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.


LRB099 08562 RJF 28721 b

 

 

A BILL FOR

 

SB1653LRB099 08562 RJF 28721 b

1    AN ACT concerning transportation.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Vehicle Code is amended by changing
5Section 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
9another other than by voluntary transfer, the transferee shall,
10except as provided in paragraph (b), promptly mail or deliver
11within 20 days to the Secretary of State the last certificate
12of title, if available, proof of the transfer, and his
13application for a new certificate in the form the Secretary of
14State prescribes. It shall be unlawful for any person having
15possession of a certificate of title for a motor vehicle,
16semi-trailer, or house car by reason of his having a lien or
17encumbrance on such vehicle, to fail or refuse to deliver such
18certificate to the owner, upon the satisfaction or discharge of
19the lien or encumbrance, indicated upon such certificate of
20title.
21    (b) If the interest of an owner in a vehicle passes to
22another under the provisions of the Small Estates provisions of
23the Probate Act of 1975 the transferee shall promptly mail or

 

 

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1deliver to the Secretary of State, within 120 days, the last
2certificate of title, if available, the documentation required
3under the provisions of the Probate Act of 1975, and an
4application for certificate of title. The Small Estate
5Affidavit form shall be furnished by the Secretary of State.
6The transfer may be to the transferee or to the nominee of the
7transferee.
8    (c) If the interest of an owner in a vehicle passes to
9another under other provisions of the Probate Act of 1975, as
10amended, and the transfer is made by a representative or
11guardian, such transferee shall promptly mail or deliver to the
12Secretary of State, the last certificate of title, if
13available, and a certified copy of the letters of office or
14guardianship, and an application for certificate of title. Such
15application shall be made before the estate is closed. The
16transfer may be to the transferee or to the nominee of the
17transferee.
18    (d) If the interest of an owner in joint tenancy passes to
19the other joint tenant with survivorship rights as provided by
20law, the transferee shall promptly mail or deliver to the
21Secretary of State, the last certificate of title, if
22available, proof of death of the one joint tenant and
23survivorship of the surviving joint tenant, and an application
24for certificate of title. Such application shall be made within
25120 days after the death of the joint tenant. The transfer may
26be 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
2vehicle title to any legatee, representative or heir of the
3decedent who submits to the Secretary a death certificate and
4an affidavit by an attorney at law on the letterhead stationery
5of the attorney at law stating the facts of the transfer.
6    (f) Repossession with assignment of title. In all cases
7wherein a lienholder has repossessed a vehicle by other than
8judicial process and holds it for resale under a security
9agreement, and the owner of record has executed an assignment
10of the existing certificate of title after default, the
11lienholder may proceed to sell or otherwise dispose of the
12vehicle as authorized under the Uniform Commercial Code. Upon
13selling the vehicle to another person, the lienholder need not
14send the certificate of title to the Secretary of State, but
15shall promptly and within 20 days mail or deliver to the
16purchaser as transferee the existing certificate of title for
17the repossessed vehicle, reflecting the release of the
18lienholder's security interest in the vehicle. The application
19for a certificate of title made by the purchaser shall comply
20with subsection (a) of Section 3-104 and be accompanied by the
21existing certificate of title for the repossessed vehicle. The
22lienholder shall execute the assignment and warranty of title
23showing the name and address of the purchaser in the spaces
24provided therefor on the certificate of title or as the
25Secretary of State prescribes. The lienholder shall complete
26the assignment of title in the certificate of title to reflect

 

 

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1the transfer of the vehicle to the lienholder and also a
2reassignment to reflect the transfer from the lienholder to the
3purchaser. For this purpose, the lienholder is specifically
4authorized to complete and execute the space reserved in the
5certificate of title for a dealer reassignment,
6notwithstanding that the lienholder is not a licensed dealer.
7Nothing herein shall be construed to mean that the lienholder
8is taking title to the repossessed vehicle for purposes of
9liability for retailer occupation, vehicle use, or other tax
10with respect to the proceeds from the repossession sale.
11Delivery of the existing certificate of title to the purchaser
12shall be deemed disclosure to the purchaser of the owner of the
13vehicle.
14    (f-5) Repossession without assignment of title. Subject to
15subsection (f-30), in all cases wherein a lienholder has
16repossessed a vehicle by other than judicial process and holds
17it for resale under a security agreement, and the owner of
18record has not executed an assignment of the existing
19certificate of title, the lienholder shall comply with the
20following 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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1wherein a lienholder has repossessed a vehicle by judicial
2process and holds it for resale under a security agreement,
3order for replevin, or other court order establishing the
4lienholder's right to possession of the vehicle, the lienholder
5may proceed to sell or otherwise dispose of the vehicle as
6authorized under the Uniform Commercial Code or the court
7order. Upon selling the vehicle to another person, the
8lienholder need not send the certificate of title to the
9Secretary of State, but shall promptly and within 20 days mail
10or deliver to the purchaser as transferee (i) the existing
11certificate of title for the repossessed vehicle reflecting the
12release of the lienholder's security interest in the vehicle;
13(ii) a certified copy of the court order; and (iii) a bill of
14sale identifying the new owner's name and address and the year,
15make, model, and vehicle identification number of the vehicle.
16The application for a certificate of title made by the
17purchaser shall comply with subsection (a) of Section 3-104 and
18be accompanied by the certified copy of the court order
19furnished by the lienholder and the existing certificate of
20title for the repossessed vehicle. The lienholder shall execute
21the assignment and warranty of title showing the name and
22address of the purchaser in the spaces provided therefor on the
23certificate of title or as the Secretary of State prescribes.
24The lienholder shall complete the assignment of title in the
25certificate of title to reflect the transfer of the vehicle to
26the lienholder and also a reassignment to reflect the transfer

 

 

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1from the lienholder to the purchaser. For this purpose, the
2lienholder is specifically authorized to execute the
3assignment on behalf of the owner as seller if the owner has
4not done so and to complete and execute the space reserved in
5the certificate of title for a dealer reassignment,
6notwithstanding that the lienholder is not a licensed dealer.
7Nothing herein shall be construed to mean that the lienholder
8is taking title to the repossessed vehicle for purposes of
9liability for retailer occupation, vehicle use, or other tax
10with respect to the proceeds from the repossession sale.
11Delivery of the existing certificate of title to the purchaser
12shall be deemed disclosure to the purchaser of the owner of the
13vehicle. In the event the lienholder does not hold the
14certificate of title for the repossessed vehicle, the
15lienholder shall make application for and may obtain a new
16certificate of title in the name of the lienholder upon
17furnishing information satisfactory to the Secretary of State.
18Upon receiving the new certificate of title, the lienholder may
19proceed with the sale described in this subsection, except that
20upon selling the vehicle the lienholder shall promptly and
21within 20 days mail or deliver to the purchaser the new
22certificate of title reflecting the assignment and transfer of
23title to the purchaser.
24    (f-15) The Secretary of State shall not issue a certificate
25of title to a purchaser under subsection (f), (f-5), or (f-10)
26of this Section, unless the person from whom the vehicle has

 

 

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1been repossessed by the lienholder is shown to be the last
2registered owner of the motor vehicle. The Secretary of State
3may provide by rule for the standards to be followed by a
4lienholder in assigning and transferring certificates of title
5with respect to repossessed vehicles.
6    (f-20) If applying for a salvage certificate or a junking
7certificate, the lienholder shall within 20 days make an
8application to the Secretary of State for a salvage certificate
9or a junking certificate, as set forth in this Code. The
10Secretary of State shall not issue a salvage certificate or a
11junking certificate to such lienholder unless the person from
12whom such vehicle has been repossessed is shown to be the last
13registered owner of such motor vehicle and such lienholder
14establishes to the satisfaction of the Secretary of State that
15he is entitled to such salvage certificate or junking
16certificate. The Secretary of State may provide by rule for the
17standards to be followed by a lienholder in order to obtain a
18salvage certificate or junking certificate for a repossessed
19vehicle.
20    (f-25) If the interest of an owner in a mobile home, as
21defined in the Mobile Home Local Services Tax Act, passes to
22another under the provisions of the Mobile Home Local Services
23Tax Enforcement Act, the transferee shall promptly mail or
24deliver to the Secretary of State (i) the last certificate of
25title, if available, (ii) a certified copy of the court order
26ordering the transfer of title, and (iii) an application for

 

 

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1certificate of title.
2    (f-30) Bankruptcy. If the repossessed vehicle is the
3subject 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
14in the vehicle has been extinguished or transferred other than
15by voluntary transfer shall mail or deliver the certificate,
16within 20 days upon request of the Secretary of State. The
17delivery of the certificate pursuant to the request of the
18Secretary of State does not affect the rights of the person
19surrendering the certificate, and the action of the Secretary
20of State in issuing a new certificate of title as provided
21herein is not conclusive upon the rights of an owner or
22lienholder named in the old certificate.
23    (h) The Secretary of State may decline to process any
24application for a transfer of an interest in a vehicle
25hereunder if any fees or taxes due under this Act from the
26transferor or the transferee have not been paid upon reasonable

 

 

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1notice and demand.
2    (i) The Secretary of State shall not be held civilly or
3criminally liable to any person because any purported
4transferor may not have had the power or authority to make a
5transfer of any interest in any vehicle or because a
6certificate of title issued in error is subsequently used to
7commit a fraudulent act.
8(Source: P.A. 94-411, eff. 1-1-06.)