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| Copyright ©2006 by Deming, Parker, Hoffman, Green, Campbell & Daly, L.L.C. All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include the above copyright notice. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. |
Green, Campbell & Daly, L.L.C. |
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| Repossession Law & Procedure |
| Possession After Default Unless otherwise agreed, and subject to compliance with other applicable laws, a secured party has, on default, the right to take possession of collateral. In taking possession a secured party may proceed without judicial process only if this can be done without breach of the peace. If not, a legal action |
may proceed to recover possession. See Code of Georgia Section 11-9-503.
Right to Redeem Collateral
At any time before secured party has disposed of collateral or entered into contract
for disposition under Code Section 11-9-504 or before discharge under Code
Section 11-9-505, the debtor or any other secured party may, unless otherwise
agreed in writing after default, redeem the collateral by tendering fulfillment of all
obligations secured by collateral, expenses reasonably incurred by the secured
party in retaking, holding, and preparing collateral for disposition, arranging for
sale, and to extent provided in agreement and not prohibited by law, reasonable
attorneys' fees and legal expenses. See Georgia Code Section 11-9-506
Compulsory Sale
If debtor has paid 60 percent of the cash price in case of a purchase money
security interest in consumer goods or 60 percent of the loan in case of another
security interest in consumer goods, and has not signed after default a statement
renouncing or modifying his rights under this part a secured party who has taken
possession of collateral must dispose of it under Code Section 11-9-504, and if he
fails to do so within 90 days after possession, the debtor may recover certain
damages. See Georgia Code Section 11-9-505
Acceptance of Collateral as Discharge
In cases other than consumer goods 60% cases, secured party in possession may,
after default, propose to retain the collateral in satisfaction of the obligation. Written
notice of must be sent to debtor if debtor has not signed, after default, a statement
renouncing or modifying rights. In the case of consumer goods no other notice
need be given, but additional notice to certain holders of subordinate liens. If
secured party receives objection in writing from a person entitled to receive notice
within 21 days after notice was sent, secured party must sell collateral under Code
Section 11-9-504. If no such written objection is received, secured party may retain
collateral in satisfaction of the debt. See Georgia Code Section 11-9-505
Sale and Application of Proceeds
A secured party after default may sell, lease, or otherwise dispose of collateral in its
then condition or following any commercially reasonable preparation or processing.
Any sale of goods is subject to Article 2 of the UCC on sales. Proceeds of sale must
be applied in order following to reasonable expenses of retaking, holding,
preparing, selling, or leasing, and, to extent provided for in agreement and not
prohibited by law, reasonable attorneys' fees and legal expenses incurred by
secured party. Proceeds would the be applied to satisfaction of debt secured by
security interest under which sale is made. See Georgia Code Section 11-9-504
Subordinate Liens
Remaining proceeds would next be applied to satisfaction of debt secured by any
subordinate security interest in the collateral if written notification of demand is
received before distribution of proceeds is completed. If requested by the secured
party, holder of a subordinate security interest must seasonably furnish proof of
interest, and unless he does so, secured party need not comply with demand. See
Georgia Code Section 11-9-504
Accounting and Deficiency
If security interest secures debt, the secured party must account to debtor for any
surplus, and, unless otherwise agreed, debtor is liable for any deficiency.
Public or Private Sale After Notice
Disposition of collateral may be by public or private sale, and may be at any time
and place and on any terms, but every aspect including method, manner, time,
place, and terms must be commercially reasonable. Unless collateral is perishable,
reasonable notice of time and place of any public sale, or reasonable notice of time
after which any private sale is to be made, must be sent by secured party to debtor,
if debtor has not signed, after default, a statement renouncing or modifying his right
to notice. In non-consumer cases additional notice may be required for certain
subordinate claims of interest in the collateral. See Georgia Code Section 11-9-504
Liability for Failure to Comply
If it is established that the secured party is not proceeding in accordance with these
provisions, disposition may be ordered or restrained on appropriate terms and
conditions. In addition, damages are provided in this section. The fact that a better
price could have been obtained by a sale at a different time or in a different method
from that selected by the secured party is not of itself sufficient to establish that the
sale was not made in a commercially reasonable manner. If the secured party either
sells the collateral in the usual manner in any recognized market therefor or if he
sells at the price current in such market at the time of his sale or if he has otherwise
sold in conformity with reasonable commercial practices among dealers in the type
of property sold he has sold in a commercially reasonable manner. See Georgia
Code Section 11-9-507
Personal Property In Vehicle
Any person who lawfully repossesses a motor vehicle shall be an involuntary,
gratuitous, or naked depository of any personal property found in such motor
vehicle and has a lien on such property for any reasonable expenses incurred in
storing such property or in giving notice to such owner. See Georgia Code Section
44-14-411.1
Within ten days of date of repossession, person repossessing vehicle must notify
owner of the intent to dispose of personal property. Notice must be actual notice,
but may be by personal service or by service by certified mail. If the personal
property is not redeemed within 30 days from the date of the first notice, a second
notice must be sent in same manner. If the personal property is not redeemed
within 30 days from date of second notice, personal property may be disposed of in
manner most expeditious, without further liability and proceeds are disbursed as
provided in Code Section 44-14-412. See Georgia Code Section 44-14-411.1
No Deficiency Without Notice
When a motor vehicle has been repossessed after default in accordance with Part
5 of Article 9 of the Uniform Commercial Code, the secured party may not recover a
deficiency against buyer unless, within ten days after repossession, he forwards by
registered or certified mail to address of buyer shown on contract or later
designated by buyer, a notice of the intention of secured party to pursue a
deficiency claim against buyer. The notice must also advise buyer of right of
redemption, and right to demand a public sale of repossessed vehicle. In event
buyer exercises right to demand a public sale, he must advise holder in writing of
election by registered or certified mail, addressed to holder at address from which
holder's notice emanated, within ten days after the posting of the original notice.
With election by buyer, holder must dispose of vehicle at a public sale as provided
by law, in the state and county where original sale took place, or state and county
where vehicle was repossessed, or state and county of buyer's residence, at
holder's election. This provides cumulative additional rights and remedies to the
Uniform Commercial Code Provisions which must be fulfilled before deficiency claim
will lie against a buyer. See Georgia Code Section 10-1-36
Right to Redeem Collateral
At any time before secured party has disposed of collateral or entered into contract
for disposition under Code Section 11-9-504 or before discharge under Code
Section 11-9-505, the debtor or any other secured party may, unless otherwise
agreed in writing after default, redeem the collateral by tendering fulfillment of all
obligations secured by collateral, expenses reasonably incurred by the secured
party in retaking, holding, and preparing collateral for disposition, arranging for
sale, and to extent provided in agreement and not prohibited by law, reasonable
attorneys' fees and legal expenses. See Georgia Code Section 11-9-506
Compulsory Sale
If debtor has paid 60 percent of the cash price in case of a purchase money
security interest in consumer goods or 60 percent of the loan in case of another
security interest in consumer goods, and has not signed after default a statement
renouncing or modifying his rights under this part a secured party who has taken
possession of collateral must dispose of it under Code Section 11-9-504, and if he
fails to do so within 90 days after possession, the debtor may recover certain
damages. See Georgia Code Section 11-9-505
Acceptance of Collateral as Discharge
In cases other than consumer goods 60% cases, secured party in possession may,
after default, propose to retain the collateral in satisfaction of the obligation. Written
notice of must be sent to debtor if debtor has not signed, after default, a statement
renouncing or modifying rights. In the case of consumer goods no other notice
need be given, but additional notice to certain holders of subordinate liens. If
secured party receives objection in writing from a person entitled to receive notice
within 21 days after notice was sent, secured party must sell collateral under Code
Section 11-9-504. If no such written objection is received, secured party may retain
collateral in satisfaction of the debt. See Georgia Code Section 11-9-505
Sale and Application of Proceeds
A secured party after default may sell, lease, or otherwise dispose of collateral in its
then condition or following any commercially reasonable preparation or processing.
Any sale of goods is subject to Article 2 of the UCC on sales. Proceeds of sale must
be applied in order following to reasonable expenses of retaking, holding,
preparing, selling, or leasing, and, to extent provided for in agreement and not
prohibited by law, reasonable attorneys' fees and legal expenses incurred by
secured party. Proceeds would the be applied to satisfaction of debt secured by
security interest under which sale is made. See Georgia Code Section 11-9-504
Subordinate Liens
Remaining proceeds would next be applied to satisfaction of debt secured by any
subordinate security interest in the collateral if written notification of demand is
received before distribution of proceeds is completed. If requested by the secured
party, holder of a subordinate security interest must seasonably furnish proof of
interest, and unless he does so, secured party need not comply with demand. See
Georgia Code Section 11-9-504
Accounting and Deficiency
If security interest secures debt, the secured party must account to debtor for any
surplus, and, unless otherwise agreed, debtor is liable for any deficiency.
Public or Private Sale After Notice
Disposition of collateral may be by public or private sale, and may be at any time
and place and on any terms, but every aspect including method, manner, time,
place, and terms must be commercially reasonable. Unless collateral is perishable,
reasonable notice of time and place of any public sale, or reasonable notice of time
after which any private sale is to be made, must be sent by secured party to debtor,
if debtor has not signed, after default, a statement renouncing or modifying his right
to notice. In non-consumer cases additional notice may be required for certain
subordinate claims of interest in the collateral. See Georgia Code Section 11-9-504
Liability for Failure to Comply
If it is established that the secured party is not proceeding in accordance with these
provisions, disposition may be ordered or restrained on appropriate terms and
conditions. In addition, damages are provided in this section. The fact that a better
price could have been obtained by a sale at a different time or in a different method
from that selected by the secured party is not of itself sufficient to establish that the
sale was not made in a commercially reasonable manner. If the secured party either
sells the collateral in the usual manner in any recognized market therefor or if he
sells at the price current in such market at the time of his sale or if he has otherwise
sold in conformity with reasonable commercial practices among dealers in the type
of property sold he has sold in a commercially reasonable manner. See Georgia
Code Section 11-9-507
Personal Property In Vehicle
Any person who lawfully repossesses a motor vehicle shall be an involuntary,
gratuitous, or naked depository of any personal property found in such motor
vehicle and has a lien on such property for any reasonable expenses incurred in
storing such property or in giving notice to such owner. See Georgia Code Section
44-14-411.1
Within ten days of date of repossession, person repossessing vehicle must notify
owner of the intent to dispose of personal property. Notice must be actual notice,
but may be by personal service or by service by certified mail. If the personal
property is not redeemed within 30 days from the date of the first notice, a second
notice must be sent in same manner. If the personal property is not redeemed
within 30 days from date of second notice, personal property may be disposed of in
manner most expeditious, without further liability and proceeds are disbursed as
provided in Code Section 44-14-412. See Georgia Code Section 44-14-411.1
No Deficiency Without Notice
When a motor vehicle has been repossessed after default in accordance with Part
5 of Article 9 of the Uniform Commercial Code, the secured party may not recover a
deficiency against buyer unless, within ten days after repossession, he forwards by
registered or certified mail to address of buyer shown on contract or later
designated by buyer, a notice of the intention of secured party to pursue a
deficiency claim against buyer. The notice must also advise buyer of right of
redemption, and right to demand a public sale of repossessed vehicle. In event
buyer exercises right to demand a public sale, he must advise holder in writing of
election by registered or certified mail, addressed to holder at address from which
holder's notice emanated, within ten days after the posting of the original notice.
With election by buyer, holder must dispose of vehicle at a public sale as provided
by law, in the state and county where original sale took place, or state and county
where vehicle was repossessed, or state and county of buyer's residence, at
holder's election. This provides cumulative additional rights and remedies to the
Uniform Commercial Code Provisions which must be fulfilled before deficiency claim
will lie against a buyer. See Georgia Code Section 10-1-36
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