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, 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 for what the words imply – mechanics getting a lien. It's not really a title process; it's a way to get paid for your mechanics 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 when maybe it's a different story.

What the government and different state DMVs have done is to make the process very, very, very hard to do, harder than any other process. It's harder than a bonded title, harder than a court-ordered 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.

Here’s an example of why: it's a very common case. You could look any day of the week, week of the year, and find more cases like this, where some repair shop owners are doing title fraud. Those are the keywords of the headline: "Repair Shop Owners Title Fraud." What they will do is make up fake work orders and fake records to say they'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 that 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 look at your payroll and your sales tax collections, and they know how big your shop is. If you have one or two employees and your sales tax indicates you work on three cars a day – about 100 cars a month on average – they know 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, they will scrutinize that business.

This is how people get caught, and this is what happened here. They're charged with a crime – a fraud crime in most states – and you can get in trouble for it.

Now, back to your video. The Department of Motor Vehicles, which handles titles, arrested these people for the scam involving illegal lien sales of vehicles. There were five vehicles, not that many, but they were $60,000 vehicles, adding up to $300,000 in total – some high-end, exotic cars. Falsifying title documents is the same as stealing it, according to the compliance enforcement officer.

So, if you're ever tempted to use fake records or fake mechanic's liens or let somebody do it on your behalf, this is how the government sees it. They understand 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 will abuse it and try to get away with obtaining free cars.

How severe is the penalty? Well, they could face prison terms of 20 years and restitution, meaning they might have to pay back that $300,000. They'll probably plea bargain it down a little, but it will likely still be a felony. One of the individuals involved was the owner of S&M Auto Body, and another was the owner of Sharp Transmission. Investigators say they falsified work orders for repairs and then sold the vehicles. Essentially, they were stealing the vehicles and selling them to the same person. Fraudulent repair orders were used to complete lien sales for these vehicles, even though no work was ever done. Falsified title requests were sent to the DMV to get a title. Some vehicles were personally used by one of the individuals, who then sold them to a dealership owner.

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

If you have a vehicle you need to get a title for and you're thinking that’s the method, there are other ways that might work better, such as a court-ordered title, bonded title, or prior owner contact. These methods, which you'll find on our website, are actually easier than a mechanic's lien. With a mechanic's lien, you have to send out various notices, do auctions, complete affidavits, and perform 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.

If you have questions about which title method to use, you can visit our website or call our phone number to speak with a title agent. If you found this video helpful, be sure to check out other videos on our channel to see if there is additional information that could assist you with resolving your issue.