House makes 'equity skimming' of vehicles a felony

The Utah House on Feb. 25 passed Senate Bill 157, a criminal measure that creates the offense of "equity skimming of a vehicle" and makes the act a third-degree felony when a person knowingly transfers or arranges transfer of a vehicle subject to a lease or security interest without the written authorization of the lessor or holder of the security interest.

Representative Boeschler, who introduced the bill on the floor, described common classified-ad style brokerage schemes in which brokers match buyers and sellers, collect fees and arrange transfers without notifying lienholders or paying off debts. "Sometimes later, the deal goes sour. The broker has disappeared, and the lienholder takes a big loss," Boeschler said.

The bill’s core provision, Boeschler said, is that a dealer, broker, or anyone colluding with them is guilty of equity skimming if they transfer a vehicle for profit while knowing (or should have known) the vehicle is subject to a lease or security interest without first getting written authorization. The measure includes a defense allowing the accused to prove, by a preponderance of the evidence, that the lease obligation or security interest had been satisfied within 30 days after the transfer.

Boeschler told the House the bill is endorsed by the county attorney’s office, the motor vehicle enforcement division and the Utah Automobile Dealers Association. "Equity skimming of the vehicle is a third degree felony," he said on the floor.

Voting was opened and closed that day; the clerk recorded 68 yes votes and no recorded no votes and the bill passed the House. The bill was publicly read by title and immediately signed by the speaker and entered in the House journal for February 1991.

Proponents argued the measure protects lienholders and deters unscrupulous brokerage arrangements. The floor debate included a sponsor explanation of the statute’s elements, the available defense, and endorsements from enforcement stakeholders.