Commercially reasonable resale Lawyer Manual

The law requires that all aspects of the resale must be commercially reasonable. This means that the manner, method, time, place, and terms of the resale must all be reasonable by commonly accepted commercial practices. The creditor must use every reasonable means and their best efforts to obtain the full value of the car or other property. However, just because the sale brought a low price for the car does not prove that the sale was unreasonable.

But, if there is a big difference between the price obtained at resale and the true value of the car, a judge might look very closely at all aspects of the sale to see if it was fair. Consider looking at references from the public library like the "red book" or "blue book," which is published at regular intervals to discover the book value of the car at any given point in time. However, you must also consider the actual condition of the subject vehicle when estimating value.

• Private sales: The creditor is not allowed to bid upon or purchase the property. More than one bid must be solicited. A non-arms length sale to a related entity or the originating dealer may not comply. If the notice of resale informs the debtor that the sale is to be private, it must be a private sale.​
• Public sales: This is usually an auction and the most common method of disposition. Here, the creditor is allowed to bid upon and purchase the property. More than one bid must be obtained. It requires appropriate advertising or other publicity to attract bidders. The secured property must be available for inspection by the public before and during the sale. The sale must occur at a convenient location and be accessible to all members of the community. It should not take place in bad weather. If the notice informs the debtor that the sale is to be public, it must be a public sale.​
• Automobile "dealers only" sales: This kind of sale may be unreasonable because the consumer is denied the chance to take part in the sale. Also, if the creditor has a retail store (such as a car dealer) available to it, the property should be sold through the store on a retail basis. Sales at wholesale and to dealers will usually bring a much lower price.
   

Other requirements:

• The creditor should prepare or recondition the property in order to bring the best price at the sale; 
• The creditor has the duty to use care in preserving the property from the time it is repossessed until the time it is sold; 
• The sale must be made to a purchaser who bids in good faith. There can be no collusion or alliances between the creditor and the purchaser; 
• The sale should not be held too quickly after the repossession, but it should not be delayed too long (60 days may be too long). If the sale is too late, the debtor can claim that the creditor decided to keep the property, and the debtor should not be liable for a deficiency

If the creditor had access to a retail outlet (Ford Motor Credit has access to Ford dealerships) then the repossessed vehicle should be sold at a retail outlet to ensure a commercially reasonable sale. Ford Motor Credit Co. v. Jackson, 126 Ill. App. 3d 124, (3d Dist. 1984).

Note: Effective January 1, 2024, if a licensed repossession agency believes that a vehicle used as collateral contains personal information, it must remove that information using an approved electronic method before releasing the vehicle. Personal information means any data linked to the vehicle's owner, driver, or passenger, collected and stored by the vehicle. It includes biometric data, contact information, addresses, phone numbers, digital subscriptions, and more.