Bill Text: CA AB1859 | 2015-2016 | Regular Session | Chaptered
Bill Title: Collateral recovery.
Sponsorship: Partisan Bill (Republican 1)
Status: (Passed) 2016-09-23 - Chaptered by Secretary of State - Chapter 509, Statutes of 2016. [AB1859 Detail]
Download: California-2015-AB1859-Chaptered.html
BILL NUMBER: AB 1859 CHAPTERED
BILL TEXT
CHAPTER 509
FILED WITH SECRETARY OF STATE SEPTEMBER 23, 2016
APPROVED BY GOVERNOR SEPTEMBER 23, 2016
PASSED THE SENATE AUGUST 23, 2016
PASSED THE ASSEMBLY AUGUST 29, 2016
AMENDED IN SENATE AUGUST 18, 2016
AMENDED IN SENATE AUGUST 2, 2016
AMENDED IN SENATE JUNE 21, 2016
AMENDED IN SENATE JUNE 14, 2016
AMENDED IN ASSEMBLY APRIL 18, 2016
AMENDED IN ASSEMBLY MARCH 18, 2016
INTRODUCED BY Assembly Member Gallagher
FEBRUARY 10, 2016
An act to amend Sections 7500.1, 7504, 7507.3, and 7507.13 of the
Business and Professions Code, relating to collateral recovery.
LEGISLATIVE COUNSEL'S DIGEST
AB 1859, Gallagher. Collateral recovery.
(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. That act defines the term "repossession"
as meaning the locating or recovering of collateral by means of an
assignment. That act defines the term "assignment" as any written
authorization by the legal owner, lienholder, lessor, lessee,
registered owner, or the agent of any of them, to repossess any
collateral or any written authorization by an employer to recover any
collateral entrusted to an employee or former employee in possession
of the collateral. That act provides for the issuance of
qualification certificates, required for the management of the places
of business of licensed repossession agencies, to applicants who
meet certain requirements, including, among others, 2 years of lawful
experience in recovering collateral and provides that lawful
experience does not include employment performing work other than
skip tracing, debt collection, or actual collateral recovery. That
act makes a violation of any of its provisions a crime.
This bill would remove debt collection from the employment
included under lawful experience. The bill would change the
definition of assignment to also include any written authorization to
skip trace or locate, would define the term "repossession order" as
having the same meaning as "assignment," and would make conforming
changes. The bill would delete the definition for the term
"repossession." By expanding the scope of a crime, this bill would
impose a state-mandated local program.
Under the Collateral Recovery Act, licensed repossession agencies
are not liable for specified acts or omissions of a legal owner,
debtor, lienholder, lessor, lessee, registered owner, or agent of any
of them, and are entitled to indemnity from the legal owner, debtor,
lienholder, lessor, lessee, or registered owner for losses incurred
as a result of those acts or omissions. Under the act, those persons
or their agents are not liable for acts or omissions by a licensed
repossession agency or its agent in carrying out a repossession order
and are entitled to indemnity from the licensed repossession agency
for losses incurred as a result of those acts or omissions, as
specified.
This bill would extend the above-described provisions applicable
to a legal owner, debtor, lienholder, lessor, lessee, or registered
owner to a debt collector.
(2) 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.
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" 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 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 where 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.
(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, 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) "Secured area" means and includes any fenced and locked area.
(x) "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.
(y) "Services" means any duty or labor to be rendered by one
person for another.
(z) "Violent act" means any act that results in bodily harm or
injury to any party involved.
(aa) 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 of the Business and Professions Code is
amended to read:
7504. (a) Except as otherwise provided in this chapter, an
applicant for a qualification certificate shall comply with all of
the following:
(1) Be at least 18 years of age.
(2) Have been, for at least two years of lawful experience, during
the five years preceding the date on which his or her application is
filed, a registrant or have had two years of lawful experience in
recovering collateral within this state. Lawful experience means
experience in recovering collateral as a registrant pursuant to this
chapter or as a salaried employee of a financial institution or
vehicle dealer. Lawful experience does not include any employment
performing work other than skip tracing or actual collateral
recovery.
Two years' experience shall consist of not less than 4,000 hours
of actual compensated work performed by the applicant preceding the
filing of an application.
An applicant shall certify that he or she has completed the
claimed hours of qualifying experience and the exact details as to
the character and nature thereof by written certifications from the
employer, licensee, financial institution, or vehicle dealer, subject
to independent verification by the director as he or she may
determine. In the event of the inability of an applicant to supply
the written certifications from the employer, licensee, financial
institution, or vehicle dealer, in whole or in part, applicants may
offer other written certifications from other persons substantiating
their experience for consideration by the director. All
certifications shall include a statement that representations made
are true, correct, and contain no material omissions of fact to the
best knowledge and belief of the applicant or the person submitting
the certification. An applicant or person submitting the
certification who declares as true any material matter pursuant to
this paragraph that he or she knows to be false is guilty of a
misdemeanor.
(3) Complete and forward to the bureau a qualified certificate
holder application which shall be on a form prescribed by the
director and signed by the applicant. An applicant who declares as
true any material matter pursuant to this paragraph that he or she
knows to be false is guilty of a misdemeanor. The application shall
be accompanied by two recent photographs of the applicant, of a type
prescribed by the director, and two classifiable sets of his or her
fingerprints. The residence address, residence telephone number, and
driver's license number of each qualified certificate holder or
applicant for a qualification certificate, if requested, 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.
(4) Pass the required examination.
(5) Pay the required application and examination fees to the
bureau.
(b) Upon the issuance of the initial qualification certificate or
renewal qualification certificate, the bureau shall issue to the
certificate holder a suitable pocket identification card which
includes a photograph of the certificate holder. The photograph shall
be of a size prescribed by the bureau. The card shall contain the
name of the licensee with whom the certificate holder is employed.
(c) The application form shall contain a statement informing the
applicant that a false or dishonest answer to a question may be
grounds for denial or subsequent suspension or revocation of a
qualification certificate.
SEC. 3. Section 7507.3 of the Business and Professions Code is
amended to read:
7507.3. A repossession agency shall be required to keep and
maintain adequate records of all transactions, including, but not
limited to, assignment or repossession order forms; vehicle report of
repossession required by Section 28 of the Vehicle Code; vehicle
condition reports, including odometer readings, if available;
personal effects inventory; notice of seizure; and records of all
transactions pertaining to the sale of collateral that has been
repossessed, including, but not limited to, bids solicited and
received, cash received, deposits made to the trust account,
remittances to the seller, and allocation of any moneys not so
remitted to appropriate ledger accounts. Records, including bank
statements of the trust account, shall be retained for a period of
not less than four years and shall be available for examination by
the bureau upon demand. In addition, collateral and personal effects
storage areas shall be made accessible for inspection by the bureau
upon demand. An assignment or repossession order form may be an
original, a photocopy, a facsimile copy, or a copy stored in an
electronic format.
SEC. 4. Section 7507.13 of the Business and Professions Code is
amended to read:
7507.13. (a) A licensed repossession agency is not liable for the
act or omission of a legal owner, debt collector, debtor,
lienholder, lessor, lessee, or registered owner, or an agent of any
of them, in making an assignment or repossession order to it or for
accepting an assignment or repossession order from any legal owner,
debt collector, debtor, lienholder, lessor, lessee, or registered
owner, or an agent of any of them, and is entitled to indemnity from
the legal owner, debt collector, debtor, lienholder, lessor, lessee,
or registered owner for any loss, damage, cost, or expense, including
court costs and attorney's fees, that it may reasonably incur as a
result thereof. Nothing in this subdivision limits the liability of
any person for his or her tortious conduct.
(b) The legal owner, debt collector, debtor, lienholder, lessor,
lessee, or registered owner, or the agent of any of them, is not
liable for any act or omission by a licensed repossession agency, or
its agent, in carrying out an assignment or repossession order and is
entitled to indemnity from the repossession agency for any loss,
damage, cost, or expense, including court costs and attorney's fees,
that the legal owner, debt collector, debtor, lienholder, lessor,
lessee, or registered owner, or the agent of any of them, may
reasonably incur as a result thereof. Nothing in this subdivision
limits the liability of any person for his or her tortious conduct.
(c) The legal owner, debtor, lienholder, lessor, lessee, or
registered owner, or the agent of any of them, is not guilty of a
violation of Section 7502.1 or 7502.2 if, at the time of the
assignment or repossession order, the party making the assignment or
repossession order has in its possession a copy of the repossessor's
current, unexpired repossession agency license, and a copy of the
current, unexpired repossession agency's qualified manager's
certificate, and does not have actual knowledge of any order of
suspension or revocation of the license or certificate.
(d) Neither a licensed repossession agency nor a legal owner,
debtor, lienholder, lessor, lessee, or registered owner, or an agent
of any of them may, by any means, direct or indirect, express or
implied, instruct or attempt to coerce the other to violate any law,
regulation, or rule regarding the recovery of any collateral,
including, but not limited to, the provisions of this chapter or
Section 9609 of the Commercial Code.
(e) A licensed repossession agency, at least annually, on or
before January 31 of each year, shall provide a legal owner from
which the agency accepts an assignment or repossession order with a
copy of this section, Sections 7500.2, 7507.4, 7507.115, 7507.12, and
7507.125 of this code, and Section 28 of the Vehicle Code.
SEC. 5. 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.
