Storage Fees and Lien Sales
Effective January 1, 2019, Assembly Bill 2392 (Santiago, Chapter 434, Statutes of 2018) modified Vehicle Code (VC) section 22524.5 regarding reasonableness of storage rates and presumptively unreasonable charges when those fees are a result of an accident or recovery of a stolen vehicle. VC section 22524.5(c)(2)(A) states that towing and storage charges are deemed reasonable if they do not exceed the amount charged to a public agency such as the California Highway Patrol or local police department. This would apply to an automotive repair dealer (ARD) if, in addition to performing automotive repair, they engage in the storage of vehicles for a public agency. VC section 22524.5(c)(2)(B) states that storage charges are reasonable if they are comparable to those charged by other facilities in the same area. This applies to ARDs and sets the reasonableness of the storage charges based upon other similar facilities in the same geographic/demographic area. VC section 22524.5(c)(3) states that administrative or filing fees, security fees, dolly fees, load and unload fees, pull-out fees, and gate fees are presumptively unreasonable, which means they are presumed to be unreasonable unless rebutted with evidence.
Although storage fees and lien sales do not fall directly under the jurisdiction of the Bureau of Automotive Repair (BAR), the issues are often included in complaint investigations. Before charging storage fees or proceeding with a lien sale, ARDs should review the following reminders:
- An ARD must have a valid registration with BAR to be able to perform a lien sale or sue on a contract for automotive repairs. Business and Professions Code (B&P) section 9884.16
- An ARD must obtain the consumer’s authorization before performing work or accruing charges. B&P section 9884.9
- An ARD can charge reasonable towing and storage fees when those services are performed as a result of an accident or recovery of a stolen vehicle after the lien has arisen. VC section 22524.5
- An ARD cannot charge for storage during the time the vehicle is undergoing repairs. Owens v. Pyeatt, 248 Cal. App. 2d 840 (1967)
- An ARD that has entered into a contract to perform a teardown (i.e., disassembling a vehicle or vehicle component for the purpose of preparing an itemized estimate to perform the needed repairs) cannot assess storage fees until the teardown is complete and the itemized estimate has been provided to the consumer. Title 16, California Code of Regulations section 3353(c)
- A lien is deemed to arise when an ARD completes the repairs and provides the invoice to the consumer, or 15 days after the completion of repairs, whichever occurs first. An ARD has 30 days after the lien has arisen to apply with the Department of Motor Vehicles (DMV) for authorization to conduct a lien sale. Civil Code (CC) sections 3068(a) and (b)
- A lien also can arise when an ARD takes possession of a vehicle for towing and storage purposes, prior to any contracted repairs. In this situation, applying with DMV for authorization to conduct a lien sale is dependent on the value of the vehicle. CC section 3068.1
Additional information is available at www.leginfo.legislature.ca.gov.