Storage Fees for Reinstatement After Repossession

After a repossession, the finance company can only impose certain conditions on a buyer reinstating his or her contract and regaining possession of the vehicle at issue. The finance company may tell the buyer that one of those conditions is he or she must pay fees to a third party (such as, the repossession agency) for storing the vehicle. Often, the storage fees the buyer must pay are hundreds of dollars and he or she does not have enough money to make the past due payments and pay the additional storage fees, thereby resulting in the buyer permanently losing his or her vehicle and being subjected to an alleged deficiency balance after the car is sold at auction.

It is important for California consumers to be aware that requiring payment of storage fees to someone other than the buyer’s finance company most likely is not a permissible condition to the buyer reinstating his or her contract. The California Legislature recognized that requiring buyers to pay estimated fees for reinstatement more than the fees truly incurred by the finance company could impede a buyer reinstating his or her contract. Thus, as of January 1, 2022, the Legislature made it abundantly clear that storage fees may be charged for reinstatement only if they “reimburse” the finance company for fees it “actually paid.” Quotations are used because that is the actual language of the law in California. Thus, requiring a buyer to pay someone else for storage fees clearly does not serve to “reimburse” the finance company for amounts it “actually paid.”

Automobile finance laws are complex and can be confusing. It is best to reach out to a qualified attorney if you are being told by your finance company that you need to pay storage fees to someone else in order to get your car back.