee is a person other than an individual, that any of its officers, partners, registrants, employees, or its manager, has been convicted of a felony or a crime substantially related to the repossession agency business, including illegally using, carrying, or possessing a deadly weapon, which the act defines as 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 5 inches, any razor with an unguarded blade, and any metal pipe or bar used or intended to be used as a club.
This bill would, among other things, redefine “deadly weapon” to mean an instrument or weapon of the kind commonly known as a firearm. The bill also would define “repossession” to mean, among other things, when the repossessor gains control of the collateral.
Existing law specifies which employees of a licensee are not required to register under the act, including employees engaged exclusively in stenographic, typing, filing, clerical, in-office skip tracing, or other office activities.
This bill would include among those exemptions employees who are engaged in out-of-office skip tracing, as specified.
Existing law provides for the manner in which a repossession agency prepares inventory for and storage of personal effects, defined as any property that is not the property of the legal owner. Existing law specifies that notice to the debtor related to the seizure of collateral or personal effects may be given by mail or by personal service. Existing law requires the repossession agency to request written authorization from the debtor to release property not covered by a security agreement to someone other than the debtor.
This bill would require any instrument or weapon other than a “deadly weapon” to be inventoried and noted as “disposed of, dangerous device” and reasonably disposed of. The bill would authorize the seizure notice to the debtor to be provided by email. The bill would require the repossession agency to, instead of request, receive written authorization from the debtor to release property not covered by a security agreement to someone other than the debtor. Because a violation of these requirements would be a crime, the bill would impose a state-mandated local program.
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 no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NOYES  

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.
 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.
(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 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 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 if the collateral is subject to a security agreement, a lien against any collateral, an assignment or a repossession order, or 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 that is locked and secured at the time of entry.
(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 that is not open at the time of entry.
(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.
(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 7504.4 of the Business and Professions Code is amended to read:

7504.4.
 If an applicant fails to pass an initial examination, the applicant shall not be eligible for a subsequent examination except upon payment of the reexamination fee for each subsequent examination, accompanied by a completed application for reexamination filed within the time limits and conditions relating to applications for initial examinations provided in Section 7504.3.

SEC. 3.

 Section 7506.7 of the Business and Professions Code is amended to read:

7506.7.
 Employees of a licensee who are engaged exclusively in stenographic, typing, filing, clerical, in-office or out-of-office skip tracing, including driving a camera car, vehicle equipped with camera or scanning technology, or other office activities are not required to register under this article.

SEC. 4.

 Section 7507.9 of the Business and Professions Code is amended to read:

7507.9.
 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 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) (A) 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.
(B) Any other instrument or weapon, including, but not limited to, any instrument or weapon of the kind commonly known as a blackjack, slungshot, billy, sandclub, sandbag, metal knuckles, dirk, dagger, 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 shall be inventoried and noted as “disposed of, dangerous device” and the item shall be disposed of in a reasonable and safe manner.
(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 4 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 email, by regular mail addressed to the last known address of the debtor, or by personal service at the option of the repossession agency.
(h) 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 the debtor has received all the property.
(i) 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 must receive written authorization to do so from 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.

SEC. 5.

 Section 7507.10 of the Business and Professions Code is amended to read:

7507.10.
 A licensee shall serve a debtor with a notice of seizure as soon as possible after the recovery of collateral and not later than 48 hours, except that if the 48-hour period encompasses a Saturday, Sunday, or postal holiday, the notice of seizure shall be provided not later than 72 hours or, if the 48-hour period encompasses a Saturday or Sunday and a postal holiday, the notice of seizure shall be provided not later than 96 hours, after the repossession of collateral. The notice shall include all of the following:
(a) The name, address, and telephone number of the legal owner to be contacted regarding the repossession.
(b) The name, address, and telephone number of the repossession agency to be contacted regarding the repossession.
(c) A statement printed on the notice containing the following: “Repossessors are regulated by the Bureau of Security and Investigative Services, Department of Consumer Affairs, Sacramento, CA. Repossessors are required to provide you, not later than 48 hours after the recovery of collateral, with an inventory of personal effects or other personal property recovered during repossession unless the 48-hour period encompasses a Saturday, Sunday, or a postal holiday, then the inventory shall be provided no later than 96 hours after the recovery of collateral.”
(d) A disclosure that “Damage to a vehicle during or subsequent to a repossession and only while the vehicle is in possession of the repossession agency and which is caused by the repossession agency is the liability of the repossession agency. A mechanical, electrical, or tire failure, or the loss of, or any damage to, or as a result of, or caused by, any aftermarket parts and accessories not in compliance with Section 24008 of the Vehicle Code shall not be the responsibility of the repossession agency unless the failure, damage, or loss is due to the negligence of the repossession agency.”
(e) If applicable, a disclosure that “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 will be removed from the collateral and inventoried, and that if the plates are not claimed by the debtor within 60 days, they will be destroyed.”
(f) A disclosure of the charges payable by the debtor to the repossession agency for the storage of the collateral and personal effects from the date of repossession until release of the property from storage.
The notice may be given by email or regular mail addressed to the last known address of the debtor or by personal service at the option of the repossession agency.

SEC. 6.

 Section 7508.2 of the Business and Professions Code is amended to read:

7508.2.
 The director may assess administrative fines for any of the following prohibited acts:
(a) Recovering collateral or making any money demand in lieu thereof, including, but not limited to, collateral registered under the Vehicle Code, that has been sold under a security agreement before a signed or telegraphic authorization has been received from the legal owner, debtor, lienholder, lessor, or repossession agency acting on behalf of the legal owner, debtor, lienholder, or lessor of the collateral. A telephonic assignment is acceptable if the legal owner, debtor, lienholder, lessor, or repossession agency acting on behalf of the legal owner, debtor, lienholder, or lessor is known to the licensee and a written authorization from the legal owner, debtor, lienholder, lessor, or repossession agency acting on behalf of the legal owner, debtor, lienholder, or lessor is received by the licensee within 10 working days or a request by the licensee for a written authorization from the legal owner, debtor, lienholder, lessor, or repossession agency acting on behalf of the legal owner, debtor, lienholder, or lessor is made in writing within 10 working days. Referrals of assignments from one licensee to another licensee are acceptable. The referral of an assignment shall be made under the same terms and conditions as in the original assignment. The fine shall be one hundred dollars ($100) for the first violation and five hundred dollars ($500) for each violation thereafter, per audit.
(b) Using collateral or personal effects, which have been recovered, for the personal benefit of a licensee, or officer, partner, manager, registrant, or employee of a licensee. The fine shall be two hundred fifty dollars ($250) for the first violation and a fine not to exceed one thousand dollars ($1,000) for each violation thereafter. This subdivision does not apply to personal effects disposed of pursuant to subdivision (c) of Section 7507.9. Nothing in this subdivision prohibits the using or taking of personal property connected, adjoined, or affixed to the collateral through an unbroken sequence if that use or taking is reasonably necessary to effectuate the recovery in a safe manner or to protect the collateral or personal effects.
(c) Selling collateral recovered under this chapter, or making a demand for payment in lieu of repossession. The fine shall be two hundred fifty dollars ($250) for the first violation and a fine not to exceed one thousand dollars ($1,000) for each subsequent violation.
(d) Unlawfully entering any private building or secured area, that is not open at the time of entry, without the consent of the owner, or of the person in legal possession thereof, at the time of repossession. The fine shall be five hundred dollars ($500) for each violation.
(e) Committing unlawful assault or battery on another person during the course of a repossession. The fine shall not exceed two thousand five hundred dollars ($2,500) for each violation.
(f) Falsification of an inventory. The fine shall be one hundred dollars ($100) for the first violation and two hundred fifty dollars ($250) for each violation thereafter.
(g) Soliciting from the legal owner the recovery of specific collateral registered under the Vehicle Code or under the motor vehicle licensing laws of other states after the collateral has been seen or located on a public street or on public or private property without divulging the location of the vehicle. The fine shall be one hundred dollars ($100) for the first violation and two hundred fifty dollars ($250) for each violation thereafter.

SEC. 7.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because 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.