A car owner hires a mechanic to install new brakes on his car and make some general repairs, but the car owner refuses to pay. Perhaps the owner claims he did not authorize the mechanic to perform all the work, or perhaps the owner believes the work was faulty. Maybe the owner claims the owner is charging too much. The mechanic, however, asserts that the car owner ordered the work, the work was done well, and the price is fair. Can the mechanic hold the vehicle until he receives the demanded payment?
It depends. Under Utah law, every person who performs work or services on personal property, such as vehicles, has a right to possess that property until receiving reasonable payment for the work or services requested. This right to withhold the property is called a “repairman’s lien.”
Importantly, car mechanics are not the only people who can claim a repairman’s lien. All kinds of services trigger repairman’s liens or possessory liens. For example, mechanics who repair heavy industrial equipment for construction companies can claim a repairman’s lien for unpaid work, and even a watch shop could claim a repairman’s lien on a watch after installing something as simple as a new battery.
This article delves into the details of a repairman’s lien, discussing each of the various elements necessary to establish a repairman’s lien and other related issues.
The first requirement for a repairman’s lien is that the property be personal property, which includes everything that is not land or fixed to land. So, a repairman’s lien cannot apply to a house or things like appliances attached to a house. It does apply, however, to personal property items such as cars, boats, motorcycles, furniture, televisions, skis, mountain bikes, clothing, shoes, watches, household goods, and any other similar items you might have somebody service, repair, or fix.
People like general contractors, subcontractors, suppliers, and certain mechanics (like HVAC repairmen) who provide services or materials on real property (i.e. houses, land, etc.) cannot claim a repairman’s lien if they don’t get paid; rather, these parties can claim a construction lien, different type of lien. Construction liens, often referred to as mechanic’s liens, are governed by much more complex laws and requirements.
At the Request of the Owner
The next requirement is that the work at issue was performed “at the request of the owner or other person entitled to possession.” It would be unfair and improper for a repairman or mechanic, in order to generate more revenue, to do additional, unauthorized work and the hold the property hostage until paid in full. For instance, if the owner asks for services A, B, and C, and received services A, B, and C plus—without authorization—services D, E, and F, it is possible that no lien exists after payment for services A, B, and C, and the property probably must be released. But, on the other hand, if the owner authorizes open-ended work, a lien likely exists for any work and services performed.
Reasonable Value of Labor and Services
A repairman’s lien is only a right to be paid the “reasonable value” of the labor or services performed. If the parties entered a written contract, the agreed-upon amount probably is the amount of the lien (i.e. the “reasonable value”). If the parties didn’t agree upon a price, a reasonable value may be difficult to pin down. For this reason, it is wise to establish a price at the outset, and if anything changes along the way, the parties should communicate and confirm adjustments to the work and the price. Obviously, this doesn’t always happen, and when no price is discussed, the parties must seek to agree upon a reasonable value—or otherwise resolve the dispute through litigation.
A Possessory Lien
A repairman’s lien is a possessory lien, which means that the repairman “may retain possession . . . until the amount so due is paid.” If the repairman releases the property before receiving full payment, the lien right is almost certainly lost, and the repairman may have to bring a breach of contract claim in court to obtain full payment. Possession is a very powerful tool and, for obvious reasons, great leverage in forcing payment. It can also be a wrongful tool used to extract more money than is owed based on an unfounded claim for a repairman’s lien.
Subject to Secured Parties
Let’s suppose that a mechanic works on an owner’s car, the owner doesn’t pay, and the mechanic retains the car. In the meantime, the owner hasn’t made the monthly payments on the car, and the bank (or lienholder) comes looking for the vehicle. Does the mechanic need to surrender the car? Probably. A repairman’s lien, along with the accompanying right of possession, is subordinate to the rights and interests of parties who have a secured interest in the property.
Selling Property to Satisfy Lien
If a repairman never gets paid for the work or services, the repairman can enforce the repairman’s lien by selling the property. Before conducting the sale, the repairman must—among other things—give the owner at least thirty days’ notice of the sale date and time, and if the property is sold at a private sale, the sale must be commercially reasonable. If the proceeds from the sale do not satisfy the outstanding debt, the repairman can go after the former owner of the property to recover the remaining debt.
Help with Repairman’s Liens
This article has discussed the basics of a repairman’s lien, but it hasn’t explained everything. If you or your company have questions about repairman’s liens and requirements for enforcing these liens, I am happy to help. Or, if you are involved in a dispute with a repairman who is asserting a repairman’s lien on your property and refusing to return it to you, I would love to advise you. I offer a free consultation. My direct dial is 801-365-1021, and you can e-mail me at [email protected].