Repossession Law in New Jersey

The basic concepts for the body of law underlying repossession, rights and remedies are encompassed in the Uniform Commercial Code. The UCC has established a multistep process and a list of requirements to be followed by creditors who have secured rights. The concept of repossession is not a single act of “repossession” collateral to enforce creditor rights BUT rather an entire process of 1) repossession; 2) notice; 3) sale and final resolution of the rights and relationships between the parties. The entire repossession process promulgated by the UCC ensures fluidity and predictability of 1) parties’ expectations; 2) standard of conduct. Again, repossession is an entire process, from self-help acquisition to post-notice sale and deficiency.

The following is the entire repossession process:

• 12A:9-607. Collection and Enforcement by Secured Party • 12A:9-608. Application of Proceeds of Collection or Enforcement; Liability for Deficiency and Right to Surplus • 12A:9-609. Secured Party’s Right to Take Possession After Default • 12A:9-610. Disposition of Collateral After Default • 12A:9-611. Notification Before Disposition of Collateral • 12A:9-612. Timeliness of Notification Before Disposition of Collateral • 12A:9-613. Contents and Form of Notification Before Disposition of Collateral: General • 12A:9-614. Contents and Form of Notification Before Disposition of Collateral: Consumer-Goods Transaction • 12A:9-615. Application of Proceeds of Disposition; Liability for Deficiency and Right to Surplus • 12A:9-616. Explanation of Calculation of Surplus or Deficiency
As to the application of the UCC, the drafters have specifically left the courts with guidelines for interpretation and specifically rely thereon for their sound discretion. See N.J.S.A 12A:9-609, comment 3. As an example, the following concepts have been established by the UCC, adopted and interpreted by New Jersey Courts: a breach of the peace in the repossession process violates the UCC and entitles the aggrieved party to statutory damages and actual damages. N.J.S.A. 12A:9-609(b) (3). See also Slowinski v. Valley Nat. Bank, 264 N.J.Super. 172, (App.Div 1993); The duty to repossess collateral is a non-delegable duty which has been assigned to the creditor as a matter of public policy. DeMary v. Rieker, 302 N.J.Super. 208, 695 A.2d 294 (App.Div 1997). The question if there has been a breach of the peace is a question of fact for the jury. Slowinski v. Valley Nat. Bank, 264 N.J.Super. 172, (App.Div 1993); It is not necessary that the repossession of the collateral actually occurred. Slowinski v. Valley Nat. Bank, 264 N.J.Super. 172, (App.Div 1993); Lawful repossession exists where (1) there has been a default on a valid security agreement and (2) the repossession is executed without a breach of the peace. Slowinski v. Valley Nat. Bank, 264 N.J. Super. 172, 92 (App. Div. 1993); other jurisdictions have held that a wrongful repossession can give rise to an action for conversion. Slowinski v. Valley Nat. Bank, 264 N.J. Super. 172, 189-90, 94 (App. Div. 1993).