Vanishing Acts: Why Your Mechanics Lien Processor Disappeared
Download MP3If you are a licensed automotive facility and you've done things like mechanic's liens, garage keeper's liens, or towing liens, you may have noticed that companies or individuals who used to handle these liens for you have disappeared. The question comes up: why are all the mechanic's lien companies going out of business, closing down, or not doing this work anymore? There used to be small mom-and-pop companies advertising on Craigslist and Facebook offering mechanic's lien services, but now you can't find them. We get calls every day saying, "Hey, my guy who used to do mechanic's liens is no longer around—why is that?"
Well, it's not a coincidence. It's not just a random occurrence that your person isn't available anymore. This is happening all over the country, and the reason why is because the mechanic's lien process is very detailed and tedious. It involves documenting, filing, sending notices, and following strict procedures. In the past, some providers of mechanic's lien services found ways to skip steps or perform them improperly, getting away with it by sliding through the system.
However, over the last few years, the 50 states' Department of Motor Vehicles (DMVs) and their Commissioners have held roundtable discussions, committees, and boards of inquiry, examining the mechanics lien processes. They found a very high degree of fraud in these procedures. In some states, over 50 percent of mechanic's liens were fraudulent. As a result, the DMVs have become stricter about accepting liens and now reject any that aren't 100 percent correct. Most states now have an investigative committee that reviews every mechanic's lien document package, auditing it to ensure everything is correct. This includes making sure all notices were sent, the initial filing with the DMV was done properly, and the right time frames were followed so that you didn’t exceed the tolling time or wait too long to start the process.
This level of scrutiny is causing many of these lien providers to stop offering services because they used to charge $100-$200 for a mechanic's lien, which should have been an 8-10 hour job. They found ways to cut corners and slide through without doing all the necessary steps. But now, with states cracking down, they are required to do every step properly, which makes the process too time-consuming to make it worthwhile for these businesses.
While it's still possible to file a mechanic's lien in most states, the process has become much more difficult. A few states temporarily shut down mechanic's liens because of the fraud, such as Indiana (though they may be back online). However, as long as the paperwork is done properly, you can still file a lien. The issue now is that it's far more challenging. Our website provides instructions to make the process easier, and we offer a service where we can assist with it. The problem is that most repair shops simply want to pay a fee and forget about it, hoping the title will magically appear.
However, this is not possible anymore. Most states require that the garage itself signs the form and mails the letters. While we can handle all the paperwork and prepare the necessary filings, there are still steps that must be done by the actual applicant. The garage must sign forms and provide a copy of the license. These are things that the applicant must handle themselves.
Additionally, states now require that you accept bids. You must have a date and time where people can offer money for the car through a public bid. You don't have to accept the bid; you can reject it and keep the car for yourself, but you still have to offer it publicly. This means that another step must be done by the applicant.
What we recommend is considering a civil lien or court-ordered title instead of a mechanic's lien. It's a much faster process without the long statutory waiting periods between steps. You can go directly to the clerk of court in the county where your business is located, file a petition, affidavit, and letter of non-interest, and get a judgment. Once you have that, you can take it to the DMV to get the title. Many clients are opting for this option first, even before thinking about a mechanic's lien.
So, that's the background on why most mechanic's lien companies are no longer around. While a few still exist, many have realized that this is no longer a viable business model due to the way the federal government has gotten involved in processing mechanic's lien documents.