RD25 - Mechanics’ and Storage Lien and Abandoned Vehicle Process Study Report 2020 Report – December 2020
Sections § 46.2-644.01 and 46.2-644.02 of the Code of Virginia create statutory liens for persons who tow, store, or repair motor vehicles to enable those persons to recover costs or other charges owed when the owners of the vehicles fail to pay within a reasonable timeframe. Storage liens, which apply to anyone who stores a motor vehicle, are established in § 46.2-644.01 of the Code of Virginia. Mechanics’ liens, for those who perform work on a motor vehicle, are found in § 46.2-644.02 of the Code of Virginia. Both liens are enforced through the provisions of § 46.2-644.03 of the Code of Virginia. That section also permits tow companies, which recover unattended or immobilized vehicles at the direction of localities, to use the mechanics’ and storage lien (MSL) process if the vehicles have not been disposed of through the abandoned vehicle process (AVP) or another statutorily authorized procedure.
Sections § 46.2-1200 through 46.2-1207 of the Code of Virginia designate the current process for applicants to dispose of an abandoned motor vehicle, trailer, or manufactured home left on a Virginia highway, public property, or private property. That process also applies to unattended and immobile vehicles, generally, under §§ 46.2-1209 through 46.2-1215 of the Code of Virginia. Anyone in possession of an abandoned vehicle is required to use the abandoned vehicle process. The Department of Motor Vehicles (DMV) allows individuals, businesses, and government agencies or their authorized agents to use the AVP through its website.
In 2019, former Chairmen of the Senate and House Transportation Committees charged DMV to convene a stakeholder group to examine issues surrounding abandoned vehicles and vehicles subject to MSL. The issues raised have included: difficulties complying with notice, posting, and Servicemembers Civil Relief Act (SCRA) requirements; confusion between the different processes legislated for abandoned vehicles and MSL, and when they may be used; lack of options to facilitate compliance with other states’ requirements, when necessary; and the lack of adequate statutory authority or direction for some practices, especially those of towing companies (Appendix A).
The stakeholders include representatives from the towing industry, the vehicle data industry, the insurance industry, the banking industry, the vehicle dealer industry, the vehicle storage industry, law enforcement, and other relevant stakeholders as identified by DMV. In March of 2019, DMV assembled an internal working group to begin reviewing the issues surrounding the concerns raised in the charge letter issued by the Transportation Committee’s Chairmen. The team began:
• Reviewing concerns regarding the different processes legislated for abandoned vehicles and vehicles subject to mechanics’ and storage liens and when they can be used;
• Reviewing options to comply with other states’ requirements;
• Reviewing concerns regarding the difficulties complying with notices, postings and the requirements of SCRA;
• Identifying changes for adequate statutory authority or direction for some practices;
• Streamlining and increasing compliance with Virginia’s current requirements and processes; and
• Identifying processes or legislation needed to ensure compliance with notification requirements in Virginia law and other jurisdictions’ laws.
After three meetings and a conference call, the stakeholders agreed that, in order to ensure a thorough review of the MSL process and AVP, the study needed to be extended into 2020, with a full report submitted to the House and Senate Transportation Committees in December 2020.
With the agreement and understanding of the stakeholders, DMV submitted an interim report to the Senate and House Transportation Committees in December 2019. As we conclude the extended sessions for the MSL/AVP Stakeholder Study, this final report is being submitted and supersedes the interim report.
Stakeholder meetings resumed in the summer of 2020. Many topics were discussed, such as: lien relinquishment, securing priority, submission of independent appraisals, retail versus tradein value, process timeframes, notification and mail requirements, notice of sale, out-of-state vehicle information, and rewriting the Code of Virginia for MSL and AVP. DMV provided revisions to the Code of Virginia based on stakeholder discussion and consensus was reached on the majority of the proposed enhancements. No consensus was reached for increasing storage lien caps or enforcement sections proposed by the Office of the Attorney General (OAG). The towing industry and the OAG agreed to continue discussions into the fall and felt optimistic that an agreement could be reached on the latter.
An overwhelmingly popular concept was the proposed online MSL/AVP portal where customers with proper access would be able to log in, conduct MSL and AVP transactions, and review their vehicle activity without having to contact DMV. The concept would expand on the existing AVP online service option and include transactions such as conducting a record request, posting notice of sale, uploading documents for certain processes needed for DMV review, submitting paperwork for the new lien relinquishment process, and viewing all vehicle postings for MSL. The group sought to align MSL and AVP, as much as possible, in order to streamline and enhance the processes.
In addition to the portal, a number of policy and process discussions occurred. While a few proposals did not obtain consensus, mentioned previously, the group was successful in identifying many process enhancements for both lien types, to include:
• Permit authorized agents of bailees to request transcripts and use the enforcement process. Anyone requesting more than five transcripts in a 12-month period must use DMV’s extranet tool;
• Expand DMV’s vehicle record search to other states. DMV would be responsible for contacting the other states and notifying all owners or lienholders. If no record is found, or another state will not provide DMV with the owner or lienholder information, the bailee may proceed with enforcement; however, they would assume liability for doing so without notice to the owner. Nothing would prevent the bailee from using a third-party data provider to obtain vehicle information; however, it would not be required;
• DMV would place an administrative hold on each vehicle record for which an MSL transcript is requested. The bailee would be responsible for advising DMV within five business days that a vehicle has been reclaimed in order to remove the hold. Failure to do so could result in a $40 administrative removal fee. The hold would also be removed at the close of the enforcement process, when the vehicle is sold. There would be no fee associated with that removal;
• If the bailee wants to prove that a vehicle is worth less than the trade-in value determined by DMV, they would be able to submit an independent appraisal for that purpose. If DMV cannot establish a value, the agency would have guidelines for other acceptable valuation documents, which may be something other than an independent appraisal. Independent appraisals would be acceptable for any vehicle of any value;
• When the bailee is ready to sell the vehicle, DMV would conduct a second search of vehicle records, in case the vehicle has been retitled or a new lien has been added, and send notices by certified mail to the owner and lienholder. The notice would give the recipients 15 days in which to reclaim the vehicle, after which all ownership and security interests in the vehicle would be waived. At the same time, DMV would post the bailee’s auction notice for at least 21 days on the agency’s website. This process would carry a $40 fee and would also produce a certification document to provide to the purchaser of the vehicle. DMV intends for the certification document to be an updated, electronic version of the VSA 41 in use today;
• If the bailee must petition a court in order to sell the vehicle, the court order must be submitted to DMV in order to produce the certification document for the purchaser. The sheriff or sheriff’s representative would have to sign that document, in addition to the bailee;
• After the sale, surplus proceeds would still have to be paid to a lienholder of record and/or the owner; however, that surplus must be claimed. If the lienholder or owner claims any surplus prior to the auction, the bailee must pay within 30 days of the date of sale. If the lienholder or owner claims any surplus within 30 days after the auction date, the bailee must pay within 30 days of the claim date. The bailee would be permitted keep any surplus not claimed within 30 days of the sale; and
• Out-of-state requesters would be able to obtain Virginia vehicle information for MSL enforcement in their states for a $25 fee. DMV would notify the vehicle owner and lienholder, if any, of the release of the transcript by first class mail.
• Any MSL would be able to be relinquished, provided the MSL transcript shows no existing lien and the vehicle owner fails to reclaim the vehicle during the 10 days following DMV’s initial notice;
• Relinquishment would require the bailee to report the transfer of the vehicle to DMV through the portal. Submissions would carry a $5 fee and be reviewed by DMV staff. DMV would note the relinquishment on the vehicle record and notify the owner of the same, including the contact information for the new possessor of the vehicle. The relinquishment would be allowed as long as the vehicle is transferred within county/city boundaries in the Commonwealth; and
• The new possessor of the vehicle would have a storage lien that must be enforced.
• Removal and disposal of abandoned vehicles from public property would be limited to law enforcement, localities, and their contracted agents. Language would make clear that unattended and immobile vehicles could be processed as abandoned;
• DMV would be responsible for contacting the other states and notifying all owners or lienholders by certified mail;
• Out-of-state requesters would be able to obtain Virginia vehicle information for AVP enforcement in their states for a $25 fee. DMV would notify the vehicle owner and lienholder, if any, of the release of information by first class mail; and
• Private, non-governmental AVP users would be required to hold an auction before obtaining title to the vehicle themselves. Statues would provide for clearer titling documentation to be submitted to DMV.