Automobile Repossession Laws in California
Having your car repossessed is one of the most stressful and frustrating things that a consumer can experience. This page is designed to provide some basic information about California’s auto repossession laws for purchased (as opposed to leased) vehicles.
If you leased your automobile instead of buying it, then read our information page about California repossessions laws for leased cars.
Your Car Cannot Be Repossessed Unless You Are in Default
The first, and most important, repossession rule in California is that a car dealership or a bank is not allowed to repossess your car unless you have defaulted under your purchase contract. The most common types of default are either that the owner is behind on his or her payments or has failed to maintain the required insurance coverage.
If you haven’t defaulted on your loan and the bank or dealer repossess your car, then you may have a claim for conversion (i.e., civil theft) or unfair debt collection, and you should call an experienced lawyer who specializes in consumer law right away.
Repossession Agent Cannot Breach the Peace
California law only permits lien holders to repossess automobiles if the repossession can be accomplished without “breach of the peace.” This essentially means that they are not allowed to break into your garage or home, threaten you, or assault anyone.
No Right to a Grace Period or to a Notice of Default
Under California law (as in most other states), consumers who fall behind on their auto loan payments are not entitled to any “grace period.” Although many lenders permit so-called grace periods, they do so voluntarily as a matter of business policy. This means that a lender can, if it chooses to do so, repossess your vehicle even if you are only one day late on your payments. Consumers are also generally not legally entitled to notice that the lender intends to repossess their automobiles.
The only exception to these rules is if the lender has done something to lead you to believe that your vehicle will not be repossessed. For example, if a lender agrees to let you pay three weeks late, then it cannot repossess your vehicle until the payment deadline that the two of you agreed upon. Similarly, if a consumer is two weeks late on every payment he makes for over a year, and the lender hasn’t repossessed the vehicle before, then the consumer would have a strong argument that the lender’s business practices led him to believe that the vehicle would not be repossessed until payments were at least two weeks late.
Notice of Intent to Sell, Reinstatement, and Redemption
After your vehicle has been repossessed, the lender must to send you (and any cosigners on the contract) a notice of intent to sell the vehicle. This notice has to be sent to your last known address at least 15 days before the vehicle is sold. It must also be sent no later than 60 days after the repossession. If you receive this notice, it is very important that you keep it – and the envelope that it came in – so that you can discuss your rights with an attorney.
The notice must notify you of your right to redeem the contract and your right to reinstate the contract if you are entitled to so. Redemption is essentially your right to purchase the vehicle by paying off the contract. The notice must inform you of how much it will cost to redeem the contract. Reinstatement essentially means that you pay the lender the amount that you are overdue plus any repossession charges to get current on the loan, and then you can get your vehicle back and keep it as long as you continue to make your payments. You are generally entitled to reinstate your loan unless the lender has grounds for believing that you or your cosigner: (1) intentionally provided misleading information on your credit application; (2) hid the vehicle or removed it from the state to avoid repossession; (3) vandalized the vehicle or is threatening to do so; (4) harmed or threatened to harm the lender’s employees or the repossession company’s employees; (5) used the car in a crime that could result in it being seized; or (6) have exercised the right to reinstate the contract in the last 12 months.
The Notice must specifically inform you that you have 15 days to redeem the vehicle, or to reinstate it if you are entitled to do so. In addition, you are automatically entitled to a mandatory ten-day extension of this deadline if you ask for it in writing. The notice must tell you how you can request this extension.
Perhaps most importantly, if the bank fails to comply with its obligations to send you the above-described notice, then it is not allowed to collect a deficiency balance from you after the vehicle is sold.
Want to Talk to an Attorney About Your Repossessed Car?
If you think that the bank or repossession agency violated any of these rules, and you want to talk to an attorney, the Vachon Law Firm offers free consultations in repossession cases. Call us today at 1-855-4-LEMON-LAW (1-855-453-6665) for your free consultation!