Fun with Repos

Repossession Risks

Posted on Oct 8, 2013

Repossession Risks

Issue #11, October 2013 Interlocks and impounds: understanding the risks Suppose a finance or lease customer calls and advises you that his car has been impounded by police in New York as the result of a charge of Driving While Under the Influence (DUI). The customer states that he can get the car back if you allow him to install an interlock on the car. Should you go along and allow the interlock? An interlock ignition device “interlock” is a mechanism that prevents a vehicle from being started without first determining from a breath sample that the driver’s blood alcohol level does not...

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Save money on impounds

Posted on Aug 8, 2013

Save money on impounds

Issue #10, July 2013 Challenge Garage Liens on Leased Vehicles In June of 2010 a NY garage named Rice’s Auto took in a leased vehicle (Honda Odyssey) for a $2,688.41 repair. After completing the repairs, the garage kept the vehicle for over 2 years without any notice to the owner/lessor. The garage argued that since the lessee agree to the repair cost and agreed to pay storage fees, the garage had a garage lien for $21,000.00 against the vehicle. The leasing company which owned the vehicle argued that no lien should be allowed because the leasing company (the owner) never agreed to any of...

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Repossession issues abound

Posted on May 23, 2013

Repossession issues abound

Issue #8, April 2013 Bankruptcy decision requires immediate return of repossessed vehicle On May 8, 2013, the Second Circuit Court of Appeals, which governs bankruptcy law in New York, Vermont and Connecticut, issued a decision in In Re: Weber. The Court ruled that when a vehicle is repossessed and the owner then files a Chapter 13 case, the creditor must immediately return the vehicle to the debtor with no questions asked. A creditor who fails to do so violates the stay and will be liable for damages, attorney’s fees and possibly punitive damages. This is a major change in the law....

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Beware of fraud resulting from new law

Posted on Apr 16, 2013

Beware of fraud resulting from new law

Issue #8, April 2013 NY’s new dealer lien release law exposes lienholders to title fraud On June 17, 2013, NY Vehicle and Traffic Law Section 2121(b) goes into effect. This new law will enable dealers to release vehicle liens without lienholder consent. The law is intended to enable dealers to quickly resell vehicles that come in on trade. (The law is attached at the end of this article.) How does the law work? A dealer who wishes to get a lien released can send an application for a clear (lien-free) title directly to the DMV. As part of the application the dealer must demonstrate...

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Two Tricky Repo Issues

Posted on Mar 5, 2013

Two Tricky Repo Issues

Issue #7, January 2013 Does NY law prohibit repossession on weekends? New York Vehicle and Traffic Law (V&T) 425 requires that the repossessing creditor send a notice of repossession to the DMV and the vehicle owner within 24 hours of repossession. DMV offices are closed on Saturdays and Sundays. The most conservative creditor could resolve the problem by not repossessing on Friday or Saturday. However, this is not the required result. The DMV Legal Department has issued a letter opinion stating that when a repossession occurs on a Friday or Saturday, the creditor may notify the DMV on...

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Combating Title Washing, Understanding the “BFP” Defense

Posted on May 6, 2012

Combating Title Washing, Understanding the “BFP” Defense

Issue #6, May 2012 Title washing means the removal of a lien by fraud. Often, by the time the fraud is discovered, the car has been resold to a buyer who claims to be a “BFP”. BFP means bonafide purchaser. A buyer can only be a BFP if he had no knowledge that the lien was removed by fraud. Most BFP claimants are in fact innocent buyers. The Uniform Commercial Code (UCC 2-403) creates what we will call the “BFP defense”. If the BFP defense applies, then the UCC will allow the BFP to retain the car free from the claims of the lienholder whose lien was removed by fraud....

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