Repossession of real estate and other properties used as collateral security encompass different legal elements. Without doubt, repossession companies and individuals that face a possible seizure need to be acquainted with the details. Because every state has its own repossession laws, it is essential to know which ones apply to you.
Briefly, repossession takes place when someone fails to pay up a loan on a house, car or other tangible thing. That tangible object we mentioned above is generally the collateral guarantee that secures the loan. This is what makes auto or property repossession possible.
The purchaser and the borrower are the same person and, in fact, he or she is not the owner proper of the thing purchased until the secure loan is entirely paid off. Legally the lending agent is the actual owner until the object, auto or home is paid up.
Thus, a lending company that has right of ownership can legally recover the property or tangible object without a repossession order. There is legally no need for a court repossession process.
The majority of businesses that sell autos, industrial equipment and similar large objects do not carry out repossessions themselves. Most prefer to contract expert repossession services that recover the tangible property for them.
However, while some states allow repossession agents to repossess tangible items, these companies have to act within some limitations and in a certain manner to regain the home, vehicle or object.
Basic repossession laws
There are some rules that regulate property repossession proceedings:
- The lending company has the duty to notify the borrower that the mortgage is outstanding. The original mortgage contract also has to include the specific number of nonpayments that will bring about the repossession of the home or real estate.
- To repossess the property in question, the repossession agents are allowed neither to provoke a breach of peace nor to pull any illegal actions. No repossession agent can burst into the home, building or other secured property in an attempt to take back the real estate.
- To regain the disputed property, the repossession service is not allowed to inflict damage upon the real estate in any manner. Repossession agents are prohibited from taking any objects out of the repossessed property, doing things like making holes in walls and kitchen cabinets, or deteriorating the building in any manner while pulling away a stove or some other physical object.
- Neither creditors nor the repossession company can menace with or take away any other tangible item that is not the one the borrower failed to repay when due. As an example, they cannot take away a boat that happens to be on a trailer fastened to a repossessed truck.
At least in the USA, when a repossession company breaks these repossession laws, the borrower may be entitled to indemnification. Likewise, a law court may stop repossession.