Before they take it back: what hirers need to know about repossession?

Repossession is a legal process when a hirer defaults on payments under a hire-purchase agreement. The owner has the right to take back the goods, but this must be done in accordance with the law. In Malaysia, the Hire-Purchase Act 1967 governs owners' and hirers' rights and obligations in repossession cases. Additionally, the Hire Purchase (Recovery of Possession and Maintenance of Records by Owner) Regulations 1976 provide further guidelines. The Hire Purchase Act 1967 (HPA) requires a valid hire-purchase agreement to be in place before repossession occurs, and procedural safeguards are provided to protect both parties. This article aims to educate hirers on their rights, responsibilities, and the legal framework surrounding repossession to help them navigate this process effectively. Now, let's break down the steps involved in the repossession process. There are three main stages: before, during, and after repossession, each requiring specific actions and adherence to legal requirements. Starting with the initial stage, the owner must follow proper procedures. According to Section 16(1) of the Hire Purchase Act (HPA), "the owner must provide the hirer with a notice of repossession when there is an intention to repossess the goods". Before exercising the right to repossess, the owner must ensure that "the balance of the loan to be paid by the hirer must be more than one-third of the purchase price of the goods hired". By fulfilling this requirement, only then would the owner have complied with the requirement that "the hirer has defaulted two successive installments". The owner must provide a "written notice of intention to repossess the goods, which must be delivered to the hirer at least twenty-one days before any repossession, as specified in the Fourth Schedule". This notice must comply with Section 43 of the Act. The owner may retake possession of the goods after the notice period expires and if the overdue installments remain unpaid. According to Section 16(1A) HPA, "the owner must obtain a court order before repossessing the hired goods if the remaining balance of the loan is less than one-third of the total purchase price". However, if the hirer is deceased, "the owner can repossess the goods after four (4) consecutive defaults of payment" (Section 16 (1C) HPA).