[CA] What are the rights and obligations of an assignee of a retail installment sales contract?
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Under California law, assignees of a retail installment sales contract (RISC) are subject to California Civil Code § 2983.3, which governs the rights and obligations of buyers, sellers, and assignees in vehicle financing. When a dealership assigns a loan to a third-party finance company, the assignee effectively steps into the shoes of the seller for purposes of collecting payments and enforcing the contract. However, if the assignee is refusing to clarify its relationship with the original seller or misleading the buyer about control of the loan, it could constitute an unfair or deceptive business practice under:
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California’s Unfair Competition Law (UCL), Business & Professions Code § 17200
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California’s Rosenthal Fair Debt Collection Practices Act, Civil Code § 1788 et seq.
Also, California Civil Code § 1459.5 prohibits an assignee from asserting rights under an assigned contract while avoiding obligations owed to the buyer.
Regarding notification of assignment:
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California Civil Code § 2937 requires notification when a loan secured by real property is assigned.
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For retail installment sales contracts, there is no exact equivalent, but under the federal Truth in Lending Act (TILA), 15 U.S.C. § 1641, if an assignment occurs and the assignee enforces the contract, disclosures must be made.
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You may consider demanding written clarification under California Civil Code § 2982, which regulates retail installment sales contracts.
If neither party has formally notified you, you could also file a complaint with the California Department of Financial Protection and Innovation (DFPI) for deceptive or misleading lending practices.
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Please help me find a law that says if an assignee of a retail installment sales contract in California misleads or refuses to state to the buyer the nature of their relationship with the original contract holder, who has control and holds interest in the loan. The assignee tells me, the buyer, to negotiate with the original seller. The original seller, a car dealership, tells me the loan has been funded, and they don't have any interest. Also, is there a law that says the original seller must inform the buyer when they assign interest in the loan?
I can help gather some information for the expert. Is this issue related to a car purchase?
Yes.
Thank you. Could you also tell me if you've received any written communication from either the assignee or the original seller regarding the assignment of the loan?
Well, the assignee just presents itself as being in charge now and says the payments need to be made to them, but nothing was stated about the relationship between the three of us.
I see. Have you tried contacting the original seller to get clarification on the assignment of the loan?
Yes. They say the loan is funded and they don't have interest.
OK. Thanks for the information. I'll connect you with an expert.
Good afternoon and welcome to AskaLawyer. Please give me a moment to review your question. (Note: I am a hearing-impaired expert, so phone calls are difficult for me. Thank you for understanding.)
Thanks.
Under California law, assignees of a retail installment sales contract (RISC) are subject to California Civil Code § 2983.3, which governs the rights and obligations of buyers, sellers, and assignees in vehicle financing. When a dealership assigns a loan to a third-party finance company, the assignee effectively steps into the shoes of the seller for purposes of collecting payments and enforcing the contract. However, if the assignee is refusing to clarify its relationship with the original seller or misleading the buyer about control of the loan, it could constitute an unfair or deceptive business practice under:
-
California’s Unfair Competition Law (UCL), Business & Professions Code § 17200
-
California’s Rosenthal Fair Debt Collection Practices Act, Civil Code § 1788 et seq.
Also, California Civil Code § 1459.5 prohibits an assignee from asserting rights under an assigned contract while avoiding obligations owed to the buyer.
Regarding notification of assignment:
-
California Civil Code § 2937 requires notification when a loan secured by real property is assigned.
-
For retail installment sales contracts, there is no exact equivalent, but under the federal Truth in Lending Act (TILA), 15 U.S.C. § 1641, if an assignment occurs and the assignee enforces the contract, disclosures must be made.
-
You may consider demanding written clarification under California Civil Code § 2982, which regulates retail installment sales contracts.
If neither party has formally notified you, you could also file a complaint with the California Department of Financial Protection and Innovation (DFPI) for deceptive or misleading lending practices.
That makes sense. But I can't seem to find the paragraph in 2982 that applies.
I understand—it's a bit convoluted. So sorry you're dealing with this.
So the assignee steps into the shoes, but the original lender still holds an interest? The contract assigned interest to "any." Without recourse. And it wasn't signed by the finance manager until after I signed the contract.
If the assignment was made "without recourse," the assignee steps into the shoes of the original lender and assumes the risks. Typically, the original lender retains no further interest. However, if the finance manager signed the contract after you, it could raise questions about whether the agreement was fully executed and enforceable at the time you signed.
Thanks.
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