Dictionary Definition
repossess
Verb
1 claim back [syn: reclaim]
2 regain possession of something [syn: take
back]
User Contributed Dictionary
English
Translations
To reclaim ownership of property for which
payment remains due
- Finnish: ulosmitata
- Swedish: återta
Extensive Definition
Repossession is generally used to refer to a
financial
institution taking back an object that was either used as
collateral
or rented or leased in a transaction. Note that repossession is a
"self-help"
type of action in which the party having right of
ownership of the property in question takes the property back
from the party having right
of possession without invoking court proceedings.
This is usually done in accordance with a
purchase contract or credit contract, in which the consumer agrees
that the seller (the "lienholder") may repossess
the object if the signers are past the grace period (generally for
prime lenders the critical number is 30 days late making an
installment payment but can vary based on how many payments have
already been made, the length of the business relationship, reason
why past due, etc.). Contracts that authorize repossession also
usually specify additional fines that the consumer must pay to the
seller, ostensibly to cover the seller's costs of the repossession
and of depreciated value of the object, as the seller is now in
possession of a "used" object. Generally lending institutions never
want to repossess because the items sold at a wholesale auction and
were financed at retail price, hence, a loss is virtually
guaranteed. However, the statisticians and accountants have
determined that any loan which goes beyond 90 days past due will
never again become "current" (up to date on payments) and the
collateral continues to depreciate.
Repossession is a complicated and legally fraught
matter, with legality being determined by widely varying local and
state laws. In some jurisdictions, such as the United States, a
consumer may avoid repossession of some of his property by
declaring personal bankruptcy, throwing his
financial arrangements on the mercy of a court, which will usually
prevent the consumer's house and, sometimes, his car from being
repossessed. Both repossession and bankruptcy are significant
negative events on a consumer's credit
report.
In some places self-help repossession is not
permitted; the lienholder is required to go to court to obtain an
order of replevin.
However, in some states, repossession is mandatory and suits of
replevin are not permitted.
If a lender finds itself in the situation of
needing to repossess property while the borrower attempts to avoid
this, the dealer may contract the work of repossession out to a
repossession agent (colloquially termed a Repo Man, as
fictionally portrayed in the film of the same name). Agents
appointed by the courts are called bailiffs.
As an unusual provision of law, when repossession
takes place, the lienholder has a nondelegatable obligation not to
cause a breach of the peace in performing the repossession, or the
repossession will be reversed, and the party ordering the
repossession will be liable for damages (this provision is unusual
in that where a duty can be delegated to an agent, usually the
agent is responsible for the misconduct, but the principal who
hired the agent is not responsible for the agent's misconduct).
This requirement means that whether a repossession is performed by
the lienholder or by an agent, the repossessor must not cause a
breach of the peace or the lienholder will be held responsible.
This requirement not to breach the peace includes even if the
breach is caused by, say, the debtor objecting to the repossession
or resists the repossession. In the court case of MBank El Paso v.
Sanchez, 836 S.W.2d
151, where a hired repossessor towed away a car even after the
registered owner locked herself in it, the court decided that this
was an unlawful breach of the peace and declared the repossession
invalid. The debtor was also awarded $1,200,000 in damages from the
bank.
External links
repossess in German: Vindikationslage
repossess in Russian: Виндикация
repossess in Chinese: 强制收回