Illinois-2015-SB1653-Introduced

99TH GENERAL ASSEMBLY State of Illinois 2015 and 2016 SB1653

Introduced 2/20/2015, by Sen. Steve Stadelman

SYNOPSIS AS INTRODUCED:

625 ILCS 5/3-114 from Ch. 95 1/2, par. 3-114

Amends the Illinois Vehicle Code. Makes a technical change in a Section concerning transfer by operation of law.

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A BILL FOR

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1 AN ACT concerning transportation.

2 Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4 Section 5. The Illinois Vehicle Code is amended by changing

5 Section 3-114 as follows:

6 (625 ILCS 5/3-114) (from Ch. 95 1/2, par. 3-114)

7 Sec. 3-114. Transfer by operation of law.

8 (a) If the ~~the~~ interest of an owner in a vehicle passes to

9 another other than by voluntary transfer, the transferee shall,

10 except as provided in paragraph (b), promptly mail or deliver

11 within 20 days to the Secretary of State the last certificate

12 of title, if available, proof of the transfer, and his

13 application for a new certificate in the form the Secretary of

14 State prescribes. It shall be unlawful for any person having

15 possession of a certificate of title for a motor vehicle,

16 semi-trailer, or house car by reason of his having a lien or

17 encumbrance on such vehicle, to fail or refuse to deliver such

18 certificate to the owner, upon the satisfaction or discharge of

19 the lien or encumbrance, indicated upon such certificate of

20 title.

21 (b) If the interest of an owner in a vehicle passes to

22 another under the provisions of the Small Estates provisions of

23 the Probate Act of 1975 the transferee shall promptly mail or

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1 deliver to the Secretary of State, within 120 days, the last

2 certificate of title, if available, the documentation required

3 under the provisions of the Probate Act of 1975, and an

4 application for certificate of title. The Small Estate

5 Affidavit form shall be furnished by the Secretary of State.

6 The transfer may be to the transferee or to the nominee of the

7 transferee.

8 (c) If the interest of an owner in a vehicle passes to

9 another under other provisions of the Probate Act of 1975, as

10 amended, and the transfer is made by a representative or

11 guardian, such transferee shall promptly mail or deliver to the

12 Secretary of State, the last certificate of title, if

13 available, and a certified copy of the letters of office or

14 guardianship, and an application for certificate of title. Such

15 application shall be made before the estate is closed. The

16 transfer may be to the transferee or to the nominee of the

17 transferee.

18 (d) If the interest of an owner in joint tenancy passes to

19 the other joint tenant with survivorship rights as provided by

20 law, the transferee shall promptly mail or deliver to the

21 Secretary of State, the last certificate of title, if

22 available, proof of death of the one joint tenant and

23 survivorship of the surviving joint tenant, and an application

24 for certificate of title. Such application shall be made within

25 120 days after the death of the joint tenant. The transfer may

26 be to the transferee or to the nominee of the transferee.

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1 (e) The Secretary of State shall transfer a decedent's

2 vehicle title to any legatee, representative or heir of the

3 decedent who submits to the Secretary a death certificate and

4 an affidavit by an attorney at law on the letterhead stationery

5 of the attorney at law stating the facts of the transfer.

6 (f) Repossession with assignment of title. In all cases

7 wherein a lienholder has repossessed a vehicle by other than

8 judicial process and holds it for resale under a security

9 agreement, and the owner of record has executed an assignment

10 of the existing certificate of title after default, the

11 lienholder may proceed to sell or otherwise dispose of the

12 vehicle as authorized under the Uniform Commercial Code. Upon

13 selling the vehicle to another person, the lienholder need not

14 send the certificate of title to the Secretary of State, but

15 shall promptly and within 20 days mail or deliver to the

16 purchaser as transferee the existing certificate of title for

17 the repossessed vehicle, reflecting the release of the

18 lienholder's security interest in the vehicle. The application

19 for a certificate of title made by the purchaser shall comply

20 with subsection (a) of Section 3-104 and be accompanied by the

21 existing certificate of title for the repossessed vehicle. The

22 lienholder shall execute the assignment and warranty of title

23 showing the name and address of the purchaser in the spaces

24 provided therefor on the certificate of title or as the

25 Secretary of State prescribes. The lienholder shall complete

26 the assignment of title in the certificate of title to reflect

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1 the transfer of the vehicle to the lienholder and also a

2 reassignment to reflect the transfer from the lienholder to the

3 purchaser. For this purpose, the lienholder is specifically

4 authorized to complete and execute the space reserved in the

5 certificate of title for a dealer reassignment,

6 notwithstanding that the lienholder is not a licensed dealer.

7 Nothing herein shall be construed to mean that the lienholder

8 is taking title to the repossessed vehicle for purposes of

9 liability for retailer occupation, vehicle use, or other tax

10 with respect to the proceeds from the repossession sale.

11 Delivery of the existing certificate of title to the purchaser

12 shall be deemed disclosure to the purchaser of the owner of the

13 vehicle.

14 (f-5) Repossession without assignment of title. Subject to

15 subsection (f-30), in all cases wherein a lienholder has

16 repossessed a vehicle by other than judicial process and holds

17 it for resale under a security agreement, and the owner of

18 record has not executed an assignment of the existing

19 certificate of title, the lienholder shall comply with the

20 following provisions:

21 (1) Prior to sale, the lienholder shall deliver or mail

22 to the owner at the owner's last known address and to any

23 other lienholder of record, a notice of redemption setting

24 forth the following information: (i) the name of the owner

25 of record and in bold type at or near the top of the notice

26 a statement that the owner's vehicle was repossessed on a

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1 specified date for failure to make payments on the loan (or

2 other reason), (ii) a description of the vehicle subject to

3 the lien sufficient to identify it, (iii) the right of the

4 owner to redeem the vehicle, (iv) the lienholder's intent

5 to sell or otherwise dispose of the vehicle after the

6 expiration of 21 days from the date of mailing or delivery

7 of the notice, and (v) the name, address, and telephone

8 number of the lienholder from whom information may be

9 obtained concerning the amount due to redeem the vehicle

10 and from whom the vehicle may be redeemed under Section

11 9-623 of the Uniform Commercial Code. At the lienholder's

12 option, the information required to be set forth in this

13 notice of redemption may be made a part of or accompany the

14 notification of sale or other disposition required under

15 Section 9-611 of the Uniform Commercial Code, but none of

16 the information required by this notice shall be construed

17 to impose any requirement under Article 9 of the Uniform

18 Commercial Code.

19 (2) With respect to the repossession of a vehicle used

20 primarily for personal, family, or household purposes, the

21 lienholder shall also deliver or mail to the owner at the

22 owner's last known address an affidavit of defense. The

23 affidavit of defense shall accompany the notice of

24 redemption required in subdivision (f-5)(1) of this

25 Section. The affidavit of defense shall (i) identify the

26 lienholder, owner, and the vehicle; (ii) provide space for

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1 the owner to state the defense claimed by the owner; and

2 (iii) include an acknowledgment by the owner that the owner

3 may be liable to the lienholder for fees, charges, and

4 costs incurred by the lienholder in establishing the

5 insufficiency or invalidity of the owner's defense. To stop

6 the transfer of title, the affidavit of defense must be

7 received by the lienholder no later than 21 days after the

8 date of mailing or delivery of the notice required in

9 subdivision (f-5)(1) of this Section. If the lienholder

10 receives the affidavit from the owner in a timely manner,

11 the lienholder must apply to a court of competent

12 jurisdiction to determine if the lienholder is entitled to

13 possession of the vehicle.

14 (3) Upon selling the vehicle to another person, the

15 lienholder need not send the certificate of title to the

16 Secretary of State, but shall promptly and within 20 days

17 mail or deliver to the purchaser as transferee (i) the

18 existing certificate of title for the repossessed vehicle,

19 reflecting the release of the lienholder's security

20 interest in the vehicle; and (ii) an affidavit of

21 repossession made by or on behalf of the lienholder which

22 provides the following information: that the vehicle was

23 repossessed, a description of the vehicle sufficient to

24 identify it, whether the vehicle has been damaged in excess

25 of 33 1/3% of its fair market value as required under

26 subdivision (b)(3) of Section 3-117.1, that the owner and

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1 any other lienholder of record were given the notice

2 required in subdivision (f-5)(1) of this Section, that the

3 owner of record was given the affidavit of defense required

4 in subdivision (f-5)(2) of this Section, that the interest

5 of the owner was lawfully terminated or sold pursuant to

6 the terms of the security agreement, and the purchaser's

7 name and address. If the vehicle is damaged in excess of 33

8 1/3% of its fair market value, the lienholder shall make

9 application for a salvage certificate under Section

10 3-117.1 and transfer the vehicle to a person eligible to

11 receive assignments of salvage certificates identified in

12 Section 3-118.

13 (4) The application for a certificate of title made by

14 the purchaser shall comply with subsection (a) of Section

15 3-104 and be accompanied by the affidavit of repossession

16 furnished by the lienholder and the existing certificate of

17 title for the repossessed vehicle. The lienholder shall

18 execute the assignment and warranty of title showing the

19 name and address of the purchaser in the spaces provided

20 therefor on the certificate of title or as the Secretary of

21 State prescribes. The lienholder shall complete the

22 assignment of title in the certificate of title to reflect

23 the transfer of the vehicle to the lienholder and also a

24 reassignment to reflect the transfer from the lienholder to

25 the purchaser. For this purpose, the lienholder is

26 specifically authorized to execute the assignment on

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1 behalf of the owner as seller if the owner has not done so

2 and to complete and execute the space reserved in the

3 certificate of title for a dealer reassignment,

4 notwithstanding that the lienholder is not a licensed

5 dealer. Nothing herein shall be construed to mean that the

6 lienholder is taking title to the repossessed vehicle for

7 purposes of liability for retailer occupation, vehicle

8 use, or other tax with respect to the proceeds from the

9 repossession sale. Delivery of the existing certificate of

10 title to the purchaser shall be deemed disclosure to the

11 purchaser of the owner of the vehicle. In the event the

12 lienholder does not hold the certificate of title for the

13 repossessed vehicle, the lienholder shall make application

14 for and may obtain a new certificate of title in the name

15 of the lienholder upon furnishing information satisfactory

16 to the Secretary of State. Upon receiving the new

17 certificate of title, the lienholder may proceed with the

18 sale described in subdivision (f-5)(3), except that upon

19 selling the vehicle the lienholder shall promptly and

20 within 20 days mail or deliver to the purchaser the new

21 certificate of title reflecting the assignment and

22 transfer of title to the purchaser.

23 (5) Neither the lienholder nor the owner shall file

24 with the Office of the Secretary of State the notice of

25 redemption or affidavit of defense described in

26 subdivisions (f-5)(1) and (f-5)(2) of this Section. The

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1 Office of the Secretary of State shall not determine the

2 merits of an owner's affidavit of defense, nor consider any

3 allegations or assertions regarding the validity or

4 invalidity of a lienholder's claim to the vehicle or an

5 owner's asserted defenses to the repossession action.

6 (f-7) Notice of reinstatement in certain cases.

7 (1) Subject to subsection (f-30), if, at the time of

8 repossession by a lienholder that is seeking to transfer

9 title pursuant to subsection (f-5), the owner has paid an

10 amount equal to 30% or more of the deferred payment price

11 or total of payments due, the owner may, within 21 days of

12 the date of repossession, reinstate the contract or loan

13 agreement and recover the vehicle from the lienholder by

14 tendering in a lump sum (i) the total of all unpaid

15 amounts, including any unpaid delinquency or deferral

16 charges due at the date of reinstatement, without

17 acceleration; and (ii) performance necessary to cure any

18 default other than nonpayment of the amounts due; and (iii)

19 all reasonable costs and fees incurred by the lienholder in

20 retaking, holding, and preparing the vehicle for

21 disposition and in arranging for the sale of the vehicle.

22 Reasonable costs and fees incurred by the lienholder

23 include without limitation repossession and storage

24 expenses and, if authorized by the contract or loan

25 agreement, reasonable attorneys' fees and collection

26 agency charges.

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1 (2) Tender of payment and performance pursuant to this

2 limited right of reinstatement restores to the owner his

3 rights under the contract or loan agreement as though no

4 default had occurred. The owner has the right to reinstate

5 the contract or loan agreement and recover the vehicle from

6 the lienholder only once under this subsection. The

7 lienholder may, in the lienholder's sole discretion,

8 extend the period during which the owner may reinstate the

9 contract or loan agreement and recover the vehicle beyond

10 the 21 days allowed under this subsection, and the

11 extension shall not subject the lienholder to liability to

12 the owner under the laws of this State.

13 (3) The lienholder shall deliver or mail written notice

14 to the owner at the owner's last known address, within 3

15 business days of the date of repossession, of the owner's

16 right to reinstate the contract or loan agreement and

17 recover the vehicle pursuant to the limited right of

18 reinstatement described in this subsection. At the

19 lienholder's option, the information required to be set

20 forth in this notice of reinstatement may be made part of

21 or accompany the notice of redemption required in

22 subdivision (f-5)(1) of this Section and the notification

23 of sale or other disposition required under Section 9-611

24 of the Uniform Commercial Code, but none of the information

25 required by this notice of reinstatement shall be construed

26 to impose any requirement under Article 9 of the Uniform

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1 Commercial Code.

2 (4) The reinstatement period, if applicable, and the

3 redemption period described in subdivision (f-5)(1) of

4 this Section, shall run concurrently if the information

5 required to be set forth in the notice of reinstatement is

6 part of or accompanies the notice of redemption. In any

7 event, the 21 day redemption period described in

8 subdivision (f-5)(1) of this Section shall commence on the

9 date of mailing or delivery to the owner of the information

10 required to be set forth in the notice of redemption, and

11 the 21 day reinstatement period described in this

12 subdivision, if applicable, shall commence on the date of

13 mailing or delivery to the owner of the information

14 required to be set forth in the notice of reinstatement.

15 (5) The Office of the Secretary of State shall not

16 determine the merits of an owner's claim of right to

17 reinstatement, nor consider any allegations or assertions

18 regarding the validity or invalidity of a lienholder's

19 claim to the vehicle or an owner's asserted right to

20 reinstatement. Where a lienholder is subject to licensing

21 and regulatory supervision by the State of Illinois, the

22 lienholder shall be subject to all of the powers and

23 authority of the lienholder's primary State regulator to

24 enforce compliance with the procedures set forth in this

25 subsection (f-7).

26 (f-10) Repossession by judicial process. In all cases

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1 wherein a lienholder has repossessed a vehicle by judicial

2 process and holds it for resale under a security agreement,

3 order for replevin, or other court order establishing the

4 lienholder's right to possession of the vehicle, the lienholder

5 may proceed to sell or otherwise dispose of the vehicle as

6 authorized under the Uniform Commercial Code or the court

7 order. Upon selling the vehicle to another person, the

8 lienholder need not send the certificate of title to the

9 Secretary of State, but shall promptly and within 20 days mail

10 or deliver to the purchaser as transferee (i) the existing

11 certificate of title for the repossessed vehicle reflecting the

12 release of the lienholder's security interest in the vehicle;

13 (ii) a certified copy of the court order; and (iii) a bill of

14 sale identifying the new owner's name and address and the year,

15 make, model, and vehicle identification number of the vehicle.

16 The application for a certificate of title made by the

17 purchaser shall comply with subsection (a) of Section 3-104 and

18 be accompanied by the certified copy of the court order

19 furnished by the lienholder and the existing certificate of

20 title for the repossessed vehicle. The lienholder shall execute

21 the assignment and warranty of title showing the name and

22 address of the purchaser in the spaces provided therefor on the

23 certificate of title or as the Secretary of State prescribes.

24 The lienholder shall complete the assignment of title in the

25 certificate of title to reflect the transfer of the vehicle to

26 the lienholder and also a reassignment to reflect the transfer

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1 from the lienholder to the purchaser. For this purpose, the

2 lienholder is specifically authorized to execute the

3 assignment on behalf of the owner as seller if the owner has

4 not done so and to complete and execute the space reserved in

5 the certificate of title for a dealer reassignment,

6 notwithstanding that the lienholder is not a licensed dealer.

7 Nothing herein shall be construed to mean that the lienholder

8 is taking title to the repossessed vehicle for purposes of

9 liability for retailer occupation, vehicle use, or other tax

10 with respect to the proceeds from the repossession sale.

11 Delivery of the existing certificate of title to the purchaser

12 shall be deemed disclosure to the purchaser of the owner of the

13 vehicle. In the event the lienholder does not hold the

14 certificate of title for the repossessed vehicle, the

15 lienholder shall make application for and may obtain a new

16 certificate of title in the name of the lienholder upon

17 furnishing information satisfactory to the Secretary of State.

18 Upon receiving the new certificate of title, the lienholder may

19 proceed with the sale described in this subsection, except that

20 upon selling the vehicle the lienholder shall promptly and

21 within 20 days mail or deliver to the purchaser the new

22 certificate of title reflecting the assignment and transfer of

23 title to the purchaser.

24 (f-15) The Secretary of State shall not issue a certificate

25 of title to a purchaser under subsection (f), (f-5), or (f-10)

26 of this Section, unless the person from whom the vehicle has

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1 been repossessed by the lienholder is shown to be the last

2 registered owner of the motor vehicle. The Secretary of State

3 may provide by rule for the standards to be followed by a

4 lienholder in assigning and transferring certificates of title

5 with respect to repossessed vehicles.

6 (f-20) If applying for a salvage certificate or a junking

7 certificate, the lienholder shall within 20 days make an

8 application to the Secretary of State for a salvage certificate

9 or a junking certificate, as set forth in this Code. The

10 Secretary of State shall not issue a salvage certificate or a

11 junking certificate to such lienholder unless the person from

12 whom such vehicle has been repossessed is shown to be the last

13 registered owner of such motor vehicle and such lienholder

14 establishes to the satisfaction of the Secretary of State that

15 he is entitled to such salvage certificate or junking

16 certificate. The Secretary of State may provide by rule for the

17 standards to be followed by a lienholder in order to obtain a

18 salvage certificate or junking certificate for a repossessed

19 vehicle.

20 (f-25) If the interest of an owner in a mobile home, as

21 defined in the Mobile Home Local Services Tax Act, passes to

22 another under the provisions of the Mobile Home Local Services

23 Tax Enforcement Act, the transferee shall promptly mail or

24 deliver to the Secretary of State (i) the last certificate of

25 title, if available, (ii) a certified copy of the court order

26 ordering the transfer of title, and (iii) an application for

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1 certificate of title.

2 (f-30) Bankruptcy. If the repossessed vehicle is the

3 subject of a bankruptcy proceeding or discharge:

4 (1) the lienholder may proceed to sell or otherwise

5 dispose of the vehicle as authorized by the Bankruptcy Code

6 and the Uniform Commercial Code;

7 (2) the notice of redemption, affidavit of defense, and

8 notice of reinstatement otherwise required to be sent by

9 the lienholder to the owner of record or other lienholder

10 of record under this Section are not required to be

11 delivered or mailed;

12 (3) the requirement to delay disposition of the vehicle

13 for 21 days, (i) from the mailing or delivery of the notice

14 of redemption under subdivision (f-5)(1) of this Section,

15 (ii) from the mailing or delivery of the affidavit of

16 defense under subdivision (f-5)(2) of this Section, or

17 (iii) from the date of repossession when the owner is

18 entitled to a notice of reinstatement under subsection

19 (f-7) of this Section, does not apply;

20 (4) the affidavit of repossession that is required

21 under subdivision (f-5)(3) shall contain a notation of

22 "bankruptcy" where the affidavit requires the date of the

23 mailing or delivery of the notice of redemption. The

24 notation of "bankruptcy" means the lienholder makes no

25 sworn representations regarding the mailing or delivery of

26 the notice of redemption or affidavit of defense or

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1 lienholder's compliance with the requirements that

2 otherwise apply to the notices listed in this subsection

3 (f-30), and makes no sworn representation that the

4 lienholder assumes liability or costs for any litigation

5 that may arise from the issuance of a certificate of title

6 based on the excluded representations;

7 (5) the right of redemption, the right to assert a

8 defense to the transfer of title, and reinstatement rights

9 under this Section do not apply; and

10 (6) references to judicial process and court orders in

11 subsection (f-10) of this Section do not include bankruptcy

12 proceedings or orders.

13 (g) A person holding a certificate of title whose interest

14 in the vehicle has been extinguished or transferred other than

15 by voluntary transfer shall mail or deliver the certificate,

16 within 20 days upon request of the Secretary of State. The

17 delivery of the certificate pursuant to the request of the

18 Secretary of State does not affect the rights of the person

19 surrendering the certificate, and the action of the Secretary

20 of State in issuing a new certificate of title as provided

21 herein is not conclusive upon the rights of an owner or

22 lienholder named in the old certificate.

23 (h) The Secretary of State may decline to process any

24 application for a transfer of an interest in a vehicle

25 hereunder if any fees or taxes due under this Act from the

26 transferor or the transferee have not been paid upon reasonable

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1 notice and demand.

2 (i) The Secretary of State shall not be held civilly or

3 criminally liable to any person because any purported

4 transferor may not have had the power or authority to make a

5 transfer of any interest in any vehicle or because a

6 certificate of title issued in error is subsequently used to

7 commit a fraudulent act.

8 (Source: P.A. 94-411, eff. 1-1-06.)