The Law Commission has published a report on Bills of Sale (no. 369). The report follows a September 2015 consultation on reform of the Bills of Sale Acts.  The report recommends that the Bills of Sale Acts should be repealed and replaced with modern legislation that imposes fewer burdens on lenders and provides more protection to borrowers. The Law Commission has made a number of recommendations for reform, including the repeal and replacement of the Bills of Sale Acts with a new Goods Mortgages Act. This would govern the way that individuals may use goods they already own as security for loans, while retaining possession of them.

Among other things, the new Act would:

  • provide appropriate protection to borrowers so that they would have more time to pay before their vehicles are repossessed;
  • protect innocent purchasers who buy second hand vehicles without realising that they are subject to logbook loans;
  • save £2 million of costs caused by unnecessary registration and red tape; and
  • remove unnecessary restrictions on secured lending to small business.

The Law Commission intends to tie the new Act to the existing consumer credit regime, in particular, some of the borrower protection measures the Commission recommends would only apply to goods mortgages used to secure a regulated credit agreement. If the Government accepts the Law Commission’s recommendations, the next stage would be for it to draft a Bill. The Law Commission hopes the Bill to be introduced to Parliament under the special procedure for uncontroversial Law Commission  Bills.

View Law Commission report on bills of sale, 12 September 2016