Jennifer Martin Paper on Self-Help Repossession

Jennifer S. Martin of St. Thomas has written The Repo Man Did What? A Secured Creditor's Article 9 Right to Repossess Collateral and When Lenders Have Liability for Repossessions Gone Awry, 28-5 Commercial Damages Reporter 1 (2013). Here's the abstract:


This Article observes that there is not a clear consensus among courts in how to describe the scope and nature of a breach of the peace when a lender elects self-help repossession and things go awry. That does not mean that courts have not deduced some guideposts that parties can use in deciding whether to proceed with self-help repossession. Relevant considerations for the reasonableness of the repossession arguably fall into several components: “(1) where the repossession took place, (2) whether the debtor consented to the repossession, (3) the reaction of third parties, (4) what premises were entered into in order to repossess the collateral, and (5) whether the lender deceived the debtor.” Yet, there is no firm consensus on these core considerations or how they might be applied or weighed. Due to the factual nature of the inquiry, courts (and lenders) are seemingly left with making decisions as to matters involving repossessions, breach of the peace and remedies in general on a case by case basis.

This lack of consensus in approaching self-help repossessions undermines uniformity, which ultimately underscores the policy of the Code and subjects both lenders and borrows to unpredictable outcomes. This Article argues that while amendment of Article 9 is not always needed or desired to achieve an adequate level of uniformity in UCC cases, this objective can be satisfied by employing an approach to breach of peace that recognizes a limited right of self-help that a lender can only exercise when it can ensure that no violence will occur or is likely to occur as a result of the repossession. Courts should not overextend self-help repossession under the mistaken overreliance on the lender’s property interest where the lender can use the judicial repossession mechanism of section 9-609 in all cases. That is, a lender is not always entitled to self-help repossession upon default.

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