Mechanics Liens For Vehicle Titles

So what happens with mechanics liens or storage liens? The question comes up quite a bit from our clients who are auctions, dealerships, repair shops that have vehicles that have been left there that they need to get off their lot or to get rid of or to get money to pay for the repairs that were done and never, um, paid for by the vehicle owner.

Mechanics Liens for Private Citizens
What about mechanics liens for private citizens? Can you do a mechanics lien to get a title for a car that maybe you purchased and didn’t get a title? Maybe you want to charge storage for a car that’s in your driveway. Can you do that? We’re going to take a look at mechanics liens in general and a few examples in some states to show what the rationale is behind these. What is the common logic behind it?

Federal and State Laws
Because in reality, even though mechanics liens for vehicles for cars and trucks are done differently in every state, the origin of the rules comes from federal law, so you have to kind of have the same process in most states even if it’s a little bit different for each jurisdiction.

Definition of Mechanics Liens
First of all, what is a mechanics lien? Well, technically a mechanics lien, sometimes called a garage holder’s lien or a repairman’s lien, is a process for a legitimate repair facility or automotive facility to get payment for a vehicle that was brought into their facility for repairs or service or storage and the person who owned the car never paid for it.

Practical Example
So somebody brings in a car, says, “Hey, fix my transmission.” You fix their transmission, and then they say, “I’m not paying for it,” and they leave the car there. This is a way for that repair facility to get compensated for their legitimate work on the vehicle and get the car off their lot so they don’t have to be stuck with a car and no money.

Authority and Misuse
Now, it gives some power and authority and privilege to a repair facility to get a title for a vehicle because, in fact, you’re taking away the ownership of that vehicle from the owner for your benefit. So you have some extra authority to do this. Because of that, sometimes this process is misused or abused by repair shops that say, “Hey, I’m going to use this to get titles for my buddy who bought a car on Craigslist that maybe didn’t get a title, right? I’m going to put in a fake mechanics lien.” We’ll talk about that later, but you have to be very careful using this because it’s very highly audited.

The Process: Example from Virginia
So what is the process? Well, here’s an example from Virginia. Mechanics lien storage application: You have to fill in this form. What else do you have to do? You have to attach an invoice that shows you have a mechanics lien under the code in the amount of whatever it is, and that invoice has to be a repair order from the owner of the vehicle authorizing you to do repairs, right? So if you don’t have authorization to do the repairs, you can’t just claim a lien on any vehicle.

Steps to Follow
First thing you have to do is send in a vehicle record request. You notice that’s the first thing. You have to put your name and address of your company and your FE number of your company, your tax ID number, your user agreement number, and street address where the vehicle is held. Then you have to put in a vehicle record request. Basically, you have to submit an inquiry to the Department of Motor Vehicles to get a printout of the ownership and lien holder of that vehicle. You have to do that first, and you’ll see all these other states have that as the first step.

Importance of Initial Steps
Why do you have to do that first? Because if you don’t do that first, the rest of your process will be voided by the government. If they don’t see that you ask the ownership records for that vehicle first thing before you send out certified letters or notices or auctions, they’re going to get your package, and they’re going to reject it because you didn’t ask for this first, right? And you have to have a reason for it. I understand it is unlawful to use this information for any other purpose. Ownership information is protected under federal law called the Driver’s Privacy Protection Act (DPPA), so if you ask for the government to give you the private name and address, of that vehicle owner, you have to have a good reason, and your reason of a mechanics lien is a good one. But if you use it for something else, you can get in trouble. I certify the information will be only used for the purpose.

Completing the Process
So you put in the VIN number, you put in the name of the person that’s asking for it, then the DMV will fill out this part. What do you have to do? Mechanic or storage lien requirements: What are the requirements? We’re going to take a look at this box right here. If the vehicle is worth between $12,000 and $25,000, first you have to ask for that vehicle transcript. That’s the first thing on the list, first bullet point. You have to notify all owners and lien holders by certified mail that you’re intending to sell the vehicle at least 10 days before the auction. Notice that that comes after the vehicle transcript. Here’s why: because if you send out that notice and it’s dated before you get the transcript, they’re going to say, “Where’d you get the information from?” Because it could be wrong. You have to have it dated afterwards.

Auction Requirements
You have to hold the vehicle for a minimum of 30 days. You have to advertise the date and time of the auction 10 days before the auction. So you have to offer this at auction. Now, you probably don’t have to sell it at auction. If somebody bids on the car $1,000, you can say, “I’ll bid $1,001,” and you can own the car. You have to petition the district court in the city or county to order the sale, so you have to get a court order for this. Then you have to be granted the petition, you have to hold the auction, and then you have to get an affidavit from the sheriff that said you complied with the auction and the other criteria. Sounds like a lot of hoops to jump through. You might think, “Well, this is Virginia. It’s a lot harder in Virginia.” Well, we’ll look at some other states.

Compliance and Qualifications
Affidavit of compliance must be completed by the lien holder and be submitted with the rest of it. Vehicle qualification: Does it qualify? Is it non-repairable? I have done all of these. I applied to the DMV to get the lien holder information. Well, guess what? That’s the first step. You have to hold the vehicle in possession for 30 days. I made notice of intent to sell the vehicle. I arranged for the vehicle to be sold. You have to check off you did these. I certify I have complied with these. I certify that all the information is true and correct. If it’s not, it’s under penalty of perjury. Make a false statement as criminal violation.

Audits and Fraud
This is because many times these are used for false purposes. Fake mechanics liens are ubiquitous, and they’ll check this out. They’re going to audit these and make sure that, first of all, you did it right. They’re also going to take a look at your mechanic shop to make sure you’re not doing too many. They’re going to compare the mechanics liens with your tax receipts to see how many dollars in taxes you’ve collected for all your customers that month, and if it’s x amount of dollars, they know there shouldn’t be 20 mechanics liens if you only collected $1,000 in taxes, right? Like, it just doesn’t add up. So they’re going to audit your individual mechanics lien packages and also audit you in general because they know there’s a lot of fraud going in.

Checklist
Here’s another checklist, right? Did you do these things? Did you get the transcript? Do you have the NADA screen value? Do you send the fees? Do you have a bill of sale? Do you have all these things? If you don’t have all these things, they’re just going to reject it. So there’s one example. Let’s look at another state here in a moment.

Example from Utah
All right, so here we are back again looking at another example of a repairman’s lien. You can see that’s what they call it here in Utah. Certificate of sale: What do you have to go through in Utah? You have to have your company name for your repairman information, right? Your business information. You also have to put a statement saying after lawfully advertising the lien, I certify the vehicle was sold to the highest bidder. So you can’t just take it to yourself. You have to take bids on it. Now, normally people don’t come bid on it, but you have to at least offer it.

Utah’s Filing Rules
Here are the rules instructions for filing it: At least 30 days before you sell it, you have to send certified letters to the registered owner. How do you know the registered owner? Well, you have to put an inquiry to the DMV to get that name. You can’t go by what you have from the customer’s note that they gave you or what you found in the vehicle. You have to get a registered or certified printout from the DMV. The customer responsible for the work order also has to be notified. So if the owner and the person who brought in the car are two different people, you have to send to both. The certified letter has to have in it the VIN number of the vehicle, the location, the name and address of the owner as indicated on the work order, and any person claiming an interest. So if there’s a lien holder, you got to send it to them too.

Sale and Notice Requirements
The name and address of your place, your garage, the total amount owing for the services, any interest and storage fees. Remember, you can’t just make that up out of thin air. The interest and storage has to conform to the law, and you have to have the date and time of the sale. No property can be sold earlier than 45 days after you complete the repair, so you have to wait at least a month and a half. Explanation of the right to claim lien: So you have to print out the law that shows how you can do this and also let the owner know that they have the right to recover by posting a bond or paying for it before the sale takes place. You have to also put an advertisement in a newspaper saying you’re going to offer it for sale. That way you get interest in it.

Final Steps in Utah
When the sale is done, you have to fill out all the forms: the TC 839 R, the receipts for certified letters, the copy of the certified letters, proof of publication, copy of the signed work order. If you don’t have a signed work order, you’re out of luck, and then you send it to the DMV, but you also have to satisfy any registered lien, right? So it doesn’t make liens go away in Utah. So that’s another difference you have to look at.

Example from Wisconsin
Last but not least, what about Wisconsin? Wisconsin also has involuntary transfer mechanics lien, right? And you have certain rules you have to go by there. The rules are you have to say, “I am a mechanic who has prepared a written repair order that clearly describes the repairs. The repair was given notice, and they didn’t abide by it,” and you have to sign it under penalty of perjury. And then you go through the same process. You have to verify ownership by getting a vehicle driver record request. You have to wait for that to come back. You have to send out a certified letter. Most of the rules are the same in different states because it goes by federal law.

Conclusion
So here’s the bottom line. If you’re thinking about doing a mechanics lien, first of all, make sure you’re an actual mechanic and you have the right to do this. If you’re not, you’re wasting your time. Now, you might say, “Well, I’m a private person, I’m just a civilian, but I’m going to get my buddy who’s a mechanic to put through a fake mechanics lien.” Be very careful because, like we talked about earlier, the government is going to audit these, and if they contact the prior owner and they say, “No, I never brought my car into that shop. I sold that car on eBay or Craigslist a couple weeks ago,” now they’re going to pull your mechanics lien and your buddy’s license will be at risk. Lots of people get in trouble for doing fake mechanics liens, so don’t do that.

Alternatives
There’s other ways to get a title. In fact, many of our clients who are mechanics that could do a mechanics lien, they would rather do a court order title because it’s easier, it’s less hassle, less headache. You don’t have to wait 30 days, 45 days. You don’t have to have all this documentation. So consider other methods. Court order title: You can see the link below for more information about that. But if you are set on doing a mechanics lien, this will give you a couple of examples. Every state’s a little different. Our website will give you instructions on how to do it if you want to do it yourself. We also have a title service if you want to have us do the work for you. Mechanics liens are a valuable way to recover money as a mechanic, but by itself, it shouldn’t be a way to try to get a title only in particular scenarios.

Watch our YouTube video: https://youtu.be/NpxDQqz9QP4?si=wggl9SRx862_JGRp