The Expert Podcast

So why is it so hard to get a mechanic’s lien title for a vehicle, and why is it not always the best way, even to try to get a title for many years? A lot of times, repair shops, garages, and towing companies have used the mechanic's lien or towing lien process to get titles for vehicles. A lot of times they thought they were abandoned and they wanted to get a title. They even sometimes took payments from outside parties to go through a fake mechanic's lien process to get a title. A lot of times, people with title problems will ask, "Well, can I just put a mechanic's lien on the vehicle?" or "I'll just file for an abandoned mechanic's lien."

Here's the problem: The mechanic's lien process is a privilege provided to licensed automotive repair shops in order to get paid for work that a customer stiffed them on the bill. So, somebody brings in a car to get fixed, then decides they don’t want to pay. The mechanic's lien is designed exactly as the words imply—mechanic's lien. It's not really a title process, it's a way to get paid for your mechanic’s work. However, that privilege is very frequently, I guess, abused—is a strong word, but it's expanded to try to get mechanic shops to get titles for vehicles that maybe have a different story.

So what the government has done, the different state DMVs, is to make the process very, very hard to do—harder than any other process. It’s harder than a bonded title, harder than a court order title, harder than any other type because they want to make sure, if the repair shop is doing it, that’s actually what they want to do. And here's an example why.

Here's a very common case: You could look any day of the week, week of the year, and you can find more cases like this where some repair shop owners are doing title fraud. Those are the key words of the headline: repair shop owners, title fraud. And what they will do is they will make up fake work orders and fake records to say, "We're filing a mechanic's lien," and they use the process to get titles for vehicles that maybe they bought at an auction with no title, maybe their buddy bought it on Craigslist, or maybe it has a lien they’re trying to get rid of.

Because of the fact this process is very frequently abused by repair shops, the government knows this. The government is not stupid—they know that this process is a loophole that a repair shop can use to get a title. So they scrutinize every single one that comes through and they audit them. They also use AI and algorithms to catch shops that are doing too many mechanic’s liens.

How do they find that out? Well, what they do is they look at your payroll, and they look at your sales tax you collect, and they know how big your shop is, right? So if you have one or two employees and you do sales tax that maybe says you work on three cars a day, 100 cars a month on average, they know that you should maybe do two or three mechanic’s liens a year based on the stats. If all of a sudden you're doing more than that or you do three in one month, now they’re going to scrutinize that business. This is how people get caught, and this is what happens here. They’re charged with a crime. This is actually a fraud crime in most states that you can get in trouble for.

In this case, the Department of Motor Vehicles, which issues titles, arrested these people for the scam involving illegal lien sales of vehicles. There were five vehicles—not that many, but five vehicles—but they were $60,000 vehicles. Because they added up to $300,000 in high-end exotic falsifying title documents, the compliance enforcement officer said that "falsifying title documents is the same as stealing it."

So if you're ever tempted to use fake records or a fake mechanic’s lien or let somebody do it on your behalf, this is how they look at it as the government. Falsifying title documents is the same as stealing it. That's what they say. Now, whether you agree with this or not, you know, we don’t have an opinion about it, it’s just the way that it is. The government knows that mechanic’s liens are necessary for legitimate, licensed garages to get paid for their cars, but they also know that when you give that privilege, some people are going to abuse it and some people are going to try to get away with getting free cars.

How bad is the penalty? Well, they could face prison terms of 20 years—20 years—and restitution, meaning they might have to pay back that $300,000. Now, they’ll probably plea bargain it down a little bit, but it’s still going to be probably a felony. One of the people was the owner of SNM Auto Body. Another one was the owner of Sharp Transmission. Investigators say they falsified work orders for repairs and then sold the vehicles. Right? So, basically, they’re steering the vehicles—they sold the vehicles to the same person. Fraudulent repair orders were used to complete lien sales for these vehicles, even though work was never done. Falsified title requests were sent to the DMV to get a title. The vehicles were personally used by one of the people they sold it to. One person owned a dealership.

So the way it works is a mechanic’s lien is a powerful tool, but because of the fact it’s so powerful and it’s a loophole, it will be scrutinized more than any other type of paperwork. So, if you’re thinking about using a mechanic’s lien to get a title, just make sure that it’s actually what happened, and what happened is somebody brought a car into a shop for repairs, you have a signed repair order, and they didn’t pay the bill.

Now, if you have a vehicle you need to get a title for and you're thinking that’s the method, you have other ways that’ll work better: court order title, bonded title, PR, or own contact—all these methods. You’ll find them on our website, and they’re actually easier than a mechanic’s lien. With a mechanic's lien, you have to send out all kinds of notices, you have to do auctions, you have to do affidavits, you have to do more work than any other title method, and it’s probably not going to work because they’re going to scrutinize it and audit it.

So, if you do have questions about which title method to use, you can reach our website or call our phone number to speak with a title agent. If you like this video, be sure to click on a few others on our channel to see if there’s other information that might be helpful to you about this same subject, or maybe even other related subjects that could assist you with the resolution of your issue.