Sometimes folks confuse various terms that relate to recovering collateral, words like “repossession”, “levy”, “execution” or replevin. While there are some similarities, there are important distinctions that you should understand. All of these are used to recover assets, but that is where the similarities end.
Most of our clients know that repossession is a “self help” remedy that allows a creditor to take back its collateral, such as automobiles, boats and other motor vehicles, etc. When a buyer purchases collateral on credit, the creditor usually receives the right to repossess it in the event of default, both as a matter of contract law and the Uniform Commercial Code (which has been adopted in Florida). Naturally, your rights will vary depending on the language of the agreement, but most loanliners and security agreements give the creditor broad latitude in default situations.
When a default occurs, as defined by the agreement, the creditor can immediately seize the collateral, without notice. The creditor can go onto the owner’s private property to take the vehicle (if the agreement contains that language), as long as the taking does not “breach the peace.” There are strict provisions in the UCC which control the next steps that the creditor must take. (That step-by-step process will be the subject of a white paper in the future.) Suffice it to say that if the creditor strictly complies, it can proceed to seek a deficiency after the collateral is sold and the new balance determined.
In those situations where a peaceful recovery cannot be made — if the property is locked up, hidden or the debtor refuses the allow the agent to pick it up — most creditors then resort to filing a replevin action, also referred to as a “detinue” in some states. The primary difference between a repossession and a replevin is that in the latter, the sheriff is instructed by the court to take the collateral and turn it over to the creditor. The policy behind this is to enforce the creditor’s rights while preserving the peace. There are many procedures involved in replevins, which we will also discuss in a future blog or white paper.
Levies & Executions
A levy or execution is also performed by the sheriff, but under entirely different rules, procedures and circumstances. While repossessions and replevins are limited to the specific property that is the subject of the loan document, levies can be used to seize any nonexempt property to pay a judgment debt. In other words, if you have a judgment — any judgment for money based on any type of debt — one of the powers available to you is to levy on property of the debtor.
The judgment creditor can then attempt to “execute” on the judgment, by having a Writ of Execution issued by the clerk of court. Once the writ is issued (there are some other steps involved), the judgment creditor prepares a meticulously detailed package for the sheriff in the county where the property is located. Once the paperwork is completed and a fee (and a deposit) is paid to the sheriff, they take the property without notice of any kind, and later sell it at a public auction. The sales can be fraught with issues and it is important that they be handled by an experienced professional.
In many cases, the entire debt can be paid once a levy is successfully carried out. We have many “war stories” involving levies that finally made our client whole.
As you can see, there are important distinctions among these remedies. Each has its place and time, and your legal counsel can advise you when to use the right one for your circumstances. We have handled all three types of remedies for over 30 years and would be pleased to assist you if a question or concern arises involving the appropriate use of these important remedies. Contact us today for more information.