94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
HB0947


 
Introduced 2/2/2005, by Rep. Jay C. Hoffman
 
SYNOPSIS AS INTRODUCED:
 		














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







    Amends the Illinois Vehicle Code provision regarding the transfer of title to a vehicle by operation of law. Establishes procedures to be followed if the vehicle is the subject of a bankruptcy proceeding or discharge. Provides that certain requirements of the provision do not apply to bankruptcy proceedings or orders.
















LRB094 06720 DRH 36819 b

















 


 


A BILL FOR









 











HB0947

LRB094 06720 DRH 36819 b






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 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 
24
deliver to the Secretary of State, within 120
days, the last 
25
certificate of title, if available, the documentation required

26
under the provisions of the Probate Act of 1975, and an 
27
application for
certificate of title. The Small Estate 
28
Affidavit form shall be furnished by the
Secretary of State. 
29
The transfer may be to the transferee or to the nominee of
the 
30
transferee.

31
    (c) If the interest of an owner in a vehicle passes to 
32
another under
other provisions of the Probate Act of 1975, as 
 


 






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1
amended, and the transfer is
made by a representative or 
2
guardian, such transferee shall promptly mail or
deliver to the 
3
Secretary of State, the last certificate of title, if 
4
available,
and a certified copy of the letters of office or 
5
guardianship, and an
application for certificate of title. Such 
6
application shall be made before the
estate is closed. The 
7
transfer may be to the transferee or to the nominee of
the 
8
transferee.

9
    (d) If the interest of an owner in joint tenancy passes to 
10
the other
joint tenant with survivorship rights as provided by 
11
law, the transferee
shall promptly mail or deliver to the 
12
Secretary of State, the last
certificate of title, if 
13
available, proof of death of the one joint
tenant and 
14
survivorship of the surviving joint tenant, and an
application 
15
for certificate of title. Such application shall be made
within 
16
120 days after the death of the joint tenant. The transfer may

17
be to the transferee or to the nominee of the transferee.

18
    (e) The Secretary of State shall transfer a decedent's 
19
vehicle title to
any legatee, representative or heir of the 
20
decedent who submits to the
Secretary a death certificate and 
21
an affidavit by an attorney at law on the
letterhead stationery  
22
of the attorney at law stating the facts of the
transfer.

23
    (f) Repossession with assignment of title.  In all cases 
24
wherein a
lienholder has repossessed a vehicle by other
than 
25
judicial process and holds it for resale under a security 
26
agreement, and
the owner of record has executed an assignment 
27
of the existing certificate of
title after default, the 
28
lienholder may proceed to sell or otherwise dispose of
the 
29
vehicle
as authorized under the Uniform Commercial Code.  Upon 
30
selling the vehicle to
another person, the lienholder need not 
31
send the certificate of title to the
Secretary of State, but 
32
shall promptly and within 20 days mail or deliver to
the 
33
purchaser
as transferee the existing certificate of title for 
34
the repossessed vehicle,
reflecting the release of the 
35
lienholder's security interest in the vehicle.
The application 
36
for a certificate of title made by the
purchaser shall comply 
 


 






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1
with subsection (a) of Section 3-104 and be accompanied
by the 
2
existing certificate of title for the repossessed vehicle.
The 
3
lienholder shall execute the assignment and warranty of title 
4
showing the
name and address of the purchaser in the spaces 
5
provided therefor on the
certificate of title or as the 
6
Secretary of State prescribes.  The lienholder
shall complete 
7
the assignment of title in the certificate of title to reflect

8
the transfer of the vehicle to the lienholder and also a 
9
reassignment to
reflect the transfer from the lienholder to the 
10
purchaser.  For this purpose,
the lienholder is specifically 
11
authorized
to complete and execute
the space reserved in the 
12
certificate of title for a dealer reassignment,

13
notwithstanding that the lienholder is not a licensed dealer.  
14
Nothing herein
shall be construed to mean that the lienholder 
15
is taking title to the
repossessed vehicle for purposes of 
16
liability for retailer occupation, vehicle
use, or other tax 
17
with respect to the proceeds from the repossession sale.

18
Delivery of the existing certificate of title to the purchaser 
19
shall be deemed
disclosure to the purchaser of the owner of the 
20
vehicle.

21
    (f-5) Repossession without assignment of title.  Subject to 
22
subsection (f-30), in
In all cases wherein a
lienholder has 
23
repossessed a vehicle
by other than judicial process and holds 
24
it for resale under a security
agreement,
and the owner of 
25
record has not executed an assignment of the existing

26
certificate of title,
the lienholder shall comply with the 
27
following provisions:


28
        (1) Prior to sale, the lienholder shall deliver or mail 
29
    to the owner at
the owner's last known address and to any 
30
    other lienholder of record, a notice
of redemption
setting 
31
    forth the following information: (i) the name of the owner 
32
    of record
and in bold type at or near the top of the notice 
33
    a statement that the owner's
vehicle was repossessed on a 
34
    specified date for failure to make payments on the
loan (or 
35
    other reason), (ii) a
description of the vehicle subject to 
36
    the lien sufficient to identify it, (iii)
the right of the 
 


 






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1
    owner to redeem the vehicle, (iv) the lienholder's intent 
2
    to
sell or otherwise dispose of the vehicle after the 
3
    expiration of 21 days from
the date of mailing or delivery 
4
    of the notice, and (v) the name, address, and
telephone 
5
    number of the lienholder from
whom information may be

6
    obtained concerning the amount due to redeem the vehicle 
7
    and from whom
the vehicle may be redeemed under
Section 
8
    9-623 of the Uniform Commercial Code.  At the
lienholder's 
9
    option, the
information required to be set forth in this 
10
    notice of redemption
may be made a part of or accompany the 
11
    notification of sale or other
disposition
required under 
12
    Section 9-611 of the
Uniform
Commercial Code, but none of 
13
    the information required by this notice shall
be construed 
14
    to impose any requirement under Article 9 of the Uniform

15
    Commercial Code.


16
        (2) With respect to the repossession of a vehicle used 
17
    primarily for
personal, family, or household purposes, the 
18
    lienholder shall also deliver or
mail to the owner at the 
19
    owner's last known address an affidavit
of defense.  The 
20
    affidavit of defense shall accompany the notice of

21
    redemption
required in subdivision (f-5)(1) of
this 
22
    Section. The affidavit of defense shall (i) identify the 
23
    lienholder,
owner, and the
vehicle; (ii) provide space for 
24
    the owner to state the defense claimed by the
owner; and 
25
    (iii) include an acknowledgment by the owner that the owner 
26
    may be
liable to the lienholder for fees, charges, and 
27
    costs incurred by the
lienholder in establishing the 
28
    insufficiency or invalidity of the owner's
defense.  To stop 
29
    the transfer of title, the affidavit of defense must be

30
    received by the
lienholder no later than 21 days after the 
31
    date of mailing or delivery of the
notice required in 
32
    subdivision (f-5)(1) of this Section. If the lienholder

33
    receives the affidavit from the owner in a timely manner, 
34
    the lienholder must
apply to a court of competent 
35
    jurisdiction to determine if the lienholder is
entitled to 
36
    possession of the vehicle.


 


 






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1
        (3) Upon selling the vehicle to another person, the 
2
    lienholder need not
send the certificate of title to the 
3
    Secretary of State, but shall
promptly and within 20 days 
4
    mail or deliver to the purchaser as transferee (i)
the 
5
    existing
certificate of title for the repossessed vehicle, 
6
    reflecting the release of the
lienholder's security 
7
    interest in the vehicle; and (ii) an affidavit of

8
    repossession made by or on behalf of the lienholder which 
9
    provides the
following information: that the vehicle was 
10
    repossessed, a description of the
vehicle sufficient to 
11
    identify it, whether the vehicle has been damaged in
excess 
12
    of 33 1/3% of its fair market value as required under 
13
    subdivision (b)(3)
of Section 3-117.1, that the owner and 
14
    any other lienholder of record were
given the notice 
15
    required in subdivision (f-5)(1) of this Section,
that the 
16
    owner of record was given the affidavit of defense required 
17
    in
subdivision (f-5)(2) of this Section,
that the interest 
18
    of the owner was lawfully terminated or sold pursuant to 
19
    the
terms of the security agreement, and the purchaser's 
20
    name and address.
If the vehicle is damaged in excess of 33 
21
    1/3% of its fair market value, the
lienholder shall make 
22
    application for a salvage certificate under Section

23
    3-117.1 and transfer the vehicle to a person eligible to 
24
    receive assignments of
salvage certificates identified in 
25
    Section 3-118.


26
        (4) The application for a certificate of title made by 
27
    the purchaser shall
comply with subsection (a) of Section 
28
    3-104 and be accompanied by the affidavit
of repossession 
29
    furnished by the lienholder and the existing certificate of

30
    title for the repossessed vehicle.
The lienholder shall 
31
    execute the assignment and warranty of title showing the

32
    name and address of the purchaser in the spaces provided 
33
    therefor on the
certificate of title or as the Secretary of 
34
    State prescribes.  The lienholder
shall complete the 
35
    assignment of title in the certificate of title to reflect

36
    the transfer of the vehicle to the lienholder and also a 
 


 






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1
    reassignment to
reflect the transfer from the lienholder to 
2
    the purchaser.  For this purpose,
the lienholder is 
3
    specifically authorized to execute the assignment on 
4
    behalf
of the owner as seller if the owner has not done so 
5
    and to complete and execute
the space reserved in the 
6
    certificate of title for a dealer reassignment,

7
    notwithstanding that the lienholder is not a licensed 
8
    dealer.  Nothing herein
shall be construed to mean that the 
9
    lienholder is taking title to the
repossessed vehicle for 
10
    purposes of liability for retailer occupation, vehicle

11
    use, or other tax with respect to the proceeds from the 
12
    repossession sale.
Delivery of the existing certificate of 
13
    title to the purchaser shall be deemed
disclosure to the 
14
    purchaser of the owner of the vehicle.
In the event the 
15
    lienholder does not hold
the certificate of title for the 
16
    repossessed vehicle, the lienholder shall
make application 
17
    for and may obtain a new certificate of title in the name 
18
    of
the lienholder upon furnishing information satisfactory 
19
    to the Secretary of
State.  Upon receiving the new 
20
    certificate of title, the lienholder may proceed
with the 
21
    sale described in subdivision (f-5)(3), except that upon 
22
    selling the
vehicle the lienholder shall promptly and 
23
    within 20 days mail or deliver to the
purchaser the new 
24
    certificate of title reflecting the assignment and 
25
    transfer
of title to the purchaser.


26
        (5) Neither the lienholder nor the owner shall file 
27
    with the Office of
the Secretary of State the notice of 
28
    redemption or affidavit of defense
 described in 
29
    subdivisions (f-5)(1) and (f-5)(2) of this Section. The 
30
    Office of
the Secretary of State shall not determine the 
31
    merits of an owner's affidavit
of defense, nor consider any 
32
    allegations or assertions regarding the validity
or 
33
    invalidity of a lienholder's claim to the vehicle or an 
34
    owner's asserted
defenses to the repossession action.

35
    (f-7) Notice of reinstatement in certain cases.


36
        (1) Subject to subsection (f-30), if
If, at the time of 
 


 






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1
    repossession by a lienholder that is seeking to
transfer 
2
    title pursuant to subsection (f-5), the owner has paid an 
3
    amount equal
to 30% or more of the deferred payment price 
4
    or total of payments due, the
owner may, within 21 days of 
5
    the date of repossession, reinstate the contract
or loan 
6
    agreement and recover the vehicle from the lienholder by 
7
    tendering in a
lump sum (i) the total of all unpaid 
8
    amounts, including any unpaid delinquency
or deferral 
9
    charges due at the date of reinstatement, without 
10
    acceleration; and
(ii) performance necessary to cure any 
11
    default other than nonpayment of the
amounts due; and (iii)

12
    all reasonable costs and fees incurred by the lienholder in 
13
    retaking, holding,
and preparing the vehicle for 
14
    disposition and in arranging for the sale of the
vehicle.  
15
    Reasonable costs and fees incurred by the lienholder 
16
    include without
limitation repossession and storage 
17
    expenses and, if authorized by the contract
or loan 
18
    agreement, reasonable attorneys' fees and collection 
19
    agency charges.


20
        (2) Tender of payment and performance pursuant to this 
21
    limited right of
reinstatement restores to the owner his 
22
    rights under the contract or loan
agreement as though no 
23
    default had occurred.  The owner has the right to
reinstate 
24
    the contract or loan agreement and recover the vehicle from 
25
    the
lienholder only once under this subsection.  The 
26
    lienholder may, in the
lienholder's sole discretion, 
27
    extend the period during which the owner may
reinstate the 
28
    contract or loan agreement and recover the vehicle beyond 
29
    the 21
days allowed under this subsection, and the 
30
    extension shall not subject the
lienholder to liability to 
31
    the owner under the laws of this State.


32
        (3) The lienholder shall deliver or mail written notice 
33
    to the owner at
the
owner's last known address, within 3 
34
    business days of the date of repossession,
of the owner's 
35
    right to reinstate the contract or loan agreement and 
36
    recover
the vehicle pursuant to the limited right of 
 


 






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1
    reinstatement described in this
subsection.  At the 
2
    lienholder's option, the information required to be set

3
    forth in this notice of reinstatement may be made part of 
4
    or accompany the
notice of redemption required in 
5
    subdivision (f-5)(1) of this Section and the
notification 
6
    of sale or other disposition required under
Section 9-611 
7
    of the Uniform Commercial Code, but none of the
information

8
    required by this notice of reinstatement shall be construed 
9
    to impose any
requirement under Article 9 of the Uniform 
10
    Commercial Code.


11
        (4) The reinstatement period, if applicable, and the 
12
    redemption period
described in subdivision (f-5)(1) of 
13
    this Section, shall run concurrently if
the information 
14
    required to be set forth in the notice of reinstatement is 
15
    part
of or accompanies the notice of redemption.  In any 
16
    event, the 21 day
redemption period described in 
17
    subdivision (f-5)(1) of this Section shall
commence on the 
18
    date of
mailing or delivery to the owner of the information 
19
    required to be set forth in
the notice of redemption, and 
20
    the 21 day reinstatement period described in this

21
    subdivision, if applicable, shall commence on the date of 
22
    mailing or delivery
to the owner of the information 
23
    required to be set forth in the notice of
reinstatement.


24
        (5) The Office of the Secretary of State shall not 
25
    determine the merits of
an owner's claim of right to 
26
    reinstatement, nor consider any allegations or
assertions 
27
    regarding the validity or invalidity of a lienholder's 
28
    claim to the
vehicle or an owner's asserted right to 
29
    reinstatement.  Where a lienholder is
subject to licensing 
30
    and regulatory supervision by the State of Illinois, the

31
    lienholder shall be subject to all of the powers and 
32
    authority of the
lienholder's primary State regulator to 
33
    enforce compliance with the procedures
set forth in this 
34
    subsection (f-7).

35
    (f-10) Repossession by judicial process.  In all cases 
36
wherein a lienholder
has repossessed a vehicle by
judicial

 


 






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1
process and holds it for resale under a security agreement, 
2
order for replevin,
or other court order establishing the 
3
lienholder's right to possession of the
vehicle, the lienholder 
4
may proceed to sell or otherwise dispose of the vehicle
as 
5
authorized under the Uniform Commercial Code or the court 
6
order. Upon
selling the vehicle to another person, the 
7
lienholder need not send the
certificate of title to the 
8
Secretary of State, but shall promptly and within
20 days mail 
9
or
deliver to the purchaser as transferee (i) the existing 
10
certificate of title
for the repossessed vehicle reflecting the 
11
release of the lienholder's security
interest in the vehicle; 
12
(ii) a certified copy of the court order; and (iii) a
bill of 
13
sale identifying the new owner's name and address and the year, 
14
make,
model, and vehicle identification number of the vehicle.

15
The application for a certificate of title made by the 
16
purchaser shall comply
with subsection (a) of Section 3-104 and 
17
be accompanied by the certified copy
of the court order 
18
furnished by the
lienholder and the existing certificate of 
19
title for the repossessed vehicle.
The lienholder shall execute 
20
the assignment and warranty of title showing the
name and 
21
address of the purchaser in the spaces provided therefor on the

22
certificate of title or as the Secretary of State prescribes.  
23
The lienholder
shall complete the assignment of title in the 
24
certificate of title to reflect
the transfer of the vehicle to 
25
the lienholder and also a reassignment to
reflect the transfer 
26
from the lienholder to the purchaser.  For this purpose,
the 
27
lienholder is specifically authorized to execute the 
28
assignment on behalf
of the owner as seller if the owner has 
29
not done so and to complete and execute
the space reserved in 
30
the certificate of title for a dealer reassignment,

31
notwithstanding that the lienholder is not a licensed dealer.  
32
Nothing herein
shall be construed to mean that the lienholder 
33
is taking title to the
repossessed vehicle for purposes of 
34
liability for retailer occupation, vehicle
use, or other tax 
35
with respect to the proceeds from the repossession sale.

36
Delivery of the existing certificate of title to the purchaser 
 


 






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1
shall be deemed
disclosure to the purchaser of the owner of the 
2
vehicle.
In the event the
lienholder does not hold the 
3
certificate of title for the repossessed vehicle,
the 
4
lienholder shall
make application for and may obtain a new 
5
certificate of title in the name of
the lienholder upon 
6
furnishing information satisfactory to the Secretary of
State.  
7
Upon receiving the new certificate of title, the lienholder may 
8
proceed
with the sale described in this subsection, except that 
9
upon selling the
vehicle the lienholder shall promptly and 
10
within 20 days mail or deliver to the
purchaser the new 
11
certificate of title reflecting the assignment and transfer
of 
12
title to the purchaser.

13
    (f-15) The Secretary of State shall not issue a certificate 
14
of title to a
purchaser under subsection (f), (f-5), or (f-10) 
15
of this Section, unless the
person from whom the vehicle has 
16
been repossessed by the lienholder is shown to
be the last 
17
registered owner of the motor vehicle.  The Secretary of State 
18
may
provide by rule for the standards to be followed by a 
19
lienholder in assigning
and transferring certificates of title 
20
with respect to repossessed vehicles.

21
    (f-20) If applying for a salvage certificate or a junking 
22
certificate, the lienholder
shall within 20 days make an 
23
application to the Secretary of State for a salvage certificate 
24
or a junking certificate, as
set forth in this Code. The 
25
Secretary of State shall
not issue a salvage
certificate or a 
26
junking
certificate to such lienholder unless the person from 
27
whom such vehicle has
been repossessed is shown to be the last 
28
registered owner of such motor
vehicle and such lienholder 
29
establishes to the satisfaction of
the Secretary of State that 
30
he is entitled to such
salvage certificate or junking 
31
certificate. The Secretary
of State may provide by rule for the 
32
standards to be followed by
a lienholder in order to obtain a

33
salvage certificate or junking certificate for a
repossessed 
34
vehicle.

35
    (f-25) If the interest of an owner in a mobile home, as 
36
defined in the
Mobile Home Local Services Tax Act, passes to 
 


 






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1
another under the provisions of
the
Mobile Home Local Services 
2
Tax Enforcement Act, the transferee shall promptly
mail or 
3
deliver to the Secretary of State (i) the last certificate of 
4
title, if
available, (ii) a certified copy of the court order 
5
ordering the transfer of
title, and (iii) an application for 
6
certificate of title.

7
    (f-30) Bankruptcy.  If the repossessed vehicle is the 
8
subject of a bankruptcy proceeding or discharge:

9
        (1) the lienholder may proceed to sell or otherwise 
10
    dispose of the vehicle as authorized by the Bankruptcy Code 
11
    and the Uniform Commercial Code;
12
        (2) the notice of redemption, affidavit of defense, and 
13
    notice of reinstatement otherwise required to be sent by 
14
    the lienholder to the owner of record or other lienholder 
15
    of record under this Section  are not required to be 
16
    delivered or mailed;
17
        (3) the requirement to delay disposition of the vehicle 
18
    for 21 days, (i) from the mailing or delivery of the notice 
19
    of redemption under subdivision (f-5)(1) of this Section, 
20
    (ii) from the mailing or delivery of the affidavit of 
21
    defense under subdivision (f-5)(2) of this Section,  or 
22
    (iii) from the date of repossession when the owner is 
23
    entitled to a notice of reinstatement under subsection 
24
    (f-7) of this Section, does not apply;
25
        (4) the affidavit of repossession that is required 
26
    under subdivision (f-5)(3) shall contain a notation of 
27
    "bankruptcy" where the affidavit requires the date of the 
28
    mailing or delivery of the notice of redemption.  The 
29
    notation of "bankruptcy" means the lienholder makes no 
30
    sworn representations regarding the mailing or delivery of 
31
    the notice of redemption or affidavit of defense or   
32
    lienholder's compliance with the requirements that 
33
    otherwise apply to the  notices listed in this subsection 
34
    (f-30), and makes no sworn representation that the 
35
    lienholder assumes liability or costs for any litigation 
36
    that may arise from the issuance of a certificate of title 
 


 






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1
    based on the excluded representations;
2
        (5) the right of redemption, the right to assert a 
3
    defense to the transfer of title, and reinstatement rights 
4
    under this Section do not apply; and
5
        (6) references to judicial process and court orders in 
6
    subsection (f-10) of this Section do not include bankruptcy 
7
    proceedings or orders.

8
    (g) A person holding a certificate of title whose interest 
9
in the
vehicle has been extinguished or transferred other than 
10
by voluntary
transfer shall mail or deliver the certificate, 
11
within 20 days
upon request of the Secretary of State. The 
12
delivery of the certificate
pursuant to the request of the 
13
Secretary of State does not affect the
rights of the person 
14
surrendering the certificate, and the action of the
Secretary 
15
of State in issuing a new certificate of title as provided

16
herein is not conclusive upon the rights of an owner or 
17
lienholder named
in the old certificate.

18
    (h) The Secretary of State may decline to process any 
19
application
for a transfer of an interest in a vehicle 
20
hereunder if any fees or
taxes due under this Act from the 
21
transferor or the transferee have not
been paid upon reasonable 
22
notice and demand.

23
    (i) The Secretary of State shall not be held civilly or 
24
criminally
liable to any person because any purported 
25
transferor may not have had
the power or authority to make a 
26
transfer of any interest in any vehicle
or because a 
27
certificate of title issued in error is subsequently used to

28
commit a fraudulent act.

29
(Source: P.A. 91-893, eff. 7-1-01; 92-807, eff. 1-1-03.)