Please note that as of August 23, 2020, the portion of Executive Order 2020-16 referenced in our answer below has been rescinded by Executive Order 2020-48 (“Executive Order 2020-16 is re-issued in its entirety and extended through August 22, 2020, whereafter Section 1 shall be rescinded”).

We do not believe that voluntary surrenders of vehicles or sales of previously repossessed vehicles are prohibited under Executive Order 2020-16 (EO-16).

EO-16 states that “the repossession of vehicles is contrary to the interest of preserving public health and ensuring that individuals are able to engage in permitted travel while limiting their use of public transportation and maintaining social distancing.” Accordingly, it provides: “Beginning March 27, 2020 and continuing for the duration of the Gubernatorial Disaster Proclamation, the provisions of the Uniform Commercial Code [UCC], 810 ILCS 5/9-609, regarding the possession or usability of a vehicle, and the provisions of the Illinois Vehicle Code, 625 ILCS 5/3-114, regarding the repossession of vehicles, are suspended.”

Both laws provide remedies for creditors when a loan secured by a vehicle is in default. Section 9-609 of the UCC authorizes creditors to take possession of a vehicle after default on the loan secured by the vehicle, while Section 3-114 of the Vehicle Code addresses the repossession of a vehicle “other than by voluntary transfer.” Clearly, EO-16’s suspension of the Vehicle Code’s remedy would not apply to (or prevent) a voluntary surrender of a vehicle after default.

Similarly, in our view, EO-16’s suspension of the UCC remedy should not apply to a voluntary surrender, since the creditor is not exercising its rights under Section 6-609 of the UCC when the debtor voluntarily surrenders the vehicle. Moreover, the purpose of EO-16 — to ensure “that individuals are able to engage in permitted travel while limiting their use of public transportation” — is not inconsistent with a debtor voluntarily relinquishing their vehicle, since the debtor is the person choosing not to use the vehicle. Consequently, we do not believe that either of these laws are implicated if a debtor chooses to surrender their vehicle, and EO-16 should not be read to prohibit such voluntary surrenders.

Additionally, we do not believe EO-16 prohibits the sale of vehicles that were repossessed before March 27, 2020. Section 9-609 of the UCC does not address vehicle sales, and while Section 3-114 of the Vehicle Code does address the sale of repossessed vehicles, the prohibition in EO-16 is limited to the provisions of Section 3-114 “regarding the repossession of vehicles” — in other words, EO-16 does not address the subsequent sale of such vehicles.

Lastly, we have received confirmation from the IDFPR Division of Banking that they agree with our conclusion; EO-16 does not prohibit a debtor from voluntarily surrendering a vehicle, nor prohibit a lender from selling a previously repossessed vehicle provided the lender can obtain title to the vehicle and follow proper social distancing when completing the sale.

For resources related to our guidance, please see:

• Illinois Executive Order 2020-16 (March 28, 2020) (“[T]he repossession of vehicles is contrary to the interest of preserving public health and ensuring that individuals are able to engage in permitted travel while limiting their use of public transportation and maintaining social distancing.”)

• Illinois Executive Order 2020-16 (March 28, 2020) (“Beginning March 27, 2020 and continuing for the duration of the Gubernatorial Disaster Proclamation, the provisions of the Uniform Commercial Code, 810 ILCS 5/9-609, regarding the possession or usability of a vehicle, and the provisions of the Illinois Vehicle Code, 625 ILCS 5/3-114, regarding the repossession of vehicles, are suspended. No provision contained in this Executive Order shall be construed as relieving any individual of the obligation to make payments or comply with any other obligation that an individual may have pursuant to a loan agreement or otherwise.”)

• Illinois UCC, 810 ILCS 5/9-609 (“Secured party's right to take possession after default.

(a) Possession; rendering equipment unusable; disposition on debtor's premises. After default, a secured party: (1) may take possession of the collateral; and (2) without removal, may render equipment unusable and dispose of collateral on a debtor's premises under Section 9-610.

(b) Judicial and nonjudicial process. A secured party may proceed under subsection (a): (1) pursuant to judicial process; or (2) without judicial process, if it proceeds without breach of the peace.

(c) Assembly of collateral. If so agreed, and in any event after default, a secured party may require the debtor to assemble the collateral and make it available to the secured party at a place to be designated by the secured party which is reasonably convenient to both parties.”)

• Illinois Vehicle Code, 625 ILCS 5/3-114(a) (“If the interest of an owner in a vehicle passes to another other than by voluntary transfer, the transferee shall, except as provided in paragraph (b), promptly mail or deliver within 20 days to the Secretary of State the last certificate of title, if available, proof of the transfer, and his application for a new certificate in the form the Secretary of State prescribes. It shall be unlawful for any person having possession of a certificate of title for a motor vehicle, semi-trailer, or house car by reason of his having a lien or encumbrance on such vehicle, to fail or refuse to deliver such certificate to the owner, upon the satisfaction or discharge of the lien or encumbrance, indicated upon such certificate of title.”)

• Illinois Vehicle Code, 625 ILCS 5/3-114(f) (“In all cases wherein a lienholder has repossessed a vehicle by other than judicial process and holds it for resale under a security agreement, and the owner of record has executed an assignment of the existing certificate of title after default, the lienholder may proceed to sell or otherwise dispose of the vehicle as authorized under the Uniform Commercial Code. . . .”)

• Illinois Vehicle Code, 625 ILCS 5/3-114(f-5) (“Subject to subsection (f-30), in all cases wherein a lienholder has repossessed a vehicle by other than judicial process and holds it for resale under a security agreement, and the owner of record has not executed an assignment of the existing certificate of title, the lienholder shall comply with the following provisions: . . .”)

• Illinois Vehicle Code, 625 ILCS 5/3-114(f-10) (“In all cases wherein a lienholder has repossessed a vehicle by judicial process and holds it for resale under a security agreement, order for replevin, or other court order establishing the lienholder's right to possession of the vehicle, the lienholder may proceed to sell or otherwise dispose of the vehicle as authorized under the Uniform Commercial Code or the court order. . . .”)