Oregon repair shops will need $20K bond before seeking ‘mechanic’s lien’

Mary N

Overall body stores and other vehicle repairers in Oregon will have to get a $20,000 surety bond, or an irrevocable letter of credit in the identical total, in order to be ready to assert a lien on a auto for non-payment when a new point out law can take outcome on Jan. 1.

The requirement, spelled out in Oregon Residence Bill 2311, was originally element of broader legislation meant to place a examine on unscrupulous fix stores. That invoice, HB 3322, proposed licensing all car mend outlets, but it died in committee when the 2017 legislative session ended.

HB 2311 applies to outlets that have out mechanical and collision repairs. Exempted are dealerships, OEMs and providers that hold a towing small business certification from the condition, presented that the lien is for towing or storage by yourself. The law does not utilize to abandoned cars.

The legislation, passed on Sept. 25, is meant to safeguard individuals from inappropriate uses of a lien. It states that repairers who file for a lien ought to have a surety bond or letter of credit score that is:

  • (i) Executed to the Condition of Oregon
  • Permitted by the Attorney Standard as to variety
  • Filed with and held by the [state transportation] department and
  • Conditioned these types of as to compensate functions harmed as a consequence of a use of a possessory lien in connection with a misrepresentation, a fraud or a violation of a responsibility set.

“A human being, other than a person that is [exempted], shall have in effect a surety bond or irrevocable letter of credit in the volume of $20,000 before, and shall retain the surety bond or irrevocable letter of credit history throughout, any interval in which the person makes, attaches, asserts or statements a possessory lien on a motor car following creating, altering, restoring, transporting, storing, performing companies for, giving resources for or executing labor in link with the motor car or truck,” the measure states.

A letter of credit rating is a guarantee by a bank to advance up to a specified volume of income to a person deal get together if the other get together defaults, whilst a surety bond is a ensure in which a third get together — frequently an insurance policy enterprise — agrees to suppose a defaulting party’s fiscal obligations.

Less than HB 2311, the bond or letter of credit rating need to be issued by a enterprise authorized to do business enterprise in Oregon. The issuer ought to notify the state’s Section of Transportation if it cancels the bond or the letter, and will continue being obligated till that notification is received.

Stores are expected to certify to the Oregon Office of Transportation [ODOT] each yr that the bond or letter of credit is continue to in impact.

The bill amends ORS 87.152, the condition regulation allowing for mend outlets to assert a possessory lien for non-payment of a invoice.

Margaret L. Ragan, the govt director of the Northwest Automotive Trades Affiliation (NATA), explained her business labored to realize a far better compromise all through the legislative process, and is less than glad with the end result.

“As with a lot of charges introduced every single yr, costs are produced and legal guidelines are handed in reaction to a couple negative players. When this monthly bill was to begin with released, it proposed licensing ALL vehicle restore stores.  Thereafter this monthly bill went by several iterations prior to becoming accepted by all associated get-togethers,” Ragan said in a assertion.

“This was the greatest compromise NATA with the help of our lobbyist, Darrell Fuller, was equipped to attain on behalf of our members. Are we content with this? No. This monthly bill does not implement to dealerships, on the other hand it does use to impartial shops. An Independent shop will only use the lien method — most likely the moment in a year. A store will now spend an estimated $300 on a bond, plus the lien fees in order to obtain title to and offer the car or truck and with any luck , get better the price tag of the unpaid mend.

“Will this correct the dilemma? Probably not,” she explained. “Bad players ARE negative gamers — they never follow the procedures – they will not comply with the procedures.”

Ron Reichen, the proprietor and founder of Precision Body & Paint, interprets the laws as an attempt to give consumers an additional layer of protection versus unscrupulous businesses.

He said the “bad players” normally are tow truck operators that will tow, impound and straight away impose a mechanic’s lien on the vehicle and mechanical maintenance shops that “lowball and upsell” — for occasion, estimating a brake job at $300, presenting a monthly bill for $3,000, and “holding the automobile hostage.”

By necessitating a surety bond or irrevocable letter of credit, the regulation provides a job to the issuing businesses, which will scrutinize any lien application and make a decision regardless of whether or not to terminate the bond or letter. Devoid of a bond or letter, the point out will not admit the lien.

Reichen explained the regulation will have minimal impact on his business, which typically information for two or a few liens each and every 12 months for vehicles that have been deserted. Deserted cars are exempted from the legislation.

Even so, the system is lengthy, and the store are not able to recover anything at all more than the vehicle’s benefit, which can be no more than a portion of what’s owed. A automobile need to be remaining for 90 times, with no response from the proprietor, to be declared abandoned. It then takes an additional 45 times to secure the vehicle’s title by the lien course of action.

Non-payment for collision mend products and services is unusual, Reichen reported, as payment is generally designed by an insurance company, and the coverage field is “scrutinized constantly” by the condition.

Lindsay Baker, assistant director of ODOT, acknowledged in a Feb. 3 letter to the House Committee on Small business and Labor that the measure “does not generate a regulatory framework or offer any level of regulation, oversight, or administration of this industry if Property Bill 2311 passes this marketplace will keep on to function mostly unregulated.

“This evaluate does not set up or immediate any regulatory actions, which include but not minimal to document authenticity verification, inspection of information or taking part entities, or auditing functions associated to business compliance,” Baker wrote.

HB 3322, the unsuccessful proposal to regulate the motor vehicle maintenance field, would have required certification by the state, and permit the ODOT to inspect areas of enterprise “for specified reasons.” Stores operating devoid of a permit would have been billed a penalty of up to $15,000.

Extra data

Northwest Car Trades Association

Oregon Property Invoice 2311

https://legiscan.com/OR/text/HB2311/2021

Oregon Statute 87.152

https://oregon.general public.law/statutes/ors_87.152

Images

Highlighted graphic: Repairers will have to have a $20,000 surety bond or irrevocable letter of credit rating in order to file a “mechanic’s lien” for non-payment of a bill in Oregon commencing Jan. 1.

The State Funds Setting up in Salem, Oregon. (4kodiak/iStockphoto)

 

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