How Auto Brokers Can Use a Mechanics Lien to Collect on Unpaid Invoices
How Auto Brokers Can Use a Mechanics Lien to Collect on Unpaid Invoices
When you work as an auto broker, your business thrives on trust and timely payments. But sometimes, despite delivering the vehicle or completing the service as agreed, a client fails to pay. This can leave you in a difficult position—especially if the amount owed is substantial.
One legal tool you may not realize is available to you is the mechanics lien. Although commonly associated with contractors and construction projects, a mechanics lien can also apply to certain automotive-related transactions, giving you a powerful way to secure payment for your work.
What Is a Mechanics Lien in the Auto Industry?
A mechanics lien is a legal claim against a vehicle for unpaid labor, services, or materials provided. For auto brokers, this can mean that if you have facilitated the purchase, repair, customization, or delivery of a vehicle and have not been paid, you may be able to assert a lien on that vehicle.
This lien acts as a public notice that you have a legal interest in the vehicle until the debt is paid. In many cases, the lien must be satisfied before the vehicle can be sold, transferred, or registered—making it a strong incentive for the owner to settle the debt quickly.
When Can an Auto Broker File a Mechanics Lien?
The ability to file a mechanics lien depends on state laws, but generally, you may have the right to file if:
You performed brokerage services resulting in a sale or delivery of a vehicle.
You advanced funds, arranged financing, or handled logistics for a client.
You performed work that added value to the vehicle, such as arranging custom upgrades or accessories.
Payment for your services is past due under the terms of your agreement.
Steps to Filing a Mechanics Lien as an Auto Broker
While the process varies by state, here are the general steps:
Review State Law – Confirm that your state allows auto brokers to file a mechanics lien and determine the applicable deadlines. Some states give you only a short window (e.g., 30–60 days) after services are completed to file.
Send a Demand for Payment – Before filing, send a written demand letter to the client. This serves as both a courtesy and a legal step in many states.
Prepare the Lien Documentation – Include details such as your business name, the client’s name, a description of services provided, the vehicle’s VIN, and the amount owed.
File the Lien – Submit the lien form to the appropriate county clerk’s office, DMV, or other designated authority in your jurisdiction.
Enforce the Lien if Necessary – If payment is still not made, you may have the right to enforce the lien through a legal sale of the vehicle (state-specific rules apply).
Benefits of Filing a Mechanics Lien as an Auto Broker
Secures Your Right to Payment – Gives you a legal claim on the vehicle until you are paid.
Puts Pressure on the Debtor – Many clients will pay quickly to clear the lien so they can sell, register, or use the vehicle without legal issues.
Protects Your Business Cash Flow – Helps prevent losses from unpaid invoices.
Avoiding the Need for a Lien
While a mechanics lien is a powerful tool, prevention is always better. Protect your business by:
Using clear written contracts.
Collecting deposits before starting work.
Setting payment milestones.
Running credit checks for large transactions.
Final Thoughts
If you are an auto broker facing unpaid invoices, a mechanics lien could be the leverage you need to collect the money you’re owed. The process can be technical, and deadlines are strict, so acting quickly is critical.
Need help filing a mechanics lien?
We can guide you through the process from start to finish, ensuring your lien is filed correctly and on time. Contact us today to protect your rights and get paid for your hard work.