A breach of a conditional sales contract occurs when either party fails to fulfill their obligations under the contract. The most common breach by a buyer is failure to make payments. When a buyer defaults on payments, the contract typically gives the seller (or the assignee — the finance company that bought the contract) the right to take certain actions, including demanding payment of the full remaining balance (acceleration) and repossessing the vehicle.
Before we get into repossession specifically, understand that the Rees-Levering Act and general California law require certain procedures to be followed before and during the exercise of remedies for breach. The contract must specify the default provisions and the remedies available. The buyer typically has the right to cure the default — to bring the payments current — before the seller can exercise more drastic remedies like repossession.
If you as the dealer are still the contract holder — if you haven’t assigned the contract to a finance company — you need to understand your rights and obligations thoroughly. Many dealers, however, assign their contracts to finance companies, and in that case, the finance company handles default and collections. But even when the contract is assigned, the buyer may come back to you with complaints, and you should be able to explain the process.