If you have repaired or stored a vehicle but the customer refuses to pay and pick the vehicle up, how do you get paid? In New York, you have a garagekeeper’s lien against the vehicle by operation of law. Your garage may enforce its lien by auctioning the vehicle at a public sale. If nobody bids on the vehicle, your garage may acquire title to the vehicle free of all liens to satisfy your debt.
There are four criteria needed to establish a valid garagekeeper’s lien. First, the garage must be duly licensed as a motor vehicle repair shop by the DMV. Second, the vehicle’s owner must have given consent for the garage to work on and store, the vehicle. Third, there must have been an agreed-upon price for the repairs and storage. Finally, the garage must maintain continuous physical possession of the vehicle. So long as these elements are met, the garage has a possessory lien on the vehicle, which is superior to the finance company’s lien. Even without an expressly agreed upon price, the garage may still have a valid lien if the amounts claimed were reasonable.
Critically, a garage must also take action to enforce its lien within a reasonable amount of time after realizing the owner is not returning for their vehicle. If a garage fails to act timely, the finance company or owner may successfully argue that it failed to mitigate its damages.
To enforce a garagemen’s lien, several tasks must be undertaken. You may want to hire a lien company such as All NY Liens (www.allnyliens.com) or Rapid Liens (www.rapidliens.net) to aid in these tasks. For a modest fee, they will prepare the paperwork to enforce the lien. The first task is to determine if there are any preexisting liens on the vehicle. Next, a notice of lien and sale must be served on the owner and finance company of the vehicle. This written notice must include an itemized statement, a description of the vehicle, the estimated value of the vehicle, and the amount of the lien. The Notice must be served in person on any owner or finance company located within the garage’s county. If either party is located outside of that county, they must be given notice via both first class mail and certified mail, return receipt requested. After that the public auction can occur once the notice of the sale has been published in a local newspaper for two weeks. Prior to the auction sale, either the owner or the finance company maintain the right to pay the garage’s charges, and “redeem” their vehicle. If neither the owner nor the finance company redeem the vehicle, it will be sold to the highest bidder at the auction sale. If nobody bids, the garage can keep the vehicle in satisfaction of its charges.
As a matter of law, the finance company only has ten (10) days to sue to stop the auction and have the lien declared invalid. This requires the vehicle to be turned over to the company. In exchange, the finance company will post a bond to ensure the garage will be paid if it can establish the lien is valid. The garage bears the burden of proving to the court that the lien is valid. If the garage ignores the lawsuit, the lien will be declared invalid, meaning the garage will receive nothing and may be liable for money damages. Thus, it is imperative that the garage defend any lawsuit brought by a finance company. There are many additional pitfalls that can invalidate a lien, therefore hiring an attorney that has experience with garagekeeper’s liens is important. These pitfalls include incomplete invoices, not having the proper documents signed by the vehicle’s owners, no expressly agreed upon storage fees, and other technical legal issues that must be addressed by a competent attorney in defending the garage.
In sum, it is critical that garagekeepers act diligently with respect to their enforcement of their liens and consult with qualified legal counsel if a lawsuit is commenced to invalidate their lien. Our law firm has successfully handled dozens of garagekeeper’s lien cases, including prevailing against Rudy Meola, an attorney based in Albany who exclusively represents finance companies in suits against garages. For more information, please call John Harwick at (518) 274-5820 or email him at email@example.com