Finance, Credit and Repossession Information Resource

Law changes involving car repossessions


S5448-2013 Memo


TITLE OF BILL:  An act to amend the vehicle and traffic law, in
relation to repossession of motor vehicle or motorcycle

PURPOSE:  To remove a bureaucratic obstacle and simplify the ability
of a motor vehicle owner to redeem a motor vehicle or motorcycle which
has been repossessed.

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


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

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.


S5448-2013 Text

 S T A T E   O F   N E W   Y O R K
 2013-2014 Regular Sessions
 May 16, 2013
 Introduced  by  Sen.  FARLEY -- read twice and ordered printed, and when
 printed to be committed to the Committee on Transportation

AN ACT to amend the vehicle and traffic law, in relation to repossession
 of motor vehicle or motorcycle

Section  1.  Subdivision  1  of section 425 of the vehicle and traffic
 law, as amended by chapter 81 of the laws of 1968, is amended to read as
 1. Any person, firm or corporation, or agent,  employee  or  represen
 tative  thereof,  repossessing or retaking a motor vehicle or motorcycle
 pursuant to the provisions of article nine  of  the  uniform  commercial
 code,  or  other  authority of law, or any contract or agreement, shall,
 immediately following such repossession or retaking,  personally  appear
 at  a  station house or other office of the police department, or agency
 or officer performing like  functions,  in  the  locality  wherein  such
 repossession or retaking occurred, give notice to such department, agen
 cy or officer of such repossession or retaking and thereafter and within
 [twenty-four  hours]  TEN  DAYS  personally  deliver or mail by [special
 delivery] first class mail  to  the  nearest  motor  vehicle  [district]
 office,  (a) notice of such repossession or retaking in such form as the
 commissioner may require and (b) the number plates of such motor vehicle
 or motorcycle. Notice of such repossession or  retaking,  including  the
 name  and  address  of  the  person, firm or corporation repossessing or
 retaking the same, shall also be given within twenty-four hours  thereof
 to  the  owner of such motor vehicle or motorcycle, either personally or
 by registered or certified mail directed to such owner at his last-known
 GIVEN BY FIRST CLASS MAIL.  Unless the motor vehicle or  motorcycle  can
 be  repossessed  or  retaken  without  breach  of the peace, it shall be
 repossessed or retaken by legal process, but  nothing  herein  contained
 shall be construed to authorize a violation of the criminal law.

S 2. This act shall take effect immediately.
 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
 [ ] is old law to be omitted.

Speak Your Mind