repossesses

Repossess is a legal term that refers to the act of taking back property by a lender or creditor when a borrower fails to make payments on a loan or meet the terms of an agreement. This process is typically initiated when a debtor defaults on secured debt, meaning the property itself served as collateral for the loan. Examples of secured debt include mortgages, car loans, and some furniture or appliance financing.

The process of repossession is governed by state laws and the terms of the loan agreement. Generally, a lender must provide the borrower with notice before repossessing the property, although the specific requirements for notice vary. In most cases, repossession can occur without a court order, and the lender may take the property without prior warning if it is feasible. However, laws often prohibit breach of the peace during the repossession, meaning a lender cannot use force or threats to take the property.

Once the property is repossessed, the lender typically has several options. They may sell the property at a public auction or private sale to recover the outstanding debt. If the sale proceeds are insufficient to cover the loan balance, the borrower may still owe the remaining amount, known as a deficiency balance. Conversely, if the sale yields more than the outstanding debt, the borrower may be entitled to the surplus. In some jurisdictions, the borrower may have a right to cure the default and reinstate the loan before the property is sold.