Lien sales are about to change in california
New DMV Lien Sale Regulations Effective 1-1-2026.
💥 Showdown at the DMV: Industry Questions vs. Final Rulings
During the public comment period, an influential coalition of lien agents, tow truck associations, and official police garages stepped forward with sharp questions for the Department. Here is the dramatic breakdown of their debate with the DMV's final, non-negotiable responses.
❓ Question 1: Who Really Pays the Fees? (The Cost Recovery Crisis)
The Industry's Plea: "We are required to pay the DMV's new fees, but the current state law caps our total lien sale prep charges at only $70 or $100 (Civil Code $\S 3074$). These caps are already maxed out! We need the DMV to make it explicitly clear—through regulation or by raising the caps—that we can recover these increased costs from vehicle owners."
The DMV's Verdict (The Hard Stop)Analysis"Irrelevant to this regulatory action."The DMV was blunt: Its fees are for records, not related to tow contracts. It explicitly stated it lacks the statutory authority to raise the lienholder's cost recovery caps, which are set by the State Legislature, not the DMV."The commenter will need to seek their own legal counsel."The Department refused to provide legal interpretation on how lienholders should manage cost recovery, sending a clear signal that this is a private business/legal issue outside the scope of its regulation.
❓ Question 2: What About the Damaged and Salvaged Vehicles?
The Industry's Plea: "If you value every vehicle the same, how can we account for the severe loss in value due to damage or salvage titles? We need clarity on documentation required to dispute a market value for a wrecked car."
The DMV's Verdict (Consistency is King)Analysis"The department will not account for the loss in vehicle value related to damaged vehicles."This is the most sweeping regulatory change. The DMV decided that using the most current Vehicle License Fee (VLF) market value for all vehicles is the clearest, most fraud-resistant method."This process will remove the need to dispute a vehicle value."By mandating a single, simple metric (VLF), the DMV eliminated the complex, subjective process of case-by-case damage appraisals and disputes—prioritizing administrative efficiency over valuation flexibility.
❓ Question 3: Can We Fix the Entire Lien System?
The Industry's Wishlist: "While you're at it, can you increase the long lien threshold from $4,000 to $7,000, extend the allowable timeframe for lien sales, or fix issues with the Declaration of Opposition form?"
The DMV's Verdict (Beyond Our Pay Grade)Analysis"These suggestions cannot be implemented through regulation. Statutory changes are necessary."A firm rejection. The DMV acknowledged these are matters for legislative reform. This regulation is only about clarifying and simplifying current procedures, not rewriting the underlying laws.
✅ The Final Rulings: What is Changing (No Debate Allowed)
The Final Statement of Reasons confirms the following changes are implemented to ensure consistency, compliance, and reduced ambiguity in DMV Lien Sales:
- Vehicle Valuation Standardization: The method for determining a vehicle's value is now mandatory and singular. Value will be based solely on the market value used for the most current Vehicle License Registration Fee (VLF). All exceptions for salvaged, damaged, or public-tow vehicles are repealed.
- Administrative Fee Reduction: The DMV's administrative charge for INF 1126 registration information related to a lien sale (short lien) is formally reduced from the calculated cost ($1.49) to the required rounded figure of $1.00, ensuring compliance with the whole-dollar rounding mandate.
- $4,000 Threshold Clarity: The regulatory text is amended to align perfectly with existing Civil Code sections. The two lien sale tracks are now explicitly defined as "over $4,000" and "at $4,000 or less," removing any ambiguity about a vehicle valued at exactly $4,000.
- Mandatory Language: Ambiguous language like "may" is replaced with the mandatory "shall" to remove any doubt about the Department's duty to assign a vehicle value using the VLF method.
- Long Lien Application now $39.00: The application to conduction a lien sale on a vehicle Over $4000 (or stored at a self storage facility) will raise from the current $5.00 to $39.00 per application. Lienholders cannot raise the amount they charge a vehicle owner for lien sale prep fees even though they will have to pay more to file.
A vehicle waiting for its owner to pay their repair bill.
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