Repossession of collateral or leased goods

. [c]ommit a breach of the peace.” Current law also adopts the Uniform Commercial Code (UCC) Article 9 - Secured Transactions, which governs transactions that involve the granting of credit secured by personal property of a debtor, and UCC Article 11 - Leases, which governs the lease of movable personal property (goods). Under UCC Article 9, if a debtor defaults, the secured party may take possession of the collateral “if it proceeds without breach of the peace” or proceeds through judicial process. Under UCC Article 11, for most defaults by a lessee under a lease contract, the lessor may repossess the goods subject to the lease contract, without judicial process, “if it can be done without breach of the peace.” This bill creates provisions that govern the determination of whether a breach of the peace occurs with respect to repossession of collateral or leased goods by, as applicable, the merchant, secured party, or lessor (together referred to as “creditor”) under the WCA and UCC. The bill specifies that the creditor or its authorized repossessor may not commit a breach of the peace and that the conduct or activities of the customer, debtor, or lessee, or any bystander, may not be considered in determining whether a breach of the peace has occurred. Under the bill, an “authorized repossessor” is defined as a person employed by a creditor or authorized to act as an agent by a creditor, or an independent contractor hired by a creditor or the independent contractor's employee, for the purpose of taking possession of the collateral or leased goods.

The bill also limits liability if the repossession involves a vehicle. The bill defines a vehicle to include, among others, a motor vehicle, an all-terrain vehicle, a motorboat, and a snowmobile. Under the bill, no criminal or civil liability for wrongful repossession may be imposed against a creditor or its authorized repossessor arising from the repossession of a vehicle if, in taking possession of the vehicle as authorized by law, the creditor or its authorized repossessor complies with all applicable requirements. The bill also creates an additional limit on liability against an independent contractor, or its employee, hired to repossess a vehicle by a creditor that lacks authority to repossess the vehicle. Under the bill, no criminal or civil liability for wrongful repossession may be imposed against the independent contractor or its employee on the basis that the creditor was not authorized to repossess the vehicle if 1) the creditor represented to the independent contractor or its employee, or the independent contractor or its employee had a reasonable belief, that the creditor was authorized to repossess the vehicle; and 2) in repossessing the vehicle, the independent contractor or its employee complies with all applicable requirements.