Dealing with Import and Export BrokersWe deal with a lot of import and export brokers for cars and motor vehicles, and a lot of times they’re frustrated with all the paperwork you have to do to export a vehicle. You might be thinking, “Why is there paperwork to export a vehicle? I thought Customs was only concerned about importing and cars coming into the country?”
Well, that’s true for the most part. I mean, if you’re importing a container full of bananas, they want to make sure there are no spiders in it or snakes or disease. If you’re exporting bananas, they really don’t care. But vehicles are different because when you export a vehicle, you might also be causing harm if it’s a stolen vehicle or has liens on it.
Scrutiny of Motor Vehicles in the Export Process
The Smuggling of Stolen CarsThe key to these smugglers smuggling cars is that you can send it to Africa, Europe, or South America, and now you have a car that you can sell for full value because they’re not going to really check the stolen records.
This is the reason why paperwork is a little more tricky to export vehicles now—because they’re making sure cars that are stolen or that have liens on them aren’t going out. A lot of times people will buy a car under a straw buyer name at a dealership with a lien on it, so they don’t really pay any money for the car. Maybe they pay a $500 down payment, they get a loan for the car, and then they export it overseas. They stop paying the loan and they have a free car in another country.
Increased Scrutiny and Paperwork for Export VehiclesSo, the crackdown is making it harder to do paperwork for export vehicles. A lot of the cars that come out of Copart or IAAI have “export only” on them. A lot of export brokers are now having to do more title work because of the vehicle’s scrutiny of being hidden in shipping containers, and they will X-ray these containers. If they see it looks like there’s a vehicle in it, they’ll pop that thing open and make sure that it’s been declared properly with the right VIN number.
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How to Get a Lien Released for a Motor VehicleSo how do you get a lien released for a motor vehicle so you can get your title? There are several different scenarios that come into play. It could be that your loan is paid off. It could be your loan is not paid off. It could be your lender is out of business. There’s a lot of different scenarios that you need to deal with, and each one has a different procedure.
Always Contact the Lien Holder in WritingHow do you do this? Well, first of all, you need to make sure that whatever the scenario is that when you make your contact with the lien holder, you always do it in writing. Never do it by phone, by email, by text message, Facebook, LinkedIn. Never do it that way. Always do it in writing—postal mail.
Why Writing is ImportantAnd here’s why. Lien holders do not have a department of people that are just sitting around waiting to do lien releases. Everybody at that bank is doing some other job—loan payments, new loans, title work, that kind of thing. They’re not doing lien releases. So when you ask them to do a lien release by phone, that person now has to drop everything, find all the right forms, look them up, fill everything out, sign them, and mail them to you.
The Process of Sending PaperworkThey’re not going to do that. They might say they will, but then they’ll just go back to their job. Or sometimes they’ll even tell you, “I’m not going to do that.” So if you take it upon yourself to mail them the paperwork, you’ll get it back. And we’ll talk about specifically what you want to send them. But do it in writing.
If Your Loan is Paid OffIf your loan is paid off, just contact the lender directly. It’s a lot cheaper and faster if you contact the lender. We have a title service—we can do it for you. It’s going to cost more money because now you’re paying us to do the work, and it’ll take a little bit longer. It’ll probably add three or four days to get your lien release if we do it. However, it’s easier because now you don’t have to do all the paperwork. But that’s a personal decision.
If Your Loan is Not Paid OffIf your loan is not paid off, if it’s a charge-off, or a write-off, or delinquent, you still want to contact them in writing. But you also want to include what’s called a letter of non-interest and an affidavit of facts. Those are two things you want to include if your loan is not paid off.
If the Loan is Charged OffMany times, the lender is going to put it in their computer, type it up, they’re going to see it’s a charge-off, and they send you your lien release. Always make that attempt. If for some reason they don’t respond, you have a backup method, which is a magistrate title, which we’ll talk about afterwards as well.
If the Lender is Out of BusinessIf the lender is out of business, take your first step and send out the package to the last known address for that lender. And if you don’t know the address, you can look it up in the Secretary of State’s records. You can look it up in the corporate records or the banking records. But send out that package. It might just come bouncing right back to you. That’s, you know, perfectly normal. But at least you can show that you sent it to their last known address.
What to Do If There is No ResponseIf it comes back to you, or if they’re not there, then what you do is you file that magistrate title—that court order title. You just tell the magistrate, “Look, I tried to contact the lender, they didn’t respond, they didn’t claim the vehicle.” And then the magistrate or the court clerk can sign that lien release, and it still clears it off your title. So that’s your backup method.
If the Loan is in DefaultIf the loan is in default, charge-off, or write-off, same thing—you want to start with sending it to the lender. If they don’t reply back, then you file it with the magistrate to tell them, “Look, they didn’t respond, and I want the court to sign off on this.”
The Importance of Making a Formal RequestRemember, you have a 0% chance of getting a lien release if you don’t make the formal request. If you make the request, now you have a shot. From what our clients tell us, from them getting lien releases, about 82% of the time, even if there’s money owed, you’ll get a lien release. If the money is paid off, you get it almost all the time.
Always Do It in WritingRemember, always do it in writing—not by phone or email. If you do it by phone or email, it’s back down to 0%. Even if the loan is paid, the bank probably won’t send it to you if you just call them on the phone and ask them to send you a lien release. Always do it in writing. That way, you’ll have a record, too. If they don’t send it, you know that you at least tried.
Filing for an Abandoned Vehicle TitleFiling for an abandoned vehicle title is a very specific process in order to get reimbursement for a vehicle that maybe has been left at your shop, towed in, or stored. Now, I use the phrase “abandoned vehicle” when I started this—be very careful with that. If you have a vehicle that has been brought to a repair shop, brought in for storage, or towed in, you don’t want to use the word “abandon.” I use that word initially because most people think of it as an abandoned vehicle. In fact, we get hundreds of calls every day from shop owners that say, “I want to get a title for an abandoned vehicle.”
The Importance of Correct TerminologyYou need to get rid of that terminology. If you call a vehicle abandoned, you probably will never get a title. But that’s okay because that’s not what it is. It is a mechanic’s lien, a towing lien, or a storage lien. If you call it abandoned, you probably have to give the car away. You can get more information about the difference between an abandoned vehicle and a mechanic’s lien on our website below. But if you do have a vehicle that was brought to you for repairs, towing, or storage, there is a process to get a title. However, it is not abandoned—abandonment is different, and we’re going to talk about that mechanic’s lien process.
Mechanic’s Lien Process ExampleHere’s an example from the state of Florida. This is the Florida Statutes talking about personal property liens, generally Section 713. It talks about what the steps are that are involved, and most states have about the same steps. You have to follow them to the letter; otherwise, they will reject the application. We do hundreds of these every week, and what we find is that it works very well as long as you follow their program. If you deviate from any of the steps, they will kick it back.
Why the DMV Scrutinizes These ApplicationsWhy do they do that? Well, the DMV or the titling authority in every state knows that many times, this process of a mechanic’s lien is used improperly by people and companies, like body shops, to get titles for vehicles that really shouldn’t be getting titles—vehicles that weren’t legitimately brought into their shop for service, but rather belong to a buddy who bought a car on Craigslist or someone they found on Facebook. So, they audit these and scrutinize them to make sure everything is right. It’s very, very important to do all this paperwork correctly.
Steps to Establish Prior State RegistrationLet’s look at a few examples and specific instructions you can get on our website. We also have a service if you want us to do this process and the paperwork for you. If you look at Section 713, the first step is a good faith effort to establish the prior state registration. Before you do anything else, you have to make a good faith effort. What does that mean? A check of the database for the owner or lienholder, a check of the National Motor Vehicle Title Information System, a check of the tag, and a check with law enforcement. The National Motor Vehicle Title Information System is a federal system.
Storage Fees and Reasonable ChargesNumber two is that you can charge fees for storage, but they must be either reasonable, published, or agreed upon. You can’t just make up a storage fee and say, “I’m charging you $100 a day.” It has to be set forth as a reasonable fee. If you try to get more than that, they might reject your whole package.
Importance of Proper NoticesThe other very important part is the notices. A person claiming a lien for towing, recovery, or storage must give notice by certified mail, pursuant to subsection 5E-16, to the registered owner, the insurance company, and all persons claiming a lien as disclosed by the records in the highway safety and motor vehicles system. What does that mean? It means you have to send these notices to the addresses listed in the title record.
Official Records and Title FreezingYou can’t just use any random address you found in the glove compartment or one that the customer gave you. You have to get the records from the government. In some states, it’s required that before you send out notices or certified letters, you first submit a notice of lien to the Department of Motor Vehicles. If you do that, they will first freeze the title, so the owner or lienholder can’t change it. This prevents any funny business. Then, they will give you a printout of what they have for a title record.
Sending Notices to the Right AddressNow you have the official record of the name and address of that person. You might say, “Well, I know they moved from there.” It doesn’t matter. You send it to the address that’s in the title record. If it gets sent back, at least you sent it to the correct address. If you send it to a different address than what’s in the records, the whole thing could get rejected two months later when you apply for the title.
Required Information in the NoticeWhat must be in the notice for a lien on a vehicle? It must include the VIN number, the name and address of the lienor (your facility, body shop, repair shop, or towing company), and the name as registered with the Department of Corporations. Many people make mistakes here. If your business is called “Automotive Restoration Development LLC,” but you call yourself “Bill’s Body Shop,” you must put your official company name on the notice.
Avoiding Rejected ClaimsIf you use “Bill’s Body Shop” or an abbreviation, the state may reject it, or the person being claimed against could dispute it. That name and address must also appear on the outside of the envelope sent to the owner. Why? Because some body shops send blank envelopes, hoping the recipient thinks it’s junk mail and throws it away.
Itemized Charges and Sale TimelineYou must include an itemized statement of charges—not just “You owe $4,200,” but a breakdown of storage, repairs, towing, parts, etc. You must also notify them that the vehicle may be sold after 35 days for an older model or 50 days for a newer model. If you don’t wait the proper time, you will lose your title. The address where the vehicle is physically located must also be included.
Timeline for Notices and Potential Legal ConsequencesTiming is important. You can’t send that notice less than 30 days before the sale of the vehicle (or 50 days for a newer model). You must give the owner at least a month or two to redeem the payment. If the DMV sees the dates are wrong, they will reject the application. Also, if you make a mistake in the paperwork and the lienholder, insurance company, or owner suffers damages, they can sue you and win money.
Importance of Following ProceduresThere are many other details to follow. For example, you must do this notice at least 20 days before the sale, pay 5% of the proceeds to the clerk, and follow all statutory requirements. This is an eight- or nine-page statute, and you must comply with all of it to avoid losing the vehicle.
State Regulations and Federal LawThis is just one example from Florida, but most states have similar procedures. The origin of these procedures comes from federal law, so whether you’re in Florida, Pennsylvania, or Arizona, the steps are largely the same.
Final TakeawaysIf you are a towing company, repair shop, or body shop with a vehicle, first of all, don’t call it abandoned—it probably isn’t. “Abandoned” means it showed up out of nowhere, and you have no idea who brought it there. Instead, it’s a mechanic’s lien or a towing lien. Secondly, don’t talk to lienholders or owners verbally until you know exactly what notices to send. Many lienholders know how to work the system, and if they catch you making a mistake, they can invalidate your entire lien and take the car.
Importance of Doing It RightIt used to be easier to get these titles, and you may have known a local “title guy” who handled mechanic’s liens for cheap. However, those days are over. The state no longer plays around—you can’t skip steps or cut corners. If you don’t do it right, you will not get your title and will lose out on your money.
Waiting in Line at the DMVSo do you hate the DMV? Well, imagine these people waiting in line at 2 a.m.—over one hundred people waiting in line. This is in Broward County, Florida. This was posted on social media: pictures of these people just sitting, waiting in the dark, trying to get to the DMV to get a title, registration, or license. The caption says they only accept the first 50 people, and there are over 100 people in this line. So do anything you can to avoid waiting in line.
Alternatives to Visiting the DMVThe DMV is good at what they do. Try to handle your business by mail. Try to do it online. Try using a service. But if you’re looking to get something done at the DMV by going in person, waiting in line is the last thing you want to do.
Challenges with Contacting the DMVAnd as you’ve probably already found out, you’re not going to get anybody on the phone when you call them. So don’t try calling them either, because they don’t have customer service at the DMV.
Considering Other OptionsSo this is just another example of why the DMV is tough to deal with and why you might want to look at alternatives to going down in person and torturing yourself with all those people at 2 a.m.
How to File for a Mechanic’s Lien on an Abandoned VehicleWell, first of all, it’s very important to distinguish between a mechanic’s lien and an abandoned vehicle, because abandoned vehicles have a lot of limitations on what you can do. In most cases, the vehicle that you’re trying to get a title for really is not abandoned. Because if you call it abandoned, you’re probably going to lose out on what you’re trying to do with your title.
Example from MarylandWe’ll talk about that as an example. We’re going to take a look at a specific state—happens to be Maryland—and how they address mechanic’s liens and how you get titles and what you can and can’t do. Remember, we do have a service where if you want assistance with this mechanic’s lien vehicle title process, you can access that on our website. And we can give you more information either as instructions, or we could do it for you, or we can even do consultation.
Maryland Department of Transportation Motor Vehicle AdministrationFirst, we’re going to look at Maryland Department of Transportation Motor Vehicle Administration’s process for entitling a vehicle with a mechanic’s lien.
Federal Guidelines for Mechanic’s LiensRemember, this is just one state, but most states have about the same rules. And the reason we selected this one to give you as an example, even if you’re not in Maryland—the chances of you being in Maryland are very slim because it’s the smallest state in the country and there are 50 states, so you’re probably not in Maryland—but the rules here are probably very similar or the same as your state. Why is that? Most states use the federal guidelines for mechanic’s liens and abandoned vehicles.
What is a Mechanic’s Lien?So what is a mechanic’s lien? You can put it against a vehicle by a repair or storage facility if the owner fails to pay the repair bill and leaves the vehicle in the custody of the facility. Now, think about that. This is not abandoned. They intentionally gave it to you in your custody for an extended period of time.
Selling the VehicleAfter taking the action required to establish a lien, the facility can then sell the vehicle to recoup the money owed to you. That sounds like what you want to do. Don’t be scared by what it says here about selling the vehicle at a public auction. It’s not like you have to bring it to some auction and let them auction it off. You hold the vehicle on your premises. You just give the public notice that they can come offer you a bid. You don’t have to take their bids. You could put your own bid in and beat everybody. It’s not like you have to pay anybody money. The money’s going right to you. You just have to at least let the public offer you something for it.
Rules for Obtaining a Mechanic’s LienWhat are the rules for obtaining a mechanic’s lien? Remember, this is a brief overview, but it does give you some insight into how it works. All of the following must be true before you can establish a mechanic’s lien. Notice the first word “all.” You have to have all of these true.
Charges and Repair AuthorizationCharges for the vehicle or vehicle repairs must go unpaid for at least 30 days. Meaning that you can’t just jump the gun and file it 2 days after the guy dropped off the car. You have to wait a month. Charges must be supported by a repair authorization. What does that mean? You have to have a completed repair order authorized by the vehicle owner, including a detailed description of the work performed. So you can’t just make stuff up. You have to have it in writing and the owner has to sign it before you do the work.
Other OptionsIf you don’t have that or don’t meet any of these other criteria, there are other ways you can get a title. Our website will give you what’s called a civil lien or a court order title or a bonded title. There are other things you can do. So if you don’t meet these criteria, don’t worry. You can do other things. And sometimes the other things are actually easier.
Storage FeesIf you want to charge storage fees, you have to have a storage contract. You can’t just make up storage fees out of the blue and say “I’m charging you $20 a day.” Can’t do it. You have to have it in writing and signed.
Abandoned VehiclesA vehicle that has been abandoned does not qualify for a mechanic’s lien. So don’t start calling these vehicles abandoned.
Contacting the PoliceWhat happens if the vehicle’s abandoned? The local police department should be contacted.
Steps to Establish a Mechanic’s LienHow do I establish a mechanic’s lien? At least 10 days prior to the planned auction date, you have to send a notification letter by registered mail to all the persons listed below.
Notification DetailsThe owner of the vehicle. The person who left the vehicle if it’s different than the owner. So if the vehicle’s owned by Joe Smith and Sally Smith dropped it off, you have to send a letter to each of those people.
Security Interest HoldersYou have to send a letter to all holders of a security interest. What does that mean? That means lienholders. So if the vehicle has a lienholder, you have to send them a notice. And you have to send a notice to basically the DMV, the government authority.
Content of the Notification LetterWhat has to be in that letter? The VIN number, year and make. A list of all the charges owed to you. So you have to have a breakdown of what the fees are that you’re claiming. Letting people know it’s going to be auctioned and the date and time of that auction.
Newspaper AdvertisementWhat you also have to do is you must also place a notice in the newspaper. And it’s very specific how you have to do it.
Correcting Errors in AdvertisementIf the newspaper advertisement is incorrect, meaning you don’t wait the number of days, you do it too soon, too late, you must re-advertise and again send the certified letters out again.
Auction and TitleThen you hold your auction and you get your title.
Downsides and LimitationsWhat are the downsides? The downsides are, first of all, if you’re not a licensed repair facility, you can’t do this. You can’t just fix cars in your backyard and do a mechanic’s lien because you’re an illegal mechanic to begin with. You can’t make up storage fees out of the blue. You also can’t wait too long. Most states have a rule that says you have to do this within six or eight or ten months. If you’ve been sitting on a car for 10 years, you can’t do a mechanic’s lien.
Alternative TitlesMost of the time if you’ve been sitting on a car more than two or three years, you’re out of luck for a mechanic’s lien. But there are other things you could do that still get you a title. And a lot of times those other things are better than a mechanic’s lien. Like a civil lien or court order title or bonded title or VT transfer.
Importance of LegitimacyA mechanic’s lien is a powerful tool to get a title for a vehicle that has other problems. However, don’t do a fake mechanic’s lien if a person really did not bring their car in for repairs. You don’t have a signed repair order. Don’t start making stuff up because what’ll happen is that the owner of the vehicle after you get your title is going to get a letter saying “Hey, we noticed that your vehicle was transferred away from you using a mechanic’s lien.”
Consequences of FraudDid you sign a repair order? Did you bring your car in for work? They’re going to audit the mechanic’s lien. If they find out that you filed a fake mechanic’s lien, they’re going to revoke your title and they’re going to do enforcement action against you. You may not think it’s a big deal but the state licensing authority—they do know that people use this improperly to get titles when they’re not supposed to.
Consultation and AssistanceSo make sure you’re doing it the right way. Make sure you’re all legit, i’s dotted, t’s crossed. If there’s any question that the mechanic’s lien might not be the way to go, then do a civil lien. Do a court order title. Do a bonded title. It’s way better in terms of how it works out for you. If you do have more questions about how to run one of these, how to do the paperwork, or you just want us to do it for you, click the link below.
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