California Law on Lien Sales

In California, car owners who fail to pay for repairs, towing, furnished supplies or storage fees for their vehicles run the risk of losing their cars at a lien sale. The California Civil Code outlines a legal process by which a lien holder can get paid the money owed by taking the car owner to court and obtaining a judgment against him, or a non-judicial process in which the lien holder can sell the car at a lien sale.

Lien

First and foremost, a person or company must have a valid lien against a vehicle's title to attempt a lien sale pursuant to California law. To obtain a proper lien, the company or person must present the car owner with a written statement outlining the work completed and the resulting charges. Once the written statement is presented, the lien arises. If the car owner fails to pay the bill and the lien holder meets certain requirements, the lien holder can sell the vehicle at a lien sale.

Eligibility

Only California residents in physical possession of another person's car can conduct a lawful lien sale. In addition, the person must have placed a lien against the vehicle's title because of a debt the car owner failed to pay that person. Finally, lien holders who have a monetary interest in the vehicle may not conduct a lawful lien sale. California law on lien sales considers that a conflict of interest.

Market Value

Two separate procedures exist for conducting a lien sale. The procedure used depends on the market value of the car. The threshold amount is $4,000. If a car is worth less than $4,000, then the lien holder must follow a certain procedure. If the car is worth more than $4,000, then the lien holder must follow a different procedure. In other words, the lien holder must determine the car's value before proceeding.

Notice

Repair shops must provide car owners with specific notice before performing expensive repairs to a car. They must notify the car owner if the cost of the repair service will exceed $1,500. If the storage charge will be greater than $1,025, they must also notify the car owner. In addition, the car owner must receive notice before the lien sale can go forward. If the vehicle is worth less than $4,000, the party attempting the lien sale must notify the car owner. If the vehicle is worth more than $4,000, the California Department of Motor Vehicles will notify all relevant parties.

Opposition

The Department of Motor Vehicles must approve the lien sale. However, if the car owner submits a declaration of opposition to the lien holder, the DMV may cancel its prior authorization of the sale. The lien holder may, in response, submit additional documentation to the DMV to attempt to continue the sale and obtain approval again.

Warning

Please contact a qualified attorney licensed to practice in California to find out how the facts of your situation apply to California laws on lien sales, which are subject to change.