Repossession of Motor Vehicles in Advance of a Bankruptcy Filing - Mechanics Lien v. Mechanics & Materialman’s Lien

Robert N. Loughran
Nov 13 2019

 Clients often get confused when dealing with lien right, particularly when they involve construction projections and vehicle repairs. As a titleholder in the state of Texas, a situation will inevitably arise where a mechanic, or other service provider, brings forward a competing lien. One of the more common scenarios comes when attempting to repossess a vehicle and it is found at a mechanic’s shop. The shop owner will not surrender the vehicle because he claims he is owed money for repairs and has a mechanics lien on the vehicle. In general, mechanic’s liens for unpaid repairs to motor vehicles take two forms (1) constitutional liens or (2) statutory liens. A titleholder’s avenue of recovery is affected by which type of lien the mechanic’s shop is asserting.

Constitutional Lien

 The Texas Constitution guarantees a person who furnishes parts or labor for repairs a mechanic’s lien on the vehicle repaired for the value of the parts furnished and labor performed. See Tex. Const. art. XVI, § 37. This lien is self-executing and the lienholder does not need to provide notice or record the lien. However, a constitutional lien is limited in scope. It does not authorize the repair facility to take or maintain possession of a vehicle until the repair is paid. Thompson v. Apollo Paint & Body Shop, 768 S.W.2d 373 (Tex. App. Houston 14th Dist. 1989), writ denied, (July 12, 1989); Garcia v. Rutledge, 649 S.W.2d 307 (Tex. App. Amarillo 1982). A constitutional lien enables a mechanic to seek remedies through the legal system. Any right of a constitutional lienholder to retain or take possession of the vehicle until the debt is paid is separate from the constitutional lien itself. Garcia, 649 S.W.2d at 308. Therefore, if a titleholder is confronted with a competing lienholder who is claiming only a constitutional lien, that constitutional lien alone cannot keep the titleholder from repossessing the vehicle at issue.

Statutory Lien

 The Texas Legislature provides a motor vehicle mechanic several types of liens that do allow them to keep possession of the vehicle until the incurred charges are paid. See Tex. Prop. Code Ann. § 70.001; See also Tex. Prop. Code Ann. § 70.003. This general category of lien is often referred to as a statutory lien. In most cases, these liens are authorized under Chapter 70 of the Texas Property Code.

 In Texas, when a vehicle is turned over to a mechanic for authorized repairs, the mechanic may maintain possession of the vehicle until either: (1) the amount due under the contract is paid or (2) he is reasonably compensated. This is known as a possessory lien. Such a lien is self-executing once a vehicle’s owner relinquishes possession of the vehicle and authorizes the mechanic to perform service. The possessory lienholder is not required to provide notice to other lienholders to perfect the lien. First State Bank of Odessa, N.A. v. Arsiaga, 804 S.W.2d 343, 344 (Tex. App.—Eastland 1991, writ denied). The pertinent part of the Code reads:

  • A worker in this state who by labor repairs an article, including a vehicle . . . may retain possession of the article until:
    1. the amount due under the contract for the repairs is paid; or
    2. if no amount is specified by contract, the reasonable and usual compensation is paid.

 Tex. Prop. Code Ann. § 70.001. However, this possessory lien only entitles the party to maintain possession of the vehicle. To sell the vehicle the statutory lienholder has specific obligations under the law.

Your Rights As A Titleholder If There Is A Statutory Lien

 If the mechanic is interested in selling a vehicle it possesses to recover the unpaid amount, it must give written notice to the owner and all recorded lienholders on the certificate of title. Additionally, the possessor must also file a copy of the notice with the county tax assessor-collector's office in the county in which the repairs were made within 30 days after the date on which the charges accrue. If the vehicle is sold without both steps being performed the other lienholders on the title may have a cause of action against the mechanic. Even if both steps are taken and the vehicle is properly sold, all proceeds of the sale above the repair cost must be turned over to the party entitled to them such as the titleholder. Additionally, it is important to note that almost uniformly Texas courts have held that for a lien to be created to secure payment for repairs to a vehicle, the owner must consent to the repairs. E.g., Jones v. Boswell, 250 S.W.3d 140 (Tex. App. Eastland 2008); Jones v. Patterson, 11-17-00112-CV, 2019 WL 2051301, at *5 (Tex. App.—Eastland May 9, 2019, no pet.). Thus, if the titleholder can show that the vehicle's owner did not authorize the repairs then the titleholder will be able to take possession of the vehicle.

Conclusion

 As a titleholder confronted with a competing lien knowing the type of lien that you are being confronted with, their obligations, and your rights in that situation makes all the difference in your ability to recover. While the law might be designed to give mechanics a safeguard to ensure that they are paid, it also values titleholder's rights to take possession of the property at issue.