The Expert Podcast

So you've heard me talk many times about mechanics liens and why they are not the way to go about getting a title. Many times an automotive shop or even a private citizen thinks, "I'll just slap a mechanic's lien on this car and get a title for it." It doesn't work. It's the worst way to get a title. In the past, years ago, it was a viable opportunity, but nowadays, you definitely don't want to use a mechanic's lien as a way to get a title. This article tells you exactly why.

Here's an article from The Daily Dot interviewing a mechanic who works on cars for a living. Somebody brought in a car, dropped it off for work, and never picked it up. His ordeal in trying to get a title was so long-winded and so torturous that he swore he'd never do it again. And here's why: For many years, an automotive mechanic's lien was a viable way for a legitimate automotive repair shop to get paid for their vehicle. But then, about seven or eight years ago, in about 2015-2016, many automotive shops started to abuse the process. They used it as a way to get a title for their buddy who lost a title that they bought on Craigslist. They put ads in the newspaper that said, "Hey, if you need to get a title for a car, bring it to us, and we'll put it through a fake mechanic's lien." Some shops were using it to get titles for cars that they really didn’t work on much.

The privilege that was given to automotive shops started to become curtailed. In some states, they stopped it altogether. There was a period of time in Indiana where they stopped and put a hold on all mechanic’s liens for about 14 months. And now, even states that allow them do what's called a level-three audit on every case that comes through their file. They make sure that the owner signed a repair order authorizing work. They make sure the car was actually auctioned off to the public, not just given to somebody directly. They make sure that all the proper procedures are followed and all the right notifications are followed.

By notifications, it means you have to send out certified letters to the lien holder, the owner, and any interested parties multiple times over the course of two or three months. You have to send out a certified letter, wait 45 days, send out another one, wait 30 days, and you have to put an ad in the newspaper announcing you're going to auction off the car to the highest bidder. That way, people will come and bid on the car. You just can’t give it to one person. It’s a very complicated process. And for the most part, even if you are a legitimate automotive shop and you did do work on the vehicle and you are entitled to a mechanic's lien, the easier way to get a title is just to go to a court-ordered title. It's faster, it's cheaper, and you don’t have to jump through as many hoops.

Because of the fact that mechanic's liens were used improperly for so long, all the states’ DMV commissioners have cracked down on them. In fact, the commissioners have a biannual meeting where they all come together. For many years, they’ve said, "Look, mechanic's liens—half of them are fraud, half of them are scams. So we’re going to audit them." What they do is they look at the records for that shop to see how much they have paid in payroll taxes, how much they've paid in sales taxes, how much they’ve put through for permit fees. That will give them an idea of how big that shop is.

Joe’s Automotive: okay, how big is Joe’s Automotive? Well, they put through sales taxes for $38,000 last month. Well, that means that they really didn’t do that much business. So why are they putting through 10 mechanic’s liens, right? They know how to do the math, so mechanic’s liens are not what they're cut out to be.

This poor guy here in this article had a very difficult process. Somebody brought in a car, they put in a new transmission, and they approved the repair quote. The customer did, and the shop installed the new transmission. It was hard because they had to remove the subframe on that car. You have to take out the subframe. Then, they had to tow the car to a Nissan shop to program the transmission afterward, and the customer never came back. Then, they went through a mechanic's lien, and it was a very brutal process. It took seven or eight months. They spent thousands of dollars, and it was rejected twice because it was audited. They wanted eyes dotted and tees crossed.

This article was consulted on because we were contacted by The Daily Dot. It says, according to cartitles.com (that’s us), it's a legal process allowing a shop to recover costs, but it's complex to execute and should only be used when absolutely necessary. It’s not an easy way to title the vehicle per cartitles.com. Once the lien is established, then the shop can take steps to sell the car. However, the procedures vary. Not only do they vary, but they are complicated. States require a car to be sold at auction. Some states will only allow you to keep the money owed for the repairs and not keep anything over. So if you sell the car for more than what the repairs are, you have to give the money to the state.

So think twice if you're considering a mechanic's lien. It's certainly not a go-to method if you're not a licensed mechanic. It's not a go-to method if you're trying to get a mechanic to do it for you for your car that wasn’t in the shop. It’s not going to work. And even if you are a mechanic, this day and age, there are other methods that are better that will save you money. It'll happen faster. You don't have to wait six or eight or nine months for the process to go through.

So consider that when you're looking at mechanic's liens and whether or not it’s the best way for you to get a title.

Thank you for watching another episode of Actual Human Advisory on Describe TV. Remember, we have live one-on-one consultation appointments available at actualhuman.com, where you can book a one-on-one, undivided attention live call with a licensed investigator, a licensed insurance broker, a licensed mortgage broker, real estate broker. I’m also a certified real estate title examiner, a certified civil court mediator, along with having developed and started over 15 businesses, several of which were sold for millions of dollars. So if you do have questions in any of those categories, you can arrange a one-on-one live video consultation. Use the link below, and we'll see you on the next video.