1. Default Notice: Before a vehicle can be repossessed, the lender or repossession agency must send a default notice to the borrower. This notice must:
- Be sent at least 20 days before the scheduled repossession date
- State the amount of debt owed
- Notify the borrower of the impending repossession
- Provide the time frame within which the borrower can cure the default
2. Right to Reinstate: Borrowers have the right to reinstate their loans and prevent repossession by paying off the debt in full or bringing it current within the time specified in the default notice.
3. Repossession Requirements:
- Repossession can only occur after the borrower defaults and the right to reinstate has expired.
- Repossessors must obtain a prior court order unless the vehicle purchase agreement or security agreement specifies otherwise.
- Repossession can only be carried out during daytime hours (6:00 a.m. to 9:00 p.m.) unless specific exceptions apply.
- Repossessors must exercise reasonable care in towing or transporting the vehicle to prevent any damage.
4. Notification of Repossession: Within 24 hours of the repossession, the repossessor must notify the borrower in writing, providing information about the date and place of repossession and where the vehicle can be claimed.
5. Sale of Repossessed Vehicles:
- Repossessed vehicles must be sold at a public auction conducted in a commercially reasonable manner.
- The repossessor must provide a written notice of the sale to the borrower at least 15 days before the auction date.
- The borrower has the right to attend the auction and redeem the vehicle by paying the outstanding balance and other allowable charges.
6. Surplus Proceeds: If the sale proceeds exceed the amount owed to the lender, the borrower is entitled to any remaining surplus amount, minus any towing and storage costs.
7. Repossession Penalties: Lenders and repossessors who fail to comply with these laws may be liable for actual damages and penalties.
It's important for borrowers and lenders to understand these laws and their rights and responsibilities regarding vehicle repossession in California. If a borrower is at risk of repossession, they may want to consult with a qualified attorney to explore options for preventing repossession or mitigating its consequences.
