Attorney Trey Wilson - RL Wilson Law

16 November 2009

In Texas, persons repairing vehicles and equipment may place workers' liens and even repossess

As a San Antonio lawyer with active real estate and construction law practices, liens are a daily part of my business. When representing landowners or buyers/sellers of real estate, ensuring clear title -- free of liens and encumberances -- is of the utmost concern. Likewise, my general contractor and sub-contractor clients regularly trust me to place or remove mechanics' liens to secure payment for work performed or materials supplied on contruction projects.

Every so often, hoewever, I get a call from an equipment repair facility, automotive mechanic or other service provider inquiring about their lien rights when customers refuse to pay for their services.

In Texas, liens are available to a variety of persons rendering goods and services, including those who perform repairs on vehicles, motorboats, vessels and/or outboard motors. Persons performing such repairs are referred to as "workers," and their lien rights are set-forth in Section 70.001 of the Texas Property Code.

That section not only entitles the repair person to place a lien on the article that was repaired, but also entitles such "worker" to retain POSSESSION of the article until payment is received. Here's the text of the statutue:

Sec. 70.001. WORKER'S LIEN. (a) A worker in this state who by labor repairs an article, including a vehicle, motorboat, vessel, or outboard motor, 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.

Many times, people pay for repairs through check or credit card transactions. In these instances, the article that was repaired is released to the owner prior to the repair person actually receiving the funds associated with a purported payment. Nefarious customers might then stop payment, close their account, or simply have their check returned for NSF. In such instances, the statute, again, seeks to protect the rights of the repair person, and even authorizes repossession in certain circumstances:

(b) If a worker relinquishes possession of a motor vehicle, motorboat, vessel, or outboard motor in return for a check, money order, or a credit card transaction on which payment is stopped, has been dishonored because of insufficient funds, no funds or because the drawer or maker of the order or the credit card holder has no account or the account upon which it was drawn or the credit card account has been closed, the lien provided by this section continues to exist and the worker is entitled to possession of the vehicle, motorboat, vessel, or outboard motor until the amount due is paid, unless the vehicle, motorboat, vessel, or outboard motor is possessed by a person who became a bona fide purchaser of the vehicle after a stop payment order was made. A person entitled to possession of property under this subsection is entitled to take possession thereof in accordance with the provisions of Section 9.609, Business & Commerce Code.

But a repair person should be very careful before asserting any right of repossession. This is because repossession is only available under a limited set of circumstanes:

(c) A worker may take possession of an article under Subsection (b) only if the person obligated under the repair contract has signed a notice stating that the article may be subject to repossession under this section. A notice under this subsection must be:
(1) separate from the written repair contract; or
(2) printed on the written repair contract, credit agreement, or other document in type that is boldfaced, capitalized, underlined, or otherwise set out from surrounding written material so as to be conspicuous with a separate signature line.

A repair person who properly asserts a right to repossession may require the owner of the repossessed article to pay for repossession costs, including towing:

(d) A worker who takes possession of an article under Subsection (b) may require a person obligated under the repair contract to pay the costs of repossession as a condition of reclaiming the article only to the extent of the reasonable fair market value of the services required to take possession of the article. For the purpose of this subsection, charges represent the fair market value of the services required to take possession of an article if the charges represent the actual cost incurred by the worker in taking possession of the article.

Again, repossession is available only in limited circumstances. Under certain conditions -- such as when a worker transfers to the repo company a returned check -- the worker may find himself in trouble for attempting repossession.

For that reason, all repair facilities and persons should consult with an experienced attorney PRIOR TO attempting a repossession upon a workers' lien. In addition, the prudent garage or mechanic should have a lawyer who is familiar with liens review their service contract or agreement to ensure that the repair document properly provides notice and authorization for repossession of the article to be repaired.

Trey Wilson --Named By Scene in SA Magazine As One of San Antonio's Best Real Estate Litigation Attorneys -- September 2008 -- As voted on by peers