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Repossessions: 7.4.4 Evidence and Proof Issues

When unsecured personal property is never returned, it may be difficult to pinpoint when the property was stolen. The theft can occur at the time of seizure by repossession agents, later by employees of the creditor when the car is in the creditor’s possession, by repair shop personnel when the car is being reconditioned for sale, or by almost anyone while the car sits on a lot waiting to be sold.

Repossessions: 7.5.1 Liability Limits for Property Eventually Returned

Creditors attempt to avoid liability for the temporary taking of unsecured property by inserting a clause into the security or credit agreement granting the secured party the right to take unsecured personalty in the course of a repossession and hold it for the debtor without liability. A good example is the clause used at one time by General Motors Acceptance Corp.

Repossessions: 7.5.3 State Law Conflicting with Liability Disclaimers

Liability disclaimer provisions may violate state law designed to protect consumers whose property is repossessed. A number of state motor vehicle financing acts and retail installment sales acts prohibit contract provisions waiving the consumer’s right of action against the creditor for various illegal actions during repossession.86

Repossessions: 1.1.2 Topics Covered in This Treatise

This treatise deals with the seizure of personal property, including car repossessions, seizure of manufactured homes, repossession of rent-to-own appliances, and threats to seize household goods. This treatise has been cited by the United States Supreme Court1 and by other courts.2

Repossessions: 1.1.3 State Law Variations

As described above, this treatise covers a variety of state statutes, federal laws and regulations, court procedures, and common law theories. With the prominent exceptions of the Uniform Commercial Code (UCC) and federal law, this law varies dramatically from state to state. Even the UCC varies considerably from state to state.

Repossessions: 1.1.4 Organization of This Treatise

Chapter 2, infra, analyzes the scope of Article 9 and other laws under which creditors may claim a right to repossess personal property. These scope issues are a critical initial question in every case, as the consumer’s rights and remedies vary greatly depending on whether Article 9 or some other body of law governs the transaction.

Repossessions: 1.2.2 Researching State Consumer Credit Laws

There are fewer comprehensive research aids for state consumer credit statutes than for the UCC. Secured transactions treatises ignore or quickly pass over retail installment sales acts, small loan acts, and similar statutes. This treatise more extensively covers the repossession aspects of these laws, and Appendix B, infra, summarizes or at least cites key provisions that relate to repossession issues.

Repossessions: 1.2.3 Researching Bankruptcy Law

Another treatise in this series, Consumer Bankruptcy Law and Practice,8 provides a comprehensive discussion of consumer bankruptcy law. Another valuable resource on bankruptcy law, particularly for attorneys doing a substantial amount of bankruptcy work, is Alan N. Resnick and Henry J. Sommer, Collier on Bankruptcy (16th ed. 2009 looseleaf with updates), a multi-volume treatise published by Lexis/Nexis. Numerous other treatises, texts, and handbooks are also available.9

Repossessions: 1.3.1 Why Repossession Cases Are Important

Repossession is one of the most traumatic economic events that can befall a family. Repossession often means loss of the car that a wage earner relies upon to get to work or that a family requires for basic needs such as shopping and medical appointments. Or a family may lose a manufactured home that it relies upon for shelter. Helping families avoid repossession can save them from economic catastrophe.

Repossessions: 1.3.2 Establishing a Repossession Practice

Legal services offices typically see many clients who seek legal help because of an actual or threatened repossession, or more commonly because of a deficiency suit. Many legal services programs establish consumer law units so that they can develop expertise in these and other consumer cases. With a larger number of clients seeking help, a consumer law unit has the ability to spot patterns and identify creditors that are systematically abusing the repossession process.

Repossessions: 4.2.2.1 Generally

Credit agreements may include language that the creditor can accelerate the obligation at will or when it deems itself insecure, or similar language. While the consumer is current on payments and is not otherwise in default, the creditor is authorized to accelerate the full obligation and then repossess the collateral. The UCC narrows a creditor’s ability to do so, and state law may further restrict such acceleration.

Repossessions: 4.5.1 Overview

The UCC does not prevent the creditor, upon the debtor’s default, from immediately accelerating the note and repossessing the collateral. A grace period (often provided for in a contract or required by a state consumer credit statute) allows a consumer to be slow in making payments before a default is declared. After default, a right to cure allows the consumer to prevent repossession by undoing the grounds for default without having to pay the full accelerated amount.

Repossessions: 4.6.3.1 Generally

If Article 9 applies to a yo-yo transaction, then a dealer that backs out of a transaction must comply with all aspects of Article 9 and related state repossession law.

Repossessions: 15.1 Introduction

A common law lien arises when one person, through labor, skills, or material, adds value to another person’s chattel by agreement.

Repossessions: 15.2 Common Law Liens

A common law lien arises when a person, with the property owner’s consent, bestows labor, skill, or materials on a chattel entrusted to them for that purpose, and thereby enhances its value.20 Once a common law lien arises, the lienholder may retain possession of the chattel until the owner pays the lienholder reasonable charges for the services performed.21 However, there is no common law right to sell the property to obtain payment.22 This

Repossessions: 15.3 Construction of Lien Statutes

Many lien statutes are intended as a codification of the common law principles described in the previous section. Some courts have required that statutes be construed consistently with the common law.29 But the majority of courts hold that lien statutes expand upon the common law, either by creating new situations in which a lien will result30 or by creating new remedies, such as lien sales.31

Repossessions: 15.4 Persons Who May Claim a Lien on Property

The lien statutes of a majority of the states allow any person who has enhanced the value of certain types of personal property through labor or skill to obtain a lien on that property.35 Other lien statutes limit liens to specific persons who have enhanced value, such as persons in certain businesses, bailees, artisans, mechanics, repairers, garagemen or garagekeepers, and towers or wreckers.36 Other statutes allow storage facilities of various sorts to obtain liens.

Repossessions: 15.5.1 Introduction

Three basic standards determine whether particular services and charges may give rise to a lien. First, the lien claimant must expend some labor and skill. Second, the lien claimant must enhance the value of the property, unless the statute specifically allows other charges to be the basis of a lien. Third, the lien must pertain to reasonable charges for the services, or to agreed-upon charges. These standards are discussed individually in the following subsections.

Repossessions: 15.5.2 Labor and Skill

The vast majority of lien statutes provide that a lien claimant must have invested labor or skill for which compensation is sought.52 Thus, a lien statute was inapplicable to a claim for unpaid rent on a trailer park lot because no services were involved.53 Similarly, automobile parts sold without a labor charge, or with only a minimal charge, do not give rise to a mechanic’s lien.54 Sale of an extended warranty did not support a mechanic’s l