Legal Question in Business Law in California

California creditor right to repossess

A default occured on a promissory note secured by a UCC 1 financing agreement and a Surface Transportation Board recorded security agreement. Can we take possession without a court order? The personal property is a railway car located on private property.


Asked on 5/09/07, 6:13 pm

3 Answers from Attorneys

Matthew Mickelson Law Offices of Matthew C. Mickelson

Re: California creditor right to repossess

You're generally not allowed to trespass on someone else's private property in order to seize private property in furtherance of repossesion. If the property owner allows you to do so, that's a different story. You may need a lawyer's help to advise you on this.

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Answered on 5/09/07, 6:18 pm
Gregg Gittler GITTLER & BRADFORD

Re: California creditor right to repossess

If you can repossess the property peacefully (with permission of the property owner, without having to break and enter any facility or into the boxcar, and without using any force), you can. However, you must then act in accordance with Chapter 9 of the UCC in disposing of the collateral.

Otherwise, you would have to file a lawsuit and obtain a writ of possession from the Court.

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Answered on 5/09/07, 7:01 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: California creditor right to repossess

Commercial Code section 9609 says:

(a) After default, a secured party may do both of the following:

(1) Take possession of the collateral.

(2) Without removal, render equipment unusable and dispose of collateral on a debtor's premises under Section 9610.

(b) A secured party may proceed under subdivision (a) in either of the following ways:

(1) Pursuant to judicial process.

(2) Without judicial process, if it proceeds without breach of the peace.

(c) If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place designated by the secured party which is reasonably convenient to both parties.

So, the answer depends upon whether the removal of the car is likely to create a ruckus. If you are who I think you are, you probably have enough clout with the U.P. or whomever to arrange to have this baby coupled up and hauled to your place of business. That's assuming it's on rail and has legal brakes, safety applinaces, roller bearings, etc. I'd say whether it's first out and your relationship with the track or site owner is a major consideration.

Please feel free to contact me if you'd like assistance from a lawyer who is also a car owner and, I think, maybe a former client of yours.

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Answered on 5/09/07, 8:29 pm


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