Part 1: When They Had No Right to Take the Car
An illegal car repossession can occur when a lender, finance company, repossession company, or repo agent takes a vehicle without having the legal right to possess it.
When I tell someone that our firm represents consumers in illegal car repossession cases across the country, I often get some version of the same question:
“Wait. How can a repossession be illegal? If you don’t make your payments, can’t the bank just take the car?”
The short answer is: sometimes.
The more lawyerly answer is that a lender’s ability to repossess a vehicle is subject to rules. When those rules aren’t followed, an otherwise routine repossession may become wrongful or unlawful.
This is the first in a series explaining the different ways a car repossession can become illegal. We’ll start with one of the most fundamental:
What if they simply had no legal right to take your car in the first place?
What Is Self-Help Repossession?
Normally, if I claim you owe me money, I cannot simply walk onto your property and start taking your belongings.
Secured lenders are different.
Under Article 9 of the Uniform Commercial Code, a secured creditor may have the right after default to take possession of its collateral without filing a lawsuit first. This is commonly referred to as self-help repossession.
We’ll discuss self-help repossession in greater detail in a later post.
But there is an important requirement: the creditor must actually have a present right to possession of the vehicle.
When Does a Lender Have No Present Right to Possession?
Some illegal car repossession cases involve a very basic problem: the company that ordered the repossession may not have had the legal right to take that particular vehicle.
Imagine waking up one morning and your car is gone.
You call the police. It wasn’t stolen.
You call the repo company. They took it.
There’s just one problem:
You don’t owe the company that ordered the repossession any money.
That could happen for a number of reasons:
- The lender has no lien on your vehicle.
- The wrong vehicle was identified.
- You were confused with another borrower.
- The lender or repo company had the wrong VIN.
- The loan had already been paid off.
- A repossession order should have been canceled but wasn’t.
- The company ordering the repossession did not have an enforceable security interest in the vehicle.
Whatever the explanation, the key question is similar:
Did the party ordering the repossession have a present right to possess that vehicle at the moment it was taken?
If not, the repossession may raise legal issues even if there was no confrontation with the repo agent.
Can a Repossession Be Illegal Without a Breach of the Peace?
Yes. An allegedly wrongful repossession does not necessarily require a confrontation or breach of the peace.
When people hear “illegal repossession,” they often picture a repo truck arriving, the consumer running outside, an argument beginning, or the police being called.
Those circumstances can raise important legal issues, and we’ll address breach of the peace in another post.
But there is an important distinction between how a repossession was conducted and whether the creditor had the right to repossess the vehicle at all.
A recent case handled by our firm illustrates that distinction.
What Happened in Johnson v. Capital One Auto Finance?
Our firm recently litigated this issue in federal court in Florida in Brianca Johnson v. Capital One Auto Finance, Inc., et al.
According to the allegations in the lawsuit, Ms. Johnson owned a 2019 Tesla Model 3 financed through Lobel Financial. The complaint alleges that Capital One nevertheless claimed a security interest in the Tesla and caused the vehicle to be repossessed from Ms. Johnson’s apartment complex.
According to the allegations, Capital One later acknowledged that the repossession had been ordered in error, and the vehicle was eventually returned. The lawsuit also alleges damage to the vehicle and personal property.
The repossession defendants moved to dismiss the lawsuit. One of their arguments was that Ms. Johnson had not alleged a breach of the peace.
The Court rejected that argument.
The distinction was important. Ms. Johnson’s theory was not that the defendants had a valid right to repossess the Tesla but lost that right because of the way the repossession was conducted.
Her allegation was more fundamental:
They never had the right to repossess the Tesla in the first place.
The Court explained that if Ms. Johnson ultimately proves Capital One lacked a security interest in the vehicle, then Capital One and its agents lacked a present right to possession regardless of whether the repossession itself was peaceful.
What Should You Do if Your Car Was Repossessed by Mistake?
If your vehicle was repossessed and you believe the lender or repossession company took the wrong vehicle or did not have a valid lien or other enforceable security interest, preserve your records.
Useful documentation may include your:
- Retail installment sales contract or financing agreement
- Vehicle title
- Payment history
- Repossession and post-repossession notices
- Text messages and emails
- Photographs or videos
- Police reports
- Communications with the lender or repossession company
And don’t assume that everything is resolved simply because the lender eventually acknowledges a mistake and returns the vehicle.
A wrongful repossession can have real consequences. Consumers may lose transportation to work, miss appointments, incur rental-car or rideshare expenses, lose or damage personal belongings, or discover damage to the vehicle from towing or storage.
The claims and damages available in an illegal car repossession case depend on the facts, applicable state law, parties involved, and other circumstances.
Think Your Car Was Wrongfully Repossessed?
Marcus & Zelman represents consumers in illegal and wrongful repossession cases nationwide.
If your vehicle was repossessed even though you were not in default, the lender did not have a lien on your vehicle, the repo company took the wrong car, your loan had been paid off, or you otherwise believe the creditor had no present right to possession, contact us to have the repossession reviewed.
There is no cost to have us evaluate your potential unlawful repossession case.
This article is for informational purposes only and does not constitute legal advice. Whether a repossession violates federal or state law depends on the particular facts and applicable law.