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§3.09 Vehicle Sales—Repossession and Reinstatement

Lesson 3:
Vehicle Repairs, Sales, & Leases

Repossession:  The seller may repossess the vehicle only when the buyer is in default of contractual obligations. [CC §2983.3(a).] If the vehicle is repossessed, the seller or holder must give 15 days’ notice of intent to sell a repossessed vehicle to all persons liable on the contract [CC §2983.2(a)], except when the vehicle was seized by a public agency, e.g., the car was seized by the police for transporting controlled substances [CC §2983.3(b)(6)].

The notice of intent to dispose of a repossessed vehicle must advise all persons liable on the contract of their rights to redeem the vehicle, reinstate the contract, request a 10-day extension of the redemption and reinstatement periods, and request a written accounting of the disposition, and must give notice of the buyer’s possible liability for a deficiency judgment. [CC §2983.2(a)(1)–(9).] The seller must provide a full accounting for the disposition of the vehicle to any person liable on the contract on written request or if there is a surplus. [CC §2983.2(b)–(c).]

Reinstatement:  After default and repossession or voluntary surrender of the vehicle, any person who is liable on the contract has the right to reinstate it by various methods, such as by paying the defaulted payments and applicable delinquency charges, or by curing another curable default under the contract. [CC §2983.3(d).] The buyer may exercise the right to reinstate only once in any 12-month period and only twice during the contract period. [CC §2983.3(c).] The seller may reasonably and in good faith deny the right of the buyer to reinstate the vehicle for specified reasons, such as [CC §2983.3(b)(1)–(6)]:

  • The buyer’s failure to take care of the vehicle in a reasonable manner so that its value has become substantially impaired.
  • The buyer’s intentional giving of false or misleading information of material importance on his or her credit application.
  • The buyer’s concealment of the vehicle to avoid repossession. 
  • The buyer’s use of the vehicle to commit a crime, and the consequent seizure of the vehicle by a law enforcement agency.

The seller has the burden of proof that a denial of the right to reinstate the contract was reasonable and made in good faith. If the seller fails to meet that burden, he or she is not entitled to a deficiency. However, there is no presumption that the buyer is entitled to damages if the seller fails to sustain the burden of proof. [CC §2983.3(e).]

The buyer may bring an action for conversion arising from the seller’s interference with the right to reinstate the contract. [Cerra v Blackstone (1985) 172 CA3d 604.]

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