Can a Mechanic’s Lien Be Placed on a Financed Vehicle?

In an ideal world, car repairs and maintenance wouldn’t come as a surprise to you or put you in a tough financial circumstance. But if you’re a car owner, you’ll have to deal with maintenance and car repairs, often without warning. These repairs are often an unpleasant surprise that you may not have accounted for. If you don’t pay your car repair bill, a service provider can place a mechanic’s lien on your vehicle. This is true whether your car is financed or you own it outright. 

This article will discuss what a mechanic’s lien is, how a repair person gets one against your motor vehicle, and what to do if your car has a lien on it.

What Is a Mechanic’s Lien?

A mechanic’s lien is a legal claim, or security interest, that is created when a mechanic, tow company, storage facility, or another worker does work or provides a service on a vehicle, and they are not paid as agreed. If there is an unpaid debt for commissioned work or a service performed, the service provider can obtain a mechanic’s lien (also known as a garageman’s lien). A mechanic’s lien is a statutory lien as it arises by operation of law. Each state has different mechanic’s lien laws. These laws regulate the time frame for these liens and the process for resolving the unpaid debt.

A mechanic’s lien is also a type of possessory lien. That means that service providers like towing companies or mechanic shops can retain possession of the vehicle if the work or the services they provided are not paid for. Some state laws give servicer providers that have a mechanic’s lien the right to sell the vehicle at a public auction or in a private sale. The sale proceeds are used to pay off or recoup the unpaid debt.

Priority Against Lender Liens

While mechanic’s liens can be placed against a financed or owned vehicle, the lien works differently with a financed car. When a motor vehicle is financed, the lender will also have a lien on the car. This shows they have a security interest in the car, meaning if the borrower defaults, the auto loan lender is in line to get paid. But this doesn’t stop a service provider from placing a mechanic’s lien on the car. Mechanics and service providers need to have a way of getting paid too, so mechanic’s liens are allowed, even on financed vehicles, including motorcycles.

A mechanic’s lien is usually superior to a lender’s lien on a vehicle title. Even if the work the mechanic performs happens years after the borrower took out the auto loan, the mechanic’s lien still typically retains priority. This means that the service provider that gets the mechanic’s lien is first in the to get paid if there is a repossession and liquidation sale of the car.

Service providers like auto mechanics and towing companies are allowed to assume that the vehicle owner has the authority to contract for repairs on their vehicle. It makes sense that the owner should be able to get a tow, get maintenance work done, or have other services rendered rather than the lender commissioning that type of work. The lender isn’t aware of the daily repair or maintenance needs of the vehicle, they just want to see the borrower’s monthly payments come in on time, in full each month. When repairs or services are performed but not paid for, state law allows service providers to place a mechanic’s lien on a vehicle.

How Does a Service Provider Obtain a Mechanic’s Lien?

Mechanics and other service providers must follow the specific steps outlined by state law to get a mechanic’s lien. State law varies. Some states may allow service providers to move quicker and more aggressively. Once the mechanic has the lien, they can sell the vehicle, if necessary.

Placing a Mechanic’s Lien

Generally, state lien laws mandate that unpaid debt be past due and outstanding for a specific number of days before a service provider can file a mechanic’s lien. The number of days varies by state. 

In some states, the mechanic’s lien can be filed once the debt goes unpaid for 30 days after it’s due. Other states, like Virginia, work a bit quicker. In Virginia, a service provider can sell your vehicle if the debt remains unpaid after 10 days of being due. In Florida, the service provider may file the mechanic’s lien within seven days after the repairs and services are rendered. This starts a storage period. Then the lienholder (your lender, bank, or credit union) has the right to inspect the vehicle and the repairs within three days of receiving notice.

Some states require a storage period or the opportunity for the lienholder to inspect the vehicle and the repairs, along with a wait time (typically between 30 and 60 days) before the service provider has the right to sell the car to recoup the unpaid debt. State laws vary on mechanic’s liens, so you should check out your state’s transportation agency or department of motor vehicles (DMV) for information on mechanic’s liens laws in your state.

Documentation Required To Get a Mechanic’s Lien

In order to place a mechanic’s lien on a motor vehicle in some states, the service provider must:

• Complete an application form and provide documentation of the services rendered,

• Give notice to the vehicle owner and the lienholder, and

• Provide proof of a valid past-due debt after the time required by state law.

Documentation required to get a mechanic’s lien in those states includes, but is not limited to:

• A signed repair authorization.

• An executed storage contract.

• A certified letter with return receipt requested to the vehicle owner notifying them that the service provider intends to place a lien on the vehicle.

• A certified letter to the lienholder notifying them that the service provider intends to place a lien on the secured property.

• Copies of invoices and work orders submitted to the vehicle owner indicating there is a past-due debt, along with related call logs, mechanic’s notes, emails, or letters.

Some states, like California, allow a mechanic’s lien to become effective when the vehicle owner is given an invoice or 15 days after repairs are completed, whichever comes first. But before the California service provider actually sells the vehicle, they have to apply to the California DMV for authorization to enforce the mechanic’s lien and sell the vehicle.

State law varies on licensing requirements for service providers to obtain a mechanic’s lien. Usually, a tow company, storage company, repair shop, or auto mechanic must be licensed and bonded to actually obtain and enforce a mechanic’s lien. But there may be some exceptions depending on state law.

Selling the Car

After the mechanic’s lien is placed on your car, truck, van, SUV, or motorcycle, the service provider may be able to enforce the lien to be paid for the past-due debt. They may be able to sell the vehicle at a public auction or directly to a private third party. Again, this depends on your state’s lien laws. Before a public auction, the service provider usually must advertise the auction in a local newspaper, business magazines, or business and trade publications for a certain number of days or weeks. 

The auto mechanic, tow company, or storage company may also be required to send notice of the sale via certified mail to the owner of the vehicle and all other lienholders that have a security interest in the vehicle, including the lender. The lienholders, including the lender, may want to attend the public auction and bid on the vehicle if they believe they could turn around and flip the vehicle for a profit once the priority and non-priority security interests have been paid off.

As mentioned, in Florida mechanics can file for a lien a week after doing the work and billing you. But in order to sell the vehicle, the service provider must give notice to anyone claiming a security interest in the vehicle within 15 business days from the beginning date of storage and accruing storage charges and storage fees on the vehicle. Other lienholders (like the lender) beyond the service provider may redeem, or acquire, the car by paying the redemption amount in the service provider’s notice. Alternatively, the interested lienholder or lender may recover possession of the vehicle without going to court by merely posting a bond with the court.  

What Can You Do About a Mechanic’s Lien on Your Vehicle?

There are a couple of different routes you can take if there’s a mechanic’s lien on your vehicle. If you haven’t paid for repairs that have been completed, you are typically allowed to inspect the car and the repairs before you pay your bill. Schedule a date and time for an inspection, and check if the repairs were done satisfactorily. Consider recording the inspection or taking pictures. If the repairs were shoddily done or were unsatisfactory, think hard before you stop payment on a check if you paid by check. A bad check is often a criminal offense. Talk to an attorney to get legal advice as to what you should do before you make a decision.

If there is a dispute over the billed amount, you may be able to file a replevin action to get your car back. A replevin action, sometimes known as a claim and delivery, is a civil legal action. If the court grants the replevin, it compels the party withholding the personal property to return it to its rightful owner or face fines and potential criminal sanctions. A private attorney may be able to assist you with a potential replevin action. 

If the repairs and services rendered were done satisfactorily, your only option is to pay the outstanding past-due repair bill to get your vehicle back from the service provider. The service provider may need to submit a lien release form after you pay them to end their claim. An attorney may be able to walk you through these steps so that there aren’t any hiccups.

Let’s Summarize…

When a service provider repairs a motor vehicle, it can place a mechanic’s lien on the vehicle for the unpaid bill. This is true even if there are other liens, such as a lender’s lien for financing, on the car title. These liens give service providers assurance they can get paid for the work they’ve completed. Mechanic’s liens generally have a higher priority than lender’s liens. And unlike some other liens, service providers may keep possession of the vehicle when there is a mechanic’s lien. They can potentially sell the vehicle to recoup the unpaid debt.

Mechanic’s liens are a complicated subject area. If you have questions or concerns, seek legal advice as soon as possible to protect your legal rights.