By Amy Holbrook, Partner
In Ohio, like most states, there is a law that allows a garage or storage facility to obtain an abandon vehicle title on vehicles with a value of less than $2,500.00 and have been left by their owners for fifteen days or more. This abandon vehicle title, however, cannot be obtained until all lien holders have been informed of the abandoned vehicle through a written notice.
So here is a scenario that I see often. Dorothy Debtor takes her vehicle to Tinman’s Auto Body Shop for body work in January. Let’s say the vehicle has a fair market value of $8,000.00 when it’s dropped off, and repairs are estimated to cost about $2,500.00. Tinman’s begins work on the vehicle, but, eventually, Dorothy Debtor stops returning calls, and her check for the repair work bounces. Tinman’s stops all work on the vehicle and parks it on its property. At this point the vehicle is worth $5,500 ($8,000 – $2,500 for the necessary repair work). At this time, Tinman’s cannot even try to get an abandon vehicle title because the vehicle is worth more than $2,500.
What often happens, however, is that Tinman’s will simply let the vehicle sit on its property accruing storage charges. In July, six months later, Tinman’s decides the time is right to go after that abandon vehicle title. It now justifies this by stating that the vehicle is worth less than $2,500, and this is how Tinman’s does the math:
- Fair Market Value: $8,000
- Repair Cost: -$2,500
- Storage Costs: -$3,600 ($20/day for 180 days)
- Vehicle’s Value: $1,900
To complicate matters, Tinman’s will notify Lion Lien Holder that it has this abandon vehicle on his property as required by the statute, but will further demand payment from Lion Lienholder, and that math will likely look like this:
- Charge for partial repair work: $500.00
- Storage Costs $3,600.00 ($20/day for 180 days)
- Total Demand: $4,100.00
While some garages and storage facilities will negotiate on fees for storage, many will not and deem the refusal of the lien holder to pay the demanded amount as a forfeiture of its interest in the vehicle enabling the garage to move forward in obtaining an abandon vehicle title.
So, what can a lien holder do to protect itself? First, any notice coming from a garage or storage facility should be taken very seriously. Procedures need to be put in place for the handling of notices. When a notice comes in it must be addressed. Either start negotiating the fees right away or refer the case to an attorney who can give you advice about what to do when negotiations fail. Don’t forget either, while you may in good faith be negotiating, the garage or storage facility, may only be waiting for the notice time to run so it can get title to the vehicle. Second, if a debtor informs you that a vehicle is at a garage and he cannot afford to pay for the work or that his vehicle was impounded, start gathering information about such things as the name and address of garage and the nature of the work being done. See if your debtor will give you copies of estimates or invoices. Remember, in most states you can file a replevin against anyone in possession of collateral upon which you have a lien. Finally, if you find yourself in the position of having a garage or storage facility obtain an abandoned vehicle title, contact an attorney who can tell you how this too can be remedied.