A lien is a powerful remedy available to recoup money owed for valid debts. If a person follows the relevant state procedures to establish a lien, the law allows the lien holder to sell the property and apply the proceeds towards the debt. A car mechanic can place liens on vehicles when she repairs them. The lien attaches even if the owner does not have full title to it (such as if it is under a lease or other finance agreement).
Repair Liens
A repair lien, also called a repairman's lien, provides payment security to mechanics who make improvements or repairs on personal property. Repair liens often involve cars but can be applied to most types of personal property. Under the lien, if a mechanic makes repairs on personal property, the law allows the repairman to retain the vehicle until he is paid for the work. Eventually, the repairman can sell the property to satisfy the debt.
Priority of the Lien
Priority of a lien refers to who has the first right to enforce the lien and take the proceeds first. Repair liens typically take priority over all other liens until the debt is paid. For example, if a bank lent money to a borrower to purchase a car, the bank likely took a security interest in the car. If the lender does not repay his debt, the bank can take the car. If the borrower takes that car in for repairs, the mechanic obtains a repair lien on it that usually has a higher priority than the bank lien. If the bank wants the car, the bank must pay the repair bill in order to take possession of the car.
Process
State laws vary with regard to how a repair lien arises and how it can be enforced. For example, Texas law requires the repairs to be authorized by the owner or agent, for the work to be complete and for the charge to be reasonable. A person could defend against the lien by arguing one or more of the elements for the lien were not met. Additionally, states usually require a specific amount of time to pass before the mechanic can enforce the lien. In Maryland, for example, the debt must go unpaid for at least 30 days.
Other Issues
Obtaining and enforcing a repairman's lien involve legal processes and principles. The legal issues vary depending on who the party is. A mechanic, for example, needs to worry about whether she has a valid right to the lien and must avoid fraudulent claims. The owner and other lien holders may wonder about the priority of the claim. To resolve specific issues, seek independent legal advice.
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