How Do Mechanic Lien’s Work And Are They Trustworthy?

Why Mechanics Liens Are Not the Best Way to Get a Title
So you’ve heard me talk many times about mechanics liens and why they are not the way to go about getting a title. Many times, an automotive shop or even a private citizen thinks, “I’ll just slap a mechanic’s lien on this car and get a title for it.” It doesn’t work. It’s the worst way to get a title. In the past, years ago, it was a viable option, but nowadays, you definitely don’t want to use a mechanics lien as a way to get a title. This article tells you exactly why. Here’s an article from The Daily Dot.

A Mechanic’s Ordeal With a Lien
I interviewed a mechanic who works on cars for a living somebody brought in a car, dropped it off for work, and never picked it up. His ordeal in even trying to get a title was so long-winded and so torturous that he swore he’d never do it again. Here’s why. For many years, an automotive mechanic’s lien was a viable way for a legitimate automotive repair shop to get paid for their work on a vehicle. Then, about seven or eight years ago, in 2015 or 2016, many automotive shops started to abuse the process. They used it as a way to get a title for their buddy who lost a title for a car they bought on Craigslist.

Abuse of Mechanics Liens
They put ads in the newspaper that said, “Hey, if you need to get a title for a car, bring it to us, and we’ll process a fake mechanic’s lien.” Some shops were using it to get titles for cars that they really didn’t work on that much. The privilege given to automotive shops started to become curtailed. Some states stopped it altogether. There was a period of time in Indiana where they stopped and put a hold on all mechanic’s liens for about 14 months.

Stricter Requirements for Mechanics Liens
Now, even in states that allow them, they do what’s called a level three audit on every case that comes through their files. They make sure that the owner signed a repair order authorizing work. They ensure the car was actually auctioned off to the public, not just given to somebody directly. They make sure all the proper procedures are followed. All the right notifications are sent, meaning certified letters must be sent to the lienholder, the owner, and any interested parties multiple times over the course of two or three months.

The Complexities of the Process
You have to send out a certified letter, wait 45 days, send another one, wait 30 days, and put an ad in the newspaper announcing that you’re going to auction off the car to the highest bidder. That way, people will come bid on the car—you just can’t give it to one person. It’s a very complicated process. For the most part, even if you are a legitimate automotive shop and you did work on the vehicle, the easier way to get a title is just to go with a court order title.

The Rise of Alternative Methods
It’s faster and cheaper, and you don’t have to jump through as many hoops. Because mechanic’s liens were used improperly for so long, all the state DMV commissioners have cracked down on them. In fact, the commissioners have a biannual meeting where they discuss this issue. For many years, they’ve said that half of mechanic’s liens are fraud, and the other half are scams.

Oversight of Shops Using Mechanics Liens
They now audit the ones that come through and review records for that shop to see how much they have paid in payroll taxes, sales taxes, and permit fees. This gives them an idea of how big the shop is. For example, if Joe’s Automotive reports $38,000 in sales taxes last month, but they are processing 10 mechanic’s liens, that raises a red flag.

A Real-Life Case Study
In this article, a shop owner faced a difficult process. A customer brought in a car, approved a repair quote, and the shop installed a new transmission. Afterward, the customer never came back. The shop had to go through a mechanic’s lien, which turned into a brutal process taking seven or eight months, costing thousands of dollars. It was rejected twice because it was audited and found to have minor errors.

The Verdict on Mechanics Liens
This article, shared by The Daily Dot, includes quotes from CarTitles.com stating that while mechanic’s liens are a legal process allowing a shop to recover costs, they are complex to execute and should only be used when absolutely necessary. States require cars to be sold at auction, and in some cases, shops can only keep the money owed for repairs, with anything over that amount going to the state.

Consider Alternative Options
Think twice if you’re considering a mechanic’s lien. It’s certainly not a go-to method if you’re not a licensed mechanic or trying to get a mechanic to do it for you on a car that wasn’t in their shop. Even if you are a mechanic, there are better, faster, and more cost-effective methods available today.

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How To Get Vehicles Properly Imported Through Customs

Vehicle Title Fraud
Here’s another video in our series about vehicle title fraud. A lot of times, it’s difficult to get titles for vehicles that are gray market or imported vehicles. Some of these vehicles are JDM vehicles, like the Nissan Skyline, and some of the other desirable cars that come out of Japan. The Japanese kei trucks are an example, but it could be any kind of vehicle that was originally not manufactured for the US market. These vehicles are desirable because they’re unique, something that people want to have, and they don’t sell them here.

Importation Challenges and Loopholes
The problem is getting these vehicles imported and titled. There is a 25-year exemption for importation, but that may not solve title problems. Sometimes, if the vehicle is newer than 25 years, loopholes are used to try to get around that. However, if you use these loopholes, you run the risk of having legal problems. For example, there was a company called Soho Imports that allegedly defrauded customers by selling JDM cars with fake titles and import documents.

Customs Requirements and Document Fraud
Why does this happen? A lot of times, these cars won’t pass through customs even if they qualify for the 25-year exemption. If the vehicle doesn’t have proper documentation or paperwork, it still won’t get through. For vehicles newer than 25 years, they must meet certain criteria, like having airbags and anti-lock brakes. Some sellers fake import documents to bypass these requirements. They might even change the year to make it look older than 25 years.

Consultation and Expert Advice
Remember, you have access to live, one-on-one consultation with the undivided attention of a licensed, certified expert in this subject and many others. We want to listen to your story, hear your questions, and provide expert advice about your options. We’re here to help you understand your situation and guide you through your choices.

The Risks of Misrepresentation
DMV fraud often involves altering documents, such as the year on the title, to misrepresent the vehicle. For instance, a client attempted to title a VW Beetle manufactured in Mexico in the mid-2000s. Although Beetles are desirable because they’re cheap, reliable, and easy to work on, this client faced customs and title issues. The suggestion to label it as a 1978 model was problematic because the VIN and part dates wouldn’t match. Misrepresenting documents to government agencies can lead to serious consequences.

Legal Consequences of Fraud
In Florida, individuals allegedly faked titles and import documents. They ended up on probation and accepted a plea deal, which saved them from facing more severe penalties. If you’re considering importing a vehicle, ensure all paperwork is accurate and properly completed. Any misrepresentation can lead to revoked titles and legal troubles. Remember, signing documents under penalty of perjury carries significant risks.

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Using Mechanics Liens To Get Titles

The Challenge of Obtaining a Mechanic’s Lien Title for a Vehicle
So why is it so hard to get a mechanic’s lien title for a vehicle, and why is it not always the best way to try to get a title? For many years, repair shops, garages, and towing companies have used the mechanic’s lien or towing lien process to get titles for vehicles. A lot of times, they thought vehicles were abandoned and wanted to get a title. They even sometimes took payments from outside parties to go through a fake mechanic’s lien process to get a title. A lot of times, people with title problems will ask, “Can I just put a mechanic’s lien on the vehicle?” or “I’ll just file for an abandoned mechanic’s lien.”

The Purpose of Mechanic’s Lien: A Payment Protection for Repair Shops
Here’s the problem: the mechanic’s lien process is a privilege provided to licensed automotive repair shops in order to get paid for work when a customer fails to pay the bill. So, if someone brings in a car to get fixed, then decides they don’t want to pay, the mechanic’s lien is designed to help the repair shop get compensated for their work. However, that privilege is frequently abused—or maybe “expanded” is a better word—to try to get repair shops titles for vehicles under questionable circumstances.

Government Response: Tightening the Mechanic’s Lien Process
What the government has done, and what different state DMVs have done, is make the process very, very difficult. It’s harder than any other process, such as getting a bonded title or a court-ordered title, because they want to ensure that if a repair shop is using the mechanic’s lien, it’s for legitimate reasons.

Common Cases of Mechanic’s Lien Fraud
A very common case of fraud involves repair shop owners engaging in title fraud. This fraud often involves creating fake work orders and records, claiming to be filing a mechanic’s lien, and then using the process to get titles for vehicles that may have been bought at an auction without a title, purchased through Craigslist, or have a lien they want to remove.

Government Oversight and AI Monitoring
The government scrutinizes each mechanic’s lien application and audits them. They also use AI and algorithms to monitor shops filing a high number of mechanic’s liens. The government checks the shop’s payroll and sales tax records to estimate the shop’s business volume. For example, if a shop with only one or two employees files more mechanic’s liens than usual, it raises red flags.

Legal Consequences of Filing a Fraudulent Mechanic’s Lien
If caught, repair shops involved in title fraud could face severe penalties, including prison terms of up to 20 years and restitution to repay any fraudulent profits. For example, in a recent case, shop owners were charged with creating fake repair orders and selling vehicles illegally, resulting in charges for title fraud.

Mechanic’s Lien: Powerful but Heavily Scrutinized
A mechanic’s lien is a powerful tool, but because it’s often misused, it is scrutinized more than any other type of paperwork. If you’re considering using a mechanic’s lien to get a title, it should only be used when someone has brought a car to a shop for repairs, has signed a repair order, and then hasn’t paid.

Alternative Title Methods
If you have a vehicle that needs a title and are considering a mechanic’s lien, there are other methods that might work better. Options like a court-ordered title, bonded title, or other procedures are often easier to execute and less scrutinized than a mechanic’s lien. These methods can be found on our website.

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Beware Fraudulent Title Agencies

Caution and Potential Consequences
This is why you want to be very, very careful about how you get your car title. If you use a sketchy or illegal method, it could come back and bite you. Here’s a story about a DMV clerk who was selling illegal titles through a DMV scam that she was running, where she had people selling these titles to individuals who didn’t have the right paperwork, and she was making $800 per title. Overall, it was $3 million worth of titles that were processed. This was an auto tag agency in Miami, and there was a stolen vehicle that had LoJack on it, and they found it in a body shop. But they found that there was a title for it somebody had issued a title for that vehicle. They tracked it back and found that this title clerk allegedly had issued the title, and they discovered that many of her records for vehicles were for fraudulent titles, and she was making a lot of money.

Consultation Services Reminder
In the meantime, remember you have access to live one-on-one consultation with the undivided attention of a licensed certified expert in this subject and many others. We want to listen to your story, we want to hear your questions, and give you expert advisement on your options. We want to tell you what we know about your situation and what options you have. Now back to the topic.

Legitimate Title Acquisition Advice
So anytime you’re looking to get a title for a vehicle, you want to make sure you’re doing it legitimately. You’re not using any kind of fake mechanic’s lien, you’re not doing any kind of tax evasion, you’re not paying somebody to do something illegal because all the titles for these vehicles are getting revoked. So whoever had the title is losing out, and if you were involved in the scam, they’re looking at other prosecutions. So make sure that you’re getting your title legitimately.

Importance of Proper Documentation
Remember, a title is a legal government document. You can’t buy one from a company; you can’t download one from the internet. You have to get it from the government. Yes, they’re going to make you jump through a few hoops, but they do that to protect you as the owner. Because once they give you a title, you don’t want anybody to take it away from you. So, the same way that you have to provide a lot of documentation to get a title, that means no one can get it from you later without the same kind of documentation.

Avoiding Scammers and Ensuring Legitimacy
So get your title the right way do it legitimately. Use the legitimate source. Don’t pay any of these fly-by-night scammers that are out there trying to sell you titles using some kind of dubious means. Make sure that whoever is getting a title for you can explain in detail how they’re going to do it, so you know it’s not being done illegally.

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How Dealers Can Commit Title Fraud On Consumers

Title Problems in Car Buying
Don’t think just because you buy a car from a licensed automotive dealer that you’re out of the woods on title problems. There’s a very common scheme that some used car dealers mostly used car dealers, occasionally a new car dealer will use that constitutes financial fraud and harms consumers. It’s called floor plan fraud, and not many people know this, but dealerships do not own their cars outright with cash, just like you. Dealerships have car loans too.

The Dealer’s Lot
If you look at all the cars on a dealer’s lot, for example, if there are 20 cars on a used car lot and each car averages $15,000, that’s $300,000 worth of cars sitting on that dealer’s lot. Most dealers don’t have $300,000 in extra cash, or if they do, they don’t want it tied up in their inventory. So what they do is get a line of credit called a floor plan or floor line, and that floor line finances their vehicles for them. When they buy a vehicle from an auction, from a trade-in, or from wherever, the bank actually writes a check for that vehicle not the dealership and the bank holds the title, just like with your car financing.

Selling the Car
When the dealership sells the car, the dealership calls up the bank and says, “Hey, I sold that 2020 Toyota Camry, send me the title.” The bank says, “No problem, send us the money.” So the dealership sells the car, takes the money from the customer, sends it to the bank, and the bank sends them the title, which they can then transfer to the customer.

Cash Flow Problems
Sometimes what happens is if a dealership is running short on cash, they will do this: they will sell you a car that 2020 Toyota Camry. They take, let’s say, $20,000 from you; you paid for the car. Instead of taking that money and giving it to the bank to pay off the loan and get the title, they’ll just keep it to pay payroll, rent, expenses, whatever. Now the bank is still holding the title, and you can’t get a new title or registration for your car. It’s called floor plan fraud or being “out of trust” with your lender, and it creates a problem because you have a temporary tag that runs out. Maybe the dealership gives you another paper tag; next thing you know, the dealership goes out of business.

Real-Life Example
In this case this was in Massachusetts; this is just one example this happens all the time. Twenty-five people reported being defrauded by the scheme. Police determined that Edward Secui, 46, allegedly receives cars on loan from a local auction but does not get the titles until he pays the auction in full. So the auction in this case is the lender. The cars are then sold at the dealership; he completes the sale, takes the payment, attaches fake or forged license plates, and promises the title will be mailed which, of course, never happens.

Victims Left Hanging
Secui stops responding to the victims and never pays the auction. The purchasers never receive the title and cannot register the vehicle because the auction company still owns the vehicles. They are in the process of repossessing them. So the lender can actually take the car from you even though you paid for it. Now if it’s a small used car auction, they might go through with that repossession. Sometimes if the floor plan lender the bank that lent the money is a larger lender like Wells Fargo or Chase, they might not take a car from a consumer (though they legally could). They have the right to, but they may just pursue it against the dealer instead.

Protecting Yourself
So how do you protect yourself against this? What we recommend doing if you’re buying a used car from a dealer: obviously they can’t hand you the title because they’re going to handle the registration and title paperwork. Even if you’re financing the vehicle through your own bank, have them show you the title. Just say, “Hey, before I do this deal, show me you have the title.” If they don’t have the title in hand, tell them you’ll come back and pay for it when they have the title in hand.

Ensuring a Smooth Transaction
Here’s what they’ll have to do: they will have to pay that floor plan lender for the car before they get your money, and then they’ll get your money to cover what they paid out. They might say, “Well, we can’t do that.” Well, guess what? If they can’t do that—if they don’t have enough cash in the bank to cover one car—do you want to do business with them? So if they can’t show you the title (they don’t have to give it to you; they don’t have to sign it over to you, just show you they have it in their hand), we don’t recommend buying the car. Tell them, “Well, it’s at the floor plan bank.” No problem go pay it off, get the title here, and then I’ll pay you for the car, or I’ll sign loan documents for the car, whichever you’re doing.

Avoiding Floor Plan Fraud
You don’t want to leave that to chance. Remember, we’re talking about your hard-earned cash you saved up for this vehicle, or even if you’re financing the vehicle, your hard-earned cash that you have to pay for it. And don’t think that if the dealer doesn’t get a title, you don’t have to pay for the vehicle. If you finance the car through another lender whether it’s your own bank or through the dealer that lender you signed a contract with expects you to pay off the loan even if you don’t get a title or the bank doesn’t get a title. You still have to pay the loan because they paid the dealer.

Red Flags and Final Thoughts
So you don’t want to have your money at risk by dealing with a dealer that doesn’t have a title. The dealer might say, “Well, we don’t have the title on hand because it’s at the bank.” Hey, no problem. Just pay off the bank, get the title, and I’ll pay you for the car. If the dealer is unable or unwilling to do that, it could be a red flag that they don’t have much cash on hand and they’re running tight—which means that might be a decision factor for you or that they’re trying to scam you.

Conclusion
So don’t fall for floor plan fraud. This is one example of an article where this happened recently in Massachusetts, but this happens all the time. Dealerships going out of trust, dealerships leaving people holding the bag. This is a way you can avoid it as an informed consumer. If you found this helpful, be sure to check out our other articles to see if there’s other information that might be helpful about this same subject or maybe even other related subjects that could assist you with resolving your issue.

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