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Mechanics lien on Car

Per California law, a possessory lien is a “hold” against your property, filed by an unpaid contractor, subcontractor, laborer, or material supplier, and is recorded with the county recorder’s office. If unpaid, it allows a foreclosure action, forcing the sale of the property in lieu of compensation.

 

But when it comes to your vehicle, if you don’t pay for repairs, tows or storage that you’ve commissioned within a specific period of time — which varies by state — the service provider who has worked on your vehicle can take steps to establish a mechanic’s lien. A mechanic’s lien, also known as a garageman’s lien, means the mechanic, storage facility or towing company may be able to sell your car to obtain compensation for the unpaid debt, depending on your state’s law.

Who can conduct a lien sale?

  • Auto body repair shop

  • Auto mechanic’s shop

  • Owners of private property

  • Owner’s of storage facility / storage company

Reasons for a mechanics lien

Reasons for a mechanic’s lien:

  • Services rendered – services performed but not paid

  • Unpaid debt

  • Abandoned vehicle

  • Unpaid storage fees

mechanics lien on a car - information

Information Required to Conduct a Mechanic’s lien

  • Vehicle identification number

  • Signed repair authorization for mechanic work performed or written statement for work performed for mechanics or body shops

  • For a storage company storage charges

  • Dates when the vehicle came into the lien holder’s possession

  • Date when the work was completed (if the vehicle underwent repairs)

  • Date when the vehicle owner or company who financed the vehicle was notified of the amount due.

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The agency that Authorizes Mechanic’s liens

In general, the state’s transportation agency issues rules, and regulations when it pertains to mechanic’s lien. In California, the California Vehicle Code that addresses lien sales are the following:

  • Vehicles valued at $4,000 or less (California Civil Code (CCC) §3072).

  • Vehicles valued over $4,000 or stored at a self-storage facility (CCC §3071).

  • Vessels or a vessel/trailer combination valued at $1,500 or less (California Harbors & Navigations Code (CH&NC) §§504 and 507).

  • Vessels or a vessel/trailer combination valued over $1,500 (CH&NC §503)

Lien information – Important Parties to Identify:

  • DMV — The California Department of Motor Vehicles (DMV).

  • Lien — A legal claim on a vehicle for unpaid towing, repairs, or storage costs.

  • Lienholder — As used in this chapter, the lienholder is the person or entity who has an interest in the vehicle due to storage and/or towing costs.

  • Legal Owner — The person or entity with a financial interest in a vehicle and is listed on the titling document in the “Lienholder” section (usually when there is a car loan on the car’s title).

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How much does it cost to process a mechanic’s lien

The cost to process a lien depends on the value and the type of vehicle being liened:

  • $70 (maximum amount allowable to charge)Vehicles valued at $4,000 or less (California Civil Code (CCC) §3072).

  • $100 (maximum amount allowable to charge)Vehicles valued over $4,000 or stored at a self-storage facility (CCC §3071).

  • $100 (maximum amount allowable to charge)Vessels or a vessel/trailer combination valued at $1,500 or less (California Harbors & Navigations Code (CH&NC) §§504 and 507).

  • $100 (maximum amount allowable to charge)Vessels or a vessel/trailer combination valued over $1,500 (CH&NC §503)

mechanics lien on a car - invalid reasons

Invalid reasons to process a mechanic’s lien.

  • You lost the title to the vehicle that you purchased

  • You did not receive a title, lien release, bill of sale or any documentation indicating that the vehicle has been sold to you

  • You have no knowledge of the registered owners and have no way to get a hold of them.

  • You are trying to bypass paying off a financed vehicle that have a security interest.

Note: Filing a mechanic’s lien for invalid reasons is a criminal offense. The only option for you is to conduct a diligent effort – please click here to learn more about a diligent effort.

Mechanic’s lien process

Any lien holder can conduct their own lien, however, most lien holders hire a third-party service to conduct a lien on the vehicle, and this is because it is much easier & faster for a third-party service to get paid to process the lien. The following is a general order in which the lien sale is conducted:

  • Get a report from the state’s department of motor vehicles listing the following:

    • registered car owner

    • bank or other entity that financed vehicle

    • any other interested party that is listed on the report

    • individual or entity that dropped off, abandoned or stored the vehicle that are not listed on the report

  • Send the lien sale application form via certified letter to all interested parties:

    • via certified mail with return receipt requested

    • Send notification to the DMV via certified mail with return receipt requested

  • Wait 30 days and wait for a response. Getting no response is a good thing and allows you to proceed with the lien sale. However, if any of the interested parties oppose the lien sale, the lien sale will not be continued.

    • If the lien sale is opposed the course of action you take will depend on who opposes the lien sale. A few scenarios could occur:

      • Contact the vehicle owner or the owner’s agent and negotiate the resolution to the amount owed. Sometimes a final payment will satisfy the lien and resolve the matter

      • Contact the Credit union or entity that has a security interest in the vehicle and negotiate the resolution to the amount owed.

      • In cases where there is no resolution, you will have to take the interested party that is opposing the lien sale to a small claims court if the claim is less than a certain amount. In cases where the amount is higher, you may contact a law firm or local attorney to resolve this unpaid mechanic’s lien.

  • On the date of sale (the date the lien can legally sell the vehicle):

    • The lien holder must provide the buyer with the following:

      • Reg 168a

      • Bill of sale from the lien holder to the new owner

      • the vehicle report that holds the lien information

      • a certified mail receipt for the letters that were sent

Mechanics lien on Car - auto auction

Selling a vehicle with Lien sale paperwork

  • On the date of the sale, the sale is considered a public auction.

  • Certain vehicles have to be advertised on a local newspaper

  • If there is no buyer on the sale date the lien holder will retain possession and is considered the first buyer. (the lienholder can still sell the vehicle afterwards).

mechanics lien - what new owner gets

What the new vehicle owner should expect:

  • A new vehicle title

  • A new set of plates, set of stickers & registration card (received in person at the department of motor vehicle)

File your Mechanic’s lien

If you have any more questions regarding a lien on the vehicle’s title please contact our team and we’ll answer your questions!

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