Lien sales are about to change in california

Welcome to Lienco.org,
Providing you with vehicle industry news and links to DMV-licensed services.

Before we begin highlighting the proposed changes, here are a few things to know:

• The public comment period has ended. We are not sure if a hearing was requested or scheduled (we will update this).
• These changes may impact small businesses across California that depend on the Lien Sale Process (Auto Repair, Towing, and Storage).

The title of the proposal is "Lien Sales - Vehicle Valuation by the Department" and can be found here (Click).

With DMV Lien Sales, there are different procedures to follow depending on the value of the vehicle.

Here are two types:

Lien Type 1: Vehicles valued OVER $4,000 or stored at a storage facility.
This type of lien sale requires filing an application with the DMV, paying $5, and waiting for an authorization letter to conduct the lien sale.

If authorization is received, you must mail notices by certified mail (return receipt requested) to every interested party and to the DMV. 

You also need to run a legal ad in the newspaper for 1 day to advertise the lien sale auction date and vehicle description.

This process takes 90-120 days to complete, depending on how quickly the DMV processes the applications or if any opposition or other issues arise.

Lien Type 2: Vehicles valued UNDER $4,000.
This type of lien requires an information request from the DMV (INF 1126) and $5 to obtain the names and addresses of the registered and legal owner for lien sale notification purposes.

Once a DMV vehicle inquiry report is received, notices must be sent by certified mail (return receipt requested) to the DMV and by Certificate of Mailing to all known interested parties.

After approximately 30 days, if no opposition is declared, the vehicle can be sold at auction.
No newspaper advertising is required.

So, what is changing?
Not much, but it’s mostly about the money. 

• The DMV would like to start charging $39.00 per application for lien authorization on vehicles valued over $4,000.00 or stored at a storage facility (Lien Type 1).
  This is a 680% increase from the current $5.00 filing fee, according to omnicalculator.com.

Yes, that is quite a hike, but looking further, it seems that the DMV plans to 

• REDUCE the fee from $5.00 to $1.49 for vehicles valued UNDER $4,000 (INF 1126).
  That is a 70.2% decrease in filing fees.

The DMV has further clarified how determining the value of a vehicle will be handled.
(This does not apply to tow liens authorized by law enforcement (since law enforcement values the vehicle) or Storage Facility Vehicle Liens.)

Currently, there are no laws on how an Automotive Repair facility or Non-Agency Tow determines the value of the vehicle (which determines the Lien Type).

The DMV would like to create a regulation that would allow them to value vehicles for Lien Sales at Automotive Repair Facilities or Non-Agency liens.

The following is copied word-for-word from the DMV's website:

(c) For purposes of a lien sale under Civil Code, Division 3, Part 4, Title 14, Chapter 6.5, sections 3067-3074, the department may assign a vehicle value for purposes of Civil Code section 3071 and 3072 by using the market value as defined in section 157.02(c), which is used to determine the most current vehicle license registration fee.
The market value of a vehicle, other than a trailer or semi-trailer as described in subdivision (a) of Section 5014.1 of the Vehicle Code, for each registration year, starting with the year the vehicle was first sold to a consumer as a new vehicle, or the year the vehicle was first purchased or assembled by the person applying for original registration in this state, or the year the vehicle was sold to the current registered owner as a used vehicle, shall be as follows: for the first year, 100 percent of a sum equal to the middle point between the extremes of its class as established in subdivision (b); for the second year, 90 percent of that sum; for the third year, 80 percent of that sum; for the fourth year, 70 percent of that sum; for the fifth year, 60 percent of that sum; for the sixth year, 50 percent of that sum; for the seventh year, 40 percent of that sum; for the eighth year, 30 percent of that sum; for the ninth year, 25 percent of that sum; and for the 10th year, 20 percent of that sum; and for the 11th year and each succeeding year, 15 percent of that sum; provided, however, that the minimum tax shall be the sum of one dollar ($1).
 

They say the above is a "simple calculation" and is how they will value vehicles (to determine lien sale type).

What could this mean for automotive repair facilities or non-agency tows?

Well, it could force them to file most liens as Lien Type 1—requiring them to pay the $39.00 (680% increase) filing fee and causing businesses to store vehicles for a longer period of time (which takes up valuable space).

Here is just one example,

Automotive Repair Facility Example Scenario:

A repair shop has a 2009 Honda Civic (Clean Title) that a customer brought in for an oil change, cabin air filter replacement, and full inspection for an estimate  of repairs that  would bring the vehicle back to an  optimal and safer condition.

The total for the oil & cabin air filter change was $150.00 and the inspection fee was $200. 

The mechanic wrote up an estimate that listed about $3500.00 in recommended repairs such as: new brakes, new o2 sensor, realignment, new fuel pump, and other costly items.

Because the customer already authorized the oil and filter change and the inspection fee for an estimate- the mechanic changed the oil and air filter and also spent 3 hours inspecting the vehicle and writing the estimate for repairs. 

The mechanic then calls the customer for authorization  to complete the repairs on the estimate but the customer says "NO! and I'm not paying you for the oil change either!" and then hangs up and the mechanic never hears from them again. 

Yes, this stuff does happen.

Naturally, the automotive repair facility would then start the lien proceedings.

Because this vehicle is damaged and in poor condition, the shop owner knows it's worth way less than $4,000.00 and proceeds to file Lien Type 2 (Short Lien) so in 35 days or so, he can sell the vehicle or remove it from his shop to make space.

But, if the new regulations are what they seem, the DMV could reject his lien and require him to file Lien Type 1 (more money to DMV), and now the shop has to wait 90-120 days for the DMV to process the application and complete all other requirements.

The new proposal does allow for some exceptions, such as:
"Vehicles whose titles have been branded as salvaged, taxi, police, non-USA, warranty return, or remanufactured, as provided in subsection (c)(2), or if the department has received an application for salvage certificate or nonrepairable vehicle certificate, form REG 488C, as specified in subsection (c)(3)."

What you don’t see is the DMV allowing an Automotive Repair Facility to provide an estimate of repairs needed that proves the value of a clean title vehicle in its current condition.

So, if the auto shop knows the vehicle is worth about $1,000 in its current condition, the DMV's new rules could say it's worth $7,000.00 per their "simple" calculations provided above.

Until the DMV  provides a more clear and final order of changes and makes it publicly available available, it's hard to say what they have in mind exactly.  I'm sure it will be some time as they will likely have to revise multiple forms to reflect the new fees, etc. 

It almost seems that many junky vehicles are about to be valued over $4,000 so that DMV can get their new $39.00 per application fee.

More businesses are going to have to store more vehicles for a lot longer at their own expense. 

But the actual overall goal is to allow vehicle owners more time to come up with the money they owe for the services they authorized  before their vehicle is sold at auction.

We understand that protecting the public is the utmost important thing and Lienco.org supports the DMV's decision to raise the application fee to $39 and  to change the algorithm to require more vehicles to be processed the costly and inconvenient way  so long as they raise the maximum fee a lienholder can charge it's customer  for lien sale preparation costs. 

That's about it for now. 

The above content may not contain complete information—please see the DMV's website for everything else that is not included here.

Lienco.org is preparing for something great to come!

For now, if you need a vehicle verified for the California DMV and want mobile service, check our directory below or visit http://myvinverification.com for the most recently updated list.

Licensed CA DMV  Vehicle Verifiers are not employees of the CA DMV but are authorized to perform Vehicle Verifications (Vin Verifications) on most vehicles. Some exclusions apply.  LienCo.org is only referring you to licensed vehicle verifiers in your area and receives no sales or commissions on your transaction. 

All businesses listed on this website are their own, and all transactions are between you and them. 

Please see their websites for information about their service.