California Assembly Bill AB1859 Amended / Bill

 BILL NUMBER: AB 1859AMENDED BILL TEXT AMENDED IN ASSEMBLY MARCH 18, 2016 INTRODUCED BY Assembly Member Gallagher FEBRUARY 10, 2016 An act to amend  Section 7506.5   Sections 7500.1 and 7507.9  of the Business and Professions Code,  and to add Section 22651.03 to the Vehicle Code,  relating to collateral recovery. LEGISLATIVE COUNSEL'S DIGEST AB 1859, as amended, Gallagher. Collateral  recovery.   recovery: release of vehicle.   (1)    The Collateral Recovery Act 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 requires every person entering the employ of, or contracting with, a licensee or multiple licensee to immediately complete an application for an initial registration or a reregistration and file the appropriate application with the chief of the bureau, as specified. The act further requires that application to be verified and include certain information, and provides that all information obtained on the application is confidential, as specified.   That act defines the term "repossession" as meaning the locating or recovering of collateral by means of an assignment. That act requires a licensee to remove personal effects from the collateral and requires a licensee to make a complete and accurate inventory of the personal effects. That act makes a violation of any of its provisions a crime.  This bill would  make a nonsubstantive change to that confidentiality provision.   define the terms "repossession" or "repossess" to mean   the locating and physical recovering of collateral by means of an assignment. The bill would instead require a licensee to make a good faith effort to inventory personal effects in the collateral and would prohibit a licensee from inventorying or removing any kind of trash or from being held   responsible for hidden personal effects. The bill would authorize a licensee to allow a debtor or person in possession of the collateral to sign a waiver forfeiting personal effects or other personal property not covered by a security agreement and to waive the required inventory of personal effects, and would require a licensee, once the waiver is signed, to immediately dispose of the personal effects or other property. The bill would authorize a licensee to store personal effects inside the collateral, as specified. The bill would also prohibit a licensee from conspiring or agreeing to release personal effects or other personal property not covered by a security agreement to anyone other than the debtor. By placing new prohibitions on a licensee, this bill would expand an existing crime and would, therefore, impose a state-mandated local program.   (2) Existing law specifies how and to whom a vehicle that has been removed by a peace officer may be released, including to the legal owner of the vehicle and the legal owner's agent.   This bill would, notwithstanding specified sections of law, instead prescribe specified procedures and requirements for releasing a vehicle to a licensed repossessor, as defined, including that the licensed repossessor present a copy of the assignment and pay all towing and storage fees related to the seizure of the vehicle.   Existing law exempts from registration a vehicle repossessed pursuant to a security agreement solely for the purpose of transporting the vehicle from the point of repossession to the storage facilities of the repossessor or other specified places if the repossessor transports the vehicle with appropriate documents and makes them available to a law enforcement officer upon request. Existing law exempts a legal owner of a vehicle from the payment of administrative costs assessed by a city, county, or city and county for releasing a properly impounded vehicle, unless the legal owner who redeems the vehicle requests a poststorage hearing. Existing law prohibits a city, county, or city and county from requiring the legal owner or the legal owner's agent to request a poststorage hearing as a requirement for release of the vehicle.   This bill would specify that the above exemptions apply when a vehicle is released to a licensed repossessor.  (3) 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 with regard to certain mandates no reimbursement is required by this act for a specified reason.   With regard to any other mandates, this bill would provide that, if the Commission on State Mandates determines that the bill contains costs so mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.  Vote: majority. Appropriation: no. Fiscal committee:  no   yes  . State-mandated local program:  no   yes  . 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. The following terms as used in this chapter have the meaning expressed in this section: (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" means any written authorization by the legal owner, lienholder, lessor, lessee, registered owner, or the agent of any of them, to 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" 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, facsimile copy of an assignment, or electronic format of an assignment shall have the same force and effect as an original written assignment. (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 blackjack, slungshot, billy, sandclub, sandbag, metal knuckles, dirk, dagger, pistol, or revolver, or any other firearm, 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. (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 a security interest in any collateral that is subject to a security agreement, a lien against any collateral, or an interest in any collateral that is subject to a lease agreement. (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. (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, or on a conditional sales contract, or on a repossession assignment, as the registered owner. (v) "Registrant" means a person registered under this chapter. (w) "Repossession"  or "repossess"  means the locating  or   and physical  recovering of collateral by means of an assignment. (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 his or her 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.  (bb)   (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 7507.9 of the   Business and Professions Code   is amended to read:  7507.9.  Personal   Except as otherwise provided in this section, 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   licensee shall make a good faith effort to inventory the personal effects, but shall not inventory or remove trash of any kind or be held responsible for hidden   personal effects. 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) 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. (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 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 regular mail addressed to the last known address of the debtor or by personal service at the option of the repossession agency. (h)  (1)    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 he or she has received all the property.  (2) A licensee may allow a debtor or a person in possession of the collateral to sign, at the time of repossession or at a later date, a waiver forfeiting personal effects or other personal property not covered by a security agreement and waiving an inventory of those personal effects or other personal property. Once the waiver has been signed, the licensee shall immediately dispose of the personal effects or personal property.  (i)  (1)    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 written authorization to do so from the debtor.  (2) A licensee shall not release or conspire or agree to release personal effects or other personal property not covered by a security agreement to anyone other than 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.  (l) A licensee may store personal effects or personal property inside the collateral until the collateral is no longer in the possession of the licensee. The collateral shall not leave the possession of the licensee until all personal effects or personal property have been removed.   SEC. 3.   Section 22651.03 is added to the   Vehicle Code   ,  immediately following Section 22651  , to read:   22651.03. (a) Notwithstanding Sections 14602.6 and 22651, this section shall apply when collateral is released to a licensed repossessor. For purposes of this section, "licensed repossessor" means a licensed repossessor, licensed repossession agency, or its officers or employees pursuant to Chapter 11 (commencing with Section 7500) of Division 3 of the Business and Professions Code. (b) Pursuant to Section 4022, a vehicle obtained by a licensed repossessor as a release of collateral is exempt from registration for purposes of the repossessor removing the vehicle to his or her storage facility or the facility of the legal owner. A law enforcement agency, impounding authority, tow yard, storage facility, or any other person in possession of the collateral shall release the vehicle without requiring current registration and pursuant to this section. The law enforcement agency shall be open to issue a release to the legal owner or a licensed repossessor whenever the agency is open to serve the public for nonemergency business. (c) The law enforcement agency and the impounding agency, including any storage facility acting on behalf of the law enforcement agency or impounding agency, shall comply with this section and shall not be liable to the registered owner for the improper release of the vehicle to the legal owner or a licensed repossessor provided the release complies with this section. A law enforcement agency shall not refuse to issue a release to a legal owner or a licensed repossessor on the grounds that it previously issued a release. (d) A vehicle removed and seized for any reason shall be released to the legal owner of the vehicle or to a licensed repossessor if all of the following conditions are met: (1) The legal owner is a motor vehicle dealer, bank, credit union, acceptance corporation, or other licensed financial institution legally operating in this state or is another person, not the registered owner, holding a security interest in the vehicle. (2) (A) The legal owner or the licensed repossessor pays all towing and storage fees related to the seizure of the vehicle. Any person having possession of the vehicle shall not collect from the legal owner of the type specified in paragraph (1) or a licensed repossessor any administrative charges imposed pursuant to Section 22850.5 unless the legal owner voluntarily requested a poststorage hearing. (B) A person operating or in charge of a storage facility where vehicles are stored pursuant to this section shall accept a valid bank credit card or cash for payment of towing, storage, and related fees by a legal owner or a licensed repossessor claiming the vehicle. A credit card shall be in the name of the person presenting the card. "Credit card" means "credit card" as defined in subdivision (a) of Section 1747.02 of the Civil Code, except, for the purposes of this section, credit card does not include a credit card issued by a retail seller. (C) A person operating or in charge of a storage facility described in subparagraph (B) who violates subparagraph (B) shall be civilly liable to the owner of the vehicle or to the person who tendered the fees for four times the amount of the towing, storage, and related fees, but not to exceed five hundred dollars ($500). (D) A person operating or in charge of a storage facility described in subparagraph (B) shall have sufficient funds on the premises of the primary storage facility during normal business hours to accommodate, and make change in, a reasonable monetary transaction. (E) Credit charges for towing and storage services shall comply with Section 1748.1 of the Civil Code. Law enforcement agencies may include the costs of providing for payment by credit when making agreements with towing companies on rates. (3) The legal owner or licensed repossessor presents a copy of the assignment, as defined in subdivision (b) of Section 7500.1 of the Business and Professions Code; a release from the one responsible governmental agency, only if required by the agency; a government-issued photographic identification card; and any one of the following, as determined by the legal owner or the licensed repossessor: a certificate of repossession for the vehicle, a security agreement for the vehicle, or title, whether paper or electronic, showing proof of legal ownership for the vehicle. Any documents presented may be originals, photocopies, or facsimile copies, or may be transmitted electronically. The law enforcement agency, impounding agency, or any other governmental agency, or any person acting on behalf of those agencies, shall not require any documents to be notarized. The law enforcement agency, impounding agency, or any person acting on behalf of those agencies may require the licensed repossessor to produce a photocopy or facsimile copy of its repossession agency license or registration issued pursuant to Chapter 11 (commencing with Section 7500) of Division 3 of the Business and Professions Code. No administrative costs authorized under subdivision (a) of Section 22850.5 shall be charged to the legal owner, of the type specified in paragraph (1), who redeems the vehicle unless the legal owner voluntarily requests a poststorage hearing. No city, county, city and county, or state agency shall require a legal owner or a licensed repossessor to request a poststorage hearing as a requirement for release of the vehicle to the legal owner or the licensed repossessor. The law enforcement agency, impounding agency, or other governmental agency, or any person acting on behalf of those agencies, shall not require any documents other than those specified in this paragraph. The law enforcement agency, impounding agency, or other governmental agency, or any person acting on behalf of those agencies, shall not require any documents to be notarized. The legal owner or the licensed repossessor shall be given a copy of any documents he or she is required to sign, except for a vehicle evidentiary hold logbook. The law enforcement agency, impounding agency, or any person acting on behalf of those agencies, or any person in possession of the vehicle may photocopy and retain the copies of any documents presented by the legal owner or licensed repossessor. (4) A failure by a storage facility to comply with any applicable conditions set forth in this subdivision shall not affect the right of the legal owner or a licensed repossessor to retrieve the vehicle, provided all conditions required of the legal owner or licensed repossessor under this subdivision are satisfied. (e) (1) A legal owner or a licensed repossessor that obtains release of a vehicle pursuant to subdivision (d) shall not release the vehicle to the registered owner of the vehicle, the person who was listed as the registered owner when the vehicle was impounded, or any agents of the registered owner, unless the registered owner is a rental car agency. (2) The legal owner or the licensed repossessor shall not relinquish the vehicle to the registered owner or the person who was listed as the registered owner when the vehicle was impounded until the registered owner or that owner's agent presents his or her valid driver's license or valid temporary driver's license to the legal owner or the licensed repossessor. The legal owner, licensed repossessor, or person in possession of the vehicle shall make every reasonable effort to ensure that the license presented is valid and that possession of the vehicle will not be given to the driver who was involved in the original impoundment proceeding until the expiration of the impoundment period. (f) The legal owner of collateral shall, by operation of law and without requiring further action, indemnify and hold harmless a law enforcement agency, city, county, city and county, the state, a tow yard, storage facility, or an impounding yard from a claim arising out of the release of the collateral to a licensed repossessor and from any damage to the collateral after its release, including reasonable attorney's fees and costs associated with defending a claim, if the collateral was released in compliance with this section.   SEC. 4.   No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution for certain costs that may be incurred by a local agency or school district because, in that regard, 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.   However, if the Commission on State Mandates determines that this act contains other costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.   SECTION 1.   Section 7506.5 of the Business and Professions Code is amended to read: 7506.5. All information obtained on the application shall be confidential pursuant to the Information Practices Act of 1977 (Chapter 1 (commencing with Section 1798) of Title 1.8 of Part 4 of Division 3 of the Civil Code) and shall not be released to the public except for the registrant's full name, the licensee's name and address, and the registration number. The application shall be verified and shall include: (a) The full name, residence address, residence telephone number, date and place of birth, and driver's license number of the applicant or registrant. (b) A statement listing any and all names used by the applicant or registrant, other than the name by which he or she is currently known. If the applicant or registrant has never used a name other than his or her true name, this fact shall be set forth in the statement. (c) The name and address of the licensee and the date the employment or contract commenced. (d) The title of the position occupied by the applicant or registrant and a description of his or her duties. (e) Two recent photographs of the applicant or registrant, of a type prescribed by the chief, and two classifiable sets of his or her fingerprints, one set of which shall be forwarded to the Federal Bureau of Investigation for purposes of a background check. (f) The bureau may impose a fee not to exceed three dollars ($3) for processing classifiable fingerprint cards submitted by applicants, excluding those submitted into an electronic fingerprint system using electronic fingerprint technology.