The vehicle mechanic’s lien process has changed in the State of Texas. The new process was implemented to prevent fraud but the process has actually made the process more complicated for small business owners. To help you understand the process and what is required, I have prepared a complete outline of the process to help get you through it.
NOTE: If you fail to do all the steps below, in the right order within the time limits, then the only way you can foreclose on a vehicle and sell the vehicle to get paid is to file a lawsuit in the Justice of Peace court.
I. FORECLOSURE NOTICE:
a. Not later than 30 days after the day on which repair charges accrue, the person claiming the lien must notify the owner/lienholder of record by CRRR mail, of the charges due and request payment. The person claiming the lien must also include the following:
- The physical address where the repairs were made;
- The legal name of the person that holds the possessory lien;
- The taxpayer or employer identification number of the person that holds the possessory lien; and
- A signed copy of the SIGNED WORK ORDER authorizing repairs.
b. A copy of the notice and a signed copy of the work order must be sent to the county tax assessor-collector’s office in the county in which the repairs were made with an administrative fee of $25 within 10 days of sending notice in (a) above.
c. The notice must also be sent to the address that appears on the work order/document authorizing possession, if the addresses are different from the address on the motor vehicle record.
II. STORAGE FEES REQUESTED:
a. If any amount of the charges include storage fees, a second notification must be made by certified mail to the registered owner and lienholder.
b. A Storage Lien for Abandoned Vehicle or Private Tow, Form VTR 265-S, must also be completed.
c. A release of lien is also required if any portion of the amount due represents charges for storage, otherwise foreclosure must be through a court of competent jurisdiction.
III. PUBLIC SALE: After you send the notices above, if payment is not made on the 31st day the notice was mailed and filed with the tax assessor-collector’s office, the possessory lienholder may sell the vehicle at public sale without obtaining a release of lien. The proceeds must be applied to the payment of charges and the balance must be paid to the person entitled to it.
IV. TITLE: The highest bidder must be the one to apply for title.
V. EVIDENCE REQUIRED TO TRANSFER OWNERSHIP:
- Form VTR-265-M properly completed by the statutory lienholder
- Form 130-U – Application for Texas Certificate of Title
- Verification of Title and Registration
- Proof of Notification
- Liability Insurance
- Work Order
- Vehicle Identification Number
The content of this article is provided for informational purposes only and does not constitute legal advice.