Relates to repossession of motor vehicle or motorcycle

Summary of provisions

This bill amends Section 425(1) of the Vehicle and Traffic Law to change the time frame in which the repossessor of a motor vehicle must submit the license plates to DMV. It also provides an additional option for notifying the affected vehicle owner.

Existing law

Under current law, a repossessor must immediately notify the local police agency. It must also, within 24 hours, personally deliver or mail to the nearest motor vehicle district office a notice of the repossession along with the license plates.

Notice must also be given to the vehicle owner within 24 hours either personally or by registered or certified mail.

Justification

Section 425 of the Vehicle and Traffic Law was enacted in 1957 to ensure that the police were immediately notified when a motor vehicle was repossessed. The problem was that police agencies were receiving reports of stolen vehicles, and then issuing alerts and initiating investigations, only to later discover that the vehicle was not stolen but had been legally repossessed. The 1957 law addressed this problem by requiring the repossessor to notify the police and give them the vehicle's license plates. The law was subsequently amended to require that the license plates be sent directly to the Department of Motor Vehicles.

However, this law has presented problems for affected motorists. Under existing law, the debtor is afforded a reasonable period of time - generally presumed to be a 10 day window -- in which to redeem the vehicle. However, the owner is faced with an additional bureaucratic burden and costs because the vehicle no longer has its license plates. As a result, the vehicle owner must first arrange for transportation to a DMV office (which may involve paying for a cab or public transportation). Then, in most cases, the returned plates have not yet been processed and therefore the vehicle owner must pay to reregister the vehicle and get new plates issued.

It would be more convenient and efficient for all parties involved to delay the submission of the license plates until after the redemption period has expired. This would eliminate an unnecessary and costly burden on the motorist. It would also make the process more efficient for DMV, since they would only have to process those returned plates for vehicles which are being removed from the system.

The bill would also allow the repossessor to notify the vehicle owner by a combination of first class mail and either a phone call, e-mail or text message. Current law requires notification to be made personally or by registered or certified mail. However, in practice,

there can be delays in receiving registered or certified mail if no one is home at the time to sign for the delivery. Many lenders already communicate electronically with their borrowers, and this bill gives them an additional option that would enable them to more quickly contact the debtor while also ensuring that the debtor still receives written notice via first class mail.

Fiscal implications

Minimal to the State. This change should make the process more efficient for DMV. This should result in a decrease in the number of persons needing to reregister a repossessed vehicle; however, the small loss of revenue would generally be offset by the savings in not having to process and issue new plates.

Effective date

Immediately