Product Code Database
Repossession, commonly referred to as repo, is a "self-help" type of action in which the party having the right of ownership of a property takes the property in question back from the party having right of possession without invoking court proceedings. The property may then be sold by either the financial institution or third party sellers.
The extent to which repossession is authorized, and how it may be executed, greatly varies in different jurisdictions (see below). When a lender cannot find the collateral, cannot peacefully obtain it through self-help repossession, or the jurisdiction does not allow self-help repossession, the alternative legal remedy to order the borrower to return the goods (prior to judgment) is replevin.
The security interest over the collateral is often known as a lien. The lender/creditor is known as the lienholder.
Many U.S. states have enacted additional laws that apply specifically to the repossession of purchased and leased automobiles, and which are intended to afford additional consumer protections. Typical requirements include mandating that auto lenders provide consumers with opportunities to either "reinstate" or "redeem" their purchase or lease contracts after their vehicles have been repossessed. A "reinstatement" entails a consumer paying all of his or her past due amounts plus the creditor's repossession expenses, and then reacquiring the automobile as if the repossession had not occurred. A "redemption" entails the consumer paying off the entire contract balance and then being given ownership of the vehicle free and clear of any contract obligations. If these instances do not occur and the vehicle becomes repossessed, the lien holder is required to notify the debtor of their intent to sell the property. This is usually in the form of a letter that states that if the amount owed is not paid within ten business days, the entity officially takes ownership and may sell the property.
Some consumers believe that they are legally entitled to a "grace period" that prevents creditors from repossessing goods until the payments are a certain number of days overdue. In reality, grace periods are non-compulsory business practices that have been adopted by most consumer lenders through a term in the lending contract.Web sites describing Ohio's There is nothing legally preventing a creditor with a security interest from repossessing the goods if a payment is late - even if it is only one day overdue - unless the lender has agreed otherwise as a binding term of contract.
Various objects can be repossessed, including boats and aircraft, but most repossession agencies focus on car repossession. The repo agent normally uses a tow truck or pickup truck with a special towing attachment called a boom. They also may obtain the key from the car owner. Usually, the vehicle owner must be notified of a repossession. The repossession agent will find the car and check its information such as the vehicle identification number (VIN) to make sure they have the right vehicle. If there is a match, they will attempt to hook up the car to the tow truck and tow it away or pick the lock and drive it away. However doing so does not absolve the repossession agent's requirement to be covered under an active insurance policy for the vehicle under the applicable criminal traffic laws. Thus, an agent who elects to do this may be subject to arrest for the violation of criminal traffic laws which apply to insurance requirements. Repossession agents cannot legally cross locked and enclosed storage spaces such as gates and garages. They also may not move a vehicle to gain access to another vehicle.
Repossession does not necessarily satisfy the loan. If the repossessor sells the asset for an appropriate amount, and if that amount is less than the amount of the loan, and if the repossessor sues the debtor for the balance (plus reasonable fees if applicable) in a timely manner, the debtor may be liable to pay the balance (sometimes called the "deficiency"). Vehicle Repossession: Understanding the Rules of the Road, Federal Trade Commission, November 2008. Retrieved 2011-02-16 In this case the creditor will be liable for contributory negligence if the creditor auctions the property for less than applicable market value. This is because such a failure directly contributes to any remaining deficiency. To avoid this liability, financial institutions will document a source (such as Kelley Blue Book or NADA) to price the collateral for sale. They will also document the condition of the vehicle to justify the sales price of it.
Whether a debtor is actually liable for a balance depends on jurisdiction and on the details of the loan contract. In the case of a nonrecourse debt, for example, the debtor is not personally liable for a deficiency.
| 43,900 |
| 75,500 |
| 68,600 |
| 58,600 |
| 49,200 |
| 49,400 |
| 42,600 |
| 32,800 |
| 33,900 |
| 29,200 |
| 22,900 |
| 18,200 |
| 12,000 |
| 8,500 |
| 8,200 |
| 14,500 |
| 21,000 |
| 25,900 |
| 40,000 |
| 48,000 |
In 2010, there was a downward trend in the number of repossessions, as lenders seized 9,400 properties in April, May and June, 400 fewer than in the first quarter of 2010, according to the Council of Mortgage Lenders (CML).
Specific forms of self-help repossession for real estate are legal. For example, a landlord may seize the tenant's property in a rented object if there are outstanding payments.Bürgerliches Gesetzbuch, §§ 229, 562b, 592 etc.
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