- Revisiting & Updating Your Notice of Sale Procedures
- March 28, 2014 | Author: John B. C. Porter
- Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Grove City Office
By now your credit union has undoubtedly been warned about the perils of failing to strictly comply with the form and content of Notices of Sale as it relates to repossessed collateral on which your credit union wishes to collect a deficiency balance. Too many credit unions have been sued, often in class action lawsuits, for non-compliant Notices of Sale, even when the error is minor. Now, credit unions are being sued by members challenging whether the Notice of Sale was even sent. I recommend implementing the following simple procedures to further buttress the credit union's case when confronted with such challenges by its members.
Send Notices of Sale certified and ordinary mail. While the Uniform Commercial Code (UCC) does not stipulate by what method these notices must be sent, only that they are authenticated, the Ohio Retail Installment Sales Act does require Notices of Sale be sent certified mail. Further, certified mail provides another layer of proof that the Notice of Sale was sent. The UCC does not require that the credit union prove delivery of the Notice of Sale, only that it sent the Notice of Sale to the member at the last known mailing address.
Document the Notice of Sale was mailed to the member. Unfortunately, the green card that the recipient of the certified mail must sign when the letter is received often never makes its way back to the credit union or the recipient scribbles an illegible name on the signature block—neither of which helps demonstrate who received the certified mail. Further, the United States Postal Services' (USPS) records pertaining to certified mail are only kept for a limited period of time. Depending on how long ago the Notice of Sale was sent, the USPS's records may no longer exist as to the particular piece of certified mail. To combat these weaknesses, notate on the Notice of Sale the certified mail receipt number. Also, document in your collection notes the date and certified mail receipt number of the Notice of Sale that was sent to the member. Finally, establish a certified mail log, wherein each piece of certified mail is logged as to the recipient, date of mailing, and certified mail receipt number.
Implementing these easy procedures will assist your credit union in defending against claims by its members that the Notice of Sale was never sent. While a provision of Ohio law (Ohio Revised Code § 1309.626) allows for secured creditors to recover deficiency balances even when a Notice of Sale was never sent (to the extent that the secured party can prove that a deficiency would have existed even if the secured creditor had sent the Notice of Sale), sending the Notice of Sale and proving that it was sent will expedite the judgment process and ensure the credit union protects its right to collect deficiency balances.