The following is an article reprinted with permission from the Winter 2008 edition of The WWR Letter:
Criminal Forfeiture of Vehicles
By: Matt Young, Esquire
Under Ohio law, and in most states, vehicle owners may subject their vehicle to forfeiture upon conviction of certain felony offenses. These offenses most commonly include repeatedly operating the vehicle while impaired by drugs or alcohol (DUI/DWI), conviction of certain drug related offenses involving the vehicle subject to the forfeiture or driving with a suspended license (DUS) (includes knowingly permitting a person who is under suspension to drive the owner’s vehicle.)* As a lienholder of collateral, credit unions must be mindful of such laws and respond promptly when notified that such forfeiture may occur or risk losing its lien interest in the collateral.
Before an order of criminal forfeiture can be issued, the law enforcement agency that seized the vehicle must conduct a search of public records relating to the vehicle and identify any lienholder or other party with an ownership interest in the subject vehicle. The court is then required to notify the lienholder or other person(s) with an interest in the vehicle with a notice of the potential forfeiture and the manner by which the vehicle may be disposed. This notice must be sent via certified mail, return receipt requested, or by personal service.
The forfeiture cannot occur if the lienholder or other such person with an ownership interest can establish to the court, usually by motion, that:
· The lienholder or other person knew or should have known that the vehicle would be used or involved in the violation resulting in the issuance of criminal forfeiture
· The lienholder or other person did not expressly/impliedly consent to the use or involvement of the vehicle in that violation
· The lien or ownership interest was perfected pursuant to law prior to the seizure, and
· Attest that the lienholder (or other holder) will not return the vehicle to the person from whom the vehicle was seized or to any member of that person’s family.
Upon presentment of the above, a court will typically allow a lienholder to take possession of the collateral for purposes of repossession and sale.** This collateral must be sold in the same commercially reasonable manner as any other collateral repossessed by the credit union. When preparing requisite notices of sale, the credit union must be mindful of the court’s order not to return the vehicle to the offender or members of his or her family, and make the appropriate changes to the notice to reflect this fact.*** Further, the credit union must ensure the auction house or seller of the collateral is aware of the restrictions on the sale to avoid violating a court’s order.
Being aware of forfeiture laws and the related notices that result from these laws is important for the protection of the credit union’s lien interest in its collateral. Upon receipt of such a forfeiture notice from the court, immediately notify your legal counsel so that the appropriate measures can be taken and the credit union avoids forfeiting any legal interest it has in its collateral.
Matt Young is an associate in the Credit Union department in the Brooklyn Heights operations center. He can be reached at (216) 739-5726 or firstname.lastname@example.org.
* R.C. § 4503.234 provides a comprehensive list of forfeitable offenses
** Less commonly a court may order the vehicle to sale, the proceeds of which be must be paid to the lienholder or other holder, less any costs for the seizure, storage and maintenance of the vehicle.
*** Review these changes with your legal counsel to ensure the notices remain legally compliant.