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Repossessions: 1.4.12 Special Issues in Manufactured Home Repossessions

Manufactured home repossessions raise special issues. The state may treat a particular manufactured home as real property rather than personal property, in which case foreclosure law rather than repossession law will apply. See § 5.5, infra. Some states prohibit self-help repossession of a manufactured home even if state law considers it personal property.

Repossessions: 1.4.13 Repossession of Leased Property

In general, UCC Article 2A rather than Article 9 applies to most closed-end automobile leases, the type of lease that is commonly used today. Many provisions of Article 2A, such as the prohibition of breach of the peace during repossession, are comparable to Article 9, but there are significant differences. Because the lessor already owns the automobile, sale of the vehicle is not used to reduce a credit obligation, but to help compute an early termination charge.

Repossessions: 1.4.4 Does the Creditor Have an Enforceable Security Interest?

Before there can be any repossession, there must be a valid, enforceable security interest in the collateral. Article 9 sets forth the requirements for the creation of an enforceable security interest, and places some limits on what can be taken as collateral. Federal law and other state laws place additional limits on the types of security interests that creditors can take.

Repossessions: 1.4.7 Did the Creditor Afford the Consumer the Right to Reinstate or Redeem and Notify the Consumer of the Repossession Sale?

After repossessing collateral, Article 9 allows the creditor to sell it and apply the proceeds to the outstanding balance. But first the creditor must comply with several important duties. The creditor must send the consumer a notice of the intended disposition of the collateral, including the date after which a private sale will occur or the time and place of a public sale.

Repossessions: 1.4.9 Has the Creditor Correctly Computed and Informed the Consumer of the Deficiency or Surplus?

After disposing of the collateral, the creditor applies the proceeds of the sale to the outstanding balance due. The outstanding balance must be reduced by rebates for unearned insurance premiums and finance charges. The creditor can also charge the consumer the costs of repossession and sale. If an amount is still owed after these calculations, the creditor is entitled to seek the remaining balance (the deficiency) from the debtor, but if the sale of the collateral brings in more than the outstanding balance the creditor is required to pay the surplus funds to the debtor.