Vanishing Acts: Why Your Mechanics Lien Processor Disappeared

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Overview of Mechanics Lien Companies:
  • Mechanics lien companies, especially smaller, mom-and-pop operations, are disappearing.
  • Many automotive facilities and towing businesses are struggling to find reliable lien services.
Why Are Mechanics Lien Companies Going Out of Business?
  • The process of filing mechanics liens is detailed and tedious, involving documentation, notices, and filing with the DMV.
  • In the past, some providers found shortcuts or improper methods to process liens, but these are no longer accepted.
  • A significant amount of fraud (over 50% in some states) was discovered, leading to stricter regulations.
Changes in State Regulations:
  • Most states now have investigative committees that review every mechanics lien document for accuracy.
  • Strict audits ensure that notices are sent, filing is done properly, and the time frames are followed.
  • As a result, some mechanics lien companies can't handle the complexity or cost of complying with new regulations.
Challenges Faced by Mechanics Lien Providers:
  • The cost of doing a proper mechanics lien (which should take 8-10 hours of work) makes it less profitable for providers.
  • States are rejecting liens that aren't 100% correct, leaving many providers unable to continue business.
Alternatives to Mechanics Liens:
  • Some states temporarily shut down mechanics lien processes due to fraud, while others have cracked down on non-compliance.
  • The civil lien or court order title process can be a faster alternative, bypassing lengthy waiting periods.
  • This process involves filing a petition with the county court, which can lead to a judgment and allow you to obtain a title quickly.
What Can Repair Shops Do?
  • If you're a repair shop, you still need to be involved in the lien process by signing forms and mailing letters.
  • States now require public bids for cars, where repair shops must offer the vehicle for sale, though they don’t have to accept the bid.
  • While there are still some companies offering lien services, the process has become much more complex and requires more involvement from the garage.
Final Thoughts:
  • The decline of mechanics lien companies is tied to government crackdowns and stricter regulations.
  • For those looking for faster, more efficient ways to obtain titles, civil liens or court order titles may be the better option.
Vanishing Acts: Why Your Mechanics Lien Processor Disappeared
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