Frequently Asked Questions About Liens
What is a lien?
When a person repairs, tows or stores a vehicle or vessel and has not been paid by the owner of the vehicle or vessel for services rendered, that person is entitled to a lien against that vehicle or vessel. A lien arises (becomes effective) at the time the registered owner is presented with a written statement of charges for completed work or service. If, however, possession is the result of a public agency or police impound, the lien arises when the vehicle is transported (towed).
What is a short lien?
A short lien is a lien on a vehicle that is valued at less than $4000 but more than $500. At least 10 days prior to the sale date the notice of pending lien sale must be posted in a conspicuous place at the lien sale location. A short lien takes between 31-40 days to clear.
What is a long lien?
A long lien is a lien on a vehicle that is valued at more than $4000 or a vehicle that is stored at a storage facility. Usually only businesses conduct this type of lien. This lien takes up to 120 days to complete. The customer must provide the public agency or name and address of the person who authorized the repairs, storage and/or towing. The DMV will reject the lien without this information.
With a long lien, Independent Lien Service will submit a request for authorization to conduct a lien sale, along with the fee to the Department of Motor Vehicles (DMV). We must wait for the authorization from the DMV before proceeding with the lien sale process. This can take approximately 30-90 days.
Then, when we receive the authorization, we prepare a lien sale package for the customer. At least five days but not more than 20 days before the sale date, the customer must give notice of the sale by advertising the sale for one day in a newspaper of general circulation in the county in which the vehicle is located. If there is no newspaper published in the county, notice shall be given by posting the notice of pending lien sale in three of the most public places in the town where the vehicle is located and at the place where the vehicle is to be sold for 10 consecutive days prior to and including the day of the sale. We can help you with that.
The vehicle must be available for inspection at a location easily accessible to the public for at least one hour before the sale and must be at the place of sale at the time and date specified on the Notice of Sale. If the auction price exceeds the amount of the lien, the excess amount must be sent to the Lien Sale Unit within 15 days after the sale date. After the sale, a redemption period of 10 days (not counting the date of sale) is required before the purchaser can take possession of the vehicle and apply for transfer of ownership. After the redemption period, you must give the buyer the lien sale package and a copy of the authorization letter from DMV. The license plates must be removed and destroyed at the time of the sale and you must submit to DMV within five days of the sale a Notice of Transfer and Release of Liability.
What about boats?
Vessels are a little bit different and require more work on our part. The procedures are determined by the whether the vessel is over or under $1500.
- For vessels under $1500, Independent Lien Service charges a rate of $60 per lien. A short lien on a vessel must be accompanied by a written statement for fair market value from a licensed yacht/ship broker as evidence that the value of the vessel or vessel/trailer is $1,500 or less.
- For vessels over $1500, Independent Lien Service charges a rate of $100 per lien. A form and a filing fee must be submitted to the DMV.
How do I know when my lien is completed?
You will receive a packet of lien sale documents from us prior to the vehicle's sale date. This packet will have an invoice on top and several pages of DMV forms attached. The sale date will be printed on both the "Seller's Warranty" and the "Certificate of Lien" forms.
Can I conduct a lien sale on a vehicle located out-of-state?
No. Independent Lien Service is only licensed in the State of California. If the vehicle in your possession has California license plates and you are out-of-state, you must follow the lien sale laws of that state. However, if the vehicle in your possession is located within California, we can lien it even if it has out-of-state plates.
Must I pay the back penalties on a vehicle I bought at a lien sale?
Yes. The Vehicle Code does not exempt lien sale vehicles from outstanding fees and penalties.
What is a lienholder?
The lienholder is the person or entity who has interest in the vehicle due to storage and/or towing costs.
I lost my title and can't find the seller who sold me the vehicle. Can I do a lien sale?
No. You cannot conduct a lien sale on a vehicle in which you have a monetary interest. You must apply for a duplicate title from the DMV.
Can a towing company, repossession company, or salvage company do a lien sale if they are contracted with an organization or company to pick up the vehicle?
No. That would be a conflict of interest.
What will I need?
- Vehicle Identification Number, Engine Number if it is a motorcycle, Hull Number if it is a vessel
- Possession of the vehicle. Loss of possession immediately stops your lien. Moving the vehicle also stops your lien.
When may I begin my lien sale?
A lien becomes effective at the time the registered owner is presented with a written statment of charges for completed work or services. If however, possession is the result of a public agency or police impound, the lien arises wihen the vehicle is towed.
Can anyone stop my lien sale?
Yes. The owners and interested parties can oppose the sale. The lienholder has the right to pursue a court judgment to satisfy the lien.
What if the vehicle gets picked up by the customer?
GREAT! You can charge the customer for the lien processing.
- For a short lien you may charge up to $70.00
- You may charge up to $100.00 for long liens.
If the vehicle is valued over $4000, be sure to call our office so that we can stop processing the paperwork.
What do I do with the personal property in the vehicle?
According to Vehicle Code 22851b, no lien shall attach to any personal property in the vehicle. The personal property in or on the vehicle shall be given to the current registered owner upon demand. The lienholder shall not be responsible for personal property after any vehicle has been disposed.
Do I have to register the vehicle after the sale?
If the vehicle registration expired while in your possession and you are a dealer, lessor retailer, garage, or operator of a towing service, the buyer has 20 days from the lien sale purchase date to pay fees without penalty, or pay a transfer fee and a planned non-operation fee. Otherwise, a planned notice must be filed prior to the vehicle expiration date or penalty fees are due.
If the vehicle came into your possession with an expired registration, the buyer must pay the registration penalties.