Motor Vehicle Repossession
Under Massachusetts law, before repossessing a motor vehicle, a lender
with a perfected security interest in the motor vehicle must provide the
borrower with a statutory "right to cure" notice entitled "Rights
of Defaulting Buyer under the Massachusetts Motor Vehicle Installment
Sales Act." This notice gives the borrower 21days to pay the arrearage
owed without having the motor vehicle repossessed and the underlying loan
balance "accelerated". This notice, however, need not be sent
if the borrower has cured a default after such a notice on three or more
prior occasions. If the borrower fails to cure the default within 21 days,
the lender has the right to repossess the motor vehicle. Repossession,
may be commenced without a prior court hearing only if this can be done
without breach of the peace, use of force or an unconsented to entry onto
the borrower's property. After repossession, the lender is still required
to hold the motor vehicle for an additional 20 days during which the borrower
may regain possession of the motor vehicle.
In order to do so, however, the lender may now require the borrower to
pay the full amount owed on the underlying loan plus any reasonable expenses
incurred by the lender. If the borrower fails to do so, the lender may
immediately thereafter move to sell the motor vehicle. Even after the
expiration of the 20 day holding period, the borrower still maintains
the right to "redeem" the motor vehicle as long as the lender
has not already sold it, entered into a contract for its disposition,
or gained the right to retain it in satisfaction of the borrower's
obligation. The lender may sue the borrower for any deficiency resulting
from the sale of the motor vehicle, including reasonable repossession
and storage costs. The lender's right to sue for a deficiency, though,
is contingent upon the lender having strictly complied with the provisions
of M.G.L. c. 255B, sec. 20B, and if deficiency balance is $2,000.00 or greater.
Rhode Island Laws:
Rhode Island law is substantially similar to Massachusetts law. Under Rhode
Island law, repossessions are governed by the Rhode Island Automobile
Repossession Act ("the Act"). Pursuant to the Act, at any time
after the borrower has been in default for ten or more days, the secured
party must send a notice of the right to cure the default to the borrower.
Said notice shall be delivered via certified mail, return receipt requested,
or via first-class mail, at the borrower's address last known to the
secured party. The notice must be in writing and must contain the heading
"Rights of Defaulting borrower under Rhode Island General Laws."
The notice must conspicuously state that the borrower has at least 21
days to cure the default by paying the amount owed to the secured party,
and if so paid, that the borrower will no longer be in default. The notice
must also advise the borrower that if the borrower does not cure the default
within the aforementioned 21 days, the secured party may sue to obtain
a judgment for the amount of the debt and may take possession of the motor vehicle.
The Act provides that if the secured party takes possession of the motor
vehicle, the secured party must wait at least 20 days before disposing
of the motor vehicle in order to allow the borrower the opportunity to
regain possession by paying the full amount of the debt plus any reasonable
expenses incurred by the secured party. The borrower may seek to regain
possession even after the expiration of the aforementioned 20 days as
long as the secured party has not disposed of the motor vehicle, entered
into a contract for its disposition, or gained the right to retain the
motor vehicle. The Act further provides that the borrower has the right
to cure a default only once in any 12 month period during the period of
the motor vehicle lease or loan agreement. The Act also states that a
secured party under a borrower motor vehicle lease or loan agreement may
proceed without prior hearing pursuant to only if the possession can be
obtained without a breach of peace and, unless the borrower consents to
an entry, at the time of such entry, without entry upon property owned
by, or rented to the borrower.
At D. Baker Law Group, P.C., Attorney Baker has a wealth of experience,
insight and knowledge with respect to motor vehicle repossession laws
and pursing deficiency actions for lenders. He routinely advises clients
on this subject matter in order to make certain that the lender does not
subject itself to suit by the borrower and to ensure that our office is
able to move expeditiously forward with a deficiency action once the matter
is forwarded for collection.
David M. Baker, Esq.-
your Massachusetts and Rhode Island Creditors' Rights Law Attorney!
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