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What is a Writ of Sequestration, and How Does a Dealer Obtain One?

By Michael Dunagan
TIADA General Counsel

The Uniform Commercial Code (the Texas version is known as the Texas Business and Commerce Code) provides that the holder of a security interest in collateral can upon default peaceably repossess the collateral without any type of legal process.  The key word here is “peaceably.”
 
Court cases have held that the refusal of a debtor to relinquish possession of collateral (hiding it, locking it in a garage, refusing to leave the vehicle unattended, etc.) takes the situation out of the realm of peaceable.  If a repossession can't be accomplished peaceably (that is, with the permission of the debtor, or without the knowledge of the debtor and without breaching the peace), then it will be necessary to obtain an order (or “writ”) from an appropriate court.

Sequestration is a process by which a court, upon suit being filed and upon being presented with evidence of certain required conditions, can order the collateral to be seized by a constable or sheriff and held pending final judicial determination of the ownership rights to the collateral.

To obtain a writ of sequestration, the secured creditor must show that he or she is legally entitled to possession of the property and that the party in possession will "conceal, dispose of, ill-treat, waste, or destroy the property or remove it from the county during the suit."  A bond must also be posted, in an amount set by the court, before a writ will issue.

Because of the technical procedural due process requirements of sequestration, it will usually require the involvement of an attorney to prepare the appropriate pleadings and affidavits. Justice of the Peace courts have the authority to issue emergency orders, including writs of sequestration, but not all J.P.s will undertake to handle a sequestration.  Some will allow individuals without attorneys to file suits seeking sequestration writs in their courts. Some even provide forms for creditors to fill out. Justice courts have jurisdiction in cases where the value of the collateral does not exceed $10,000.00. If the value of the vehicle exceeds $10,000, it will be necessary to file the action in a county or district court. 

Once a judge is satisfied that the creditor is entitled to an order of possession, he or she will sign an order for the clerk of the court to issue the writ of sequestration.  The order will also specify the amount of bond that is to be posted by the creditor.  Court rules require bonds to be at least the amount of the value of the property plus costs.  Some courts will allow local individuals with non-exempt real property to post signature bonds.  Others may require a corporate surety bond or a cash bond. 

Note: Where neither the debtor nor the vehicle can be found, this remedy is of little value. The writ must be served upon the debtor (or a person in illegal possession of the property). The sheriff or constable attempting to serve the writ will typically not provide skip-tracing services, and will rely on the creditor to supply a valid address.

Conclusion:  Given the cost and time constraints of the sequestration process, self-help repossession is still the most desirable way to retake collateral.  But when peaceable repossession is unavailable, sequestration is the safest and best remedy for a car creditor.
 

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