Mitch Levin, CPA

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How to Prepare a Mechanics Lien in California as an Auto Broker: A Complete Guide

How to Prepare a Mechanics Lien in California as an Auto Broker: A Complete Guide

When you work as an auto broker in California, one of the biggest challenges is dealing with clients who don’t pay their invoices. Whether it’s a buyer who backed out of a deal, a customer who refused final payment, or a consignment client who failed to reimburse expenses—unpaid balances can disrupt your cash flow and damage your business.

The good news?
California gives auto brokers and automotive professionals a powerful legal tool to recover money owed to them:
👉 the California Mechanics Lien (also known as a Vehicle Storage or Possessory Lien).

What Is a Mechanics Lien for Auto Brokers in California?

A mechanics lien in California allows anyone who provides labor, services, or storage on a motor vehicle to claim a legal interest in that vehicle until the debt is paid.

This includes:

  • Auto brokers

  • Car dealers

  • Transporters

  • Storage facilities

  • Mechanics

  • Auto body shops

Under California Vehicle Code §3068, you can place a lien for:

  • Brokerage fees

  • Transport fees

  • Storage fees

  • Service charges

  • Unpaid invoices related to locating, negotiating, or purchasing a vehicle

A mechanics lien gives you the right to:
✔ Demand payment
✔ Retain possession of the vehicle (if applicable)
✔ Force a lien sale through the DMV if the debt remains unpaid

This is one of the strongest collection tools available to auto brokers.

When Can an Auto Broker File a Mechanics Lien in California?

You can file a lien when:

  • You performed services related to obtaining or handling a vehicle

  • You are owed money for those services

  • The customer refuses to pay

  • You have legal possession of the vehicle or the services directly benefited the vehicle

Possession is ideal but not always required, especially for administrative or brokerage services.

Common scenarios include:

  • A buyer backs out after you locate and negotiate a deal

  • A consignment client refuses to pay your commission

  • A customer won’t reimburse transportation, inspection, or auction fees

  • You advanced money on a deal and the client disappeared

If the vehicle benefited from your services, a lien may apply.

Step-by-Step: How to Prepare a Mechanics Lien in California (Auto Broker Edition)

Below is the exact process, simplified for auto brokers.

1. Document Your Unpaid Invoice

Before you begin the lien process, make sure you have:

  • A detailed invoice

  • A written brokerage agreement (if available)

  • Proof of services (emails, texts, receipts, vehicle details)

This documentation is essential if the dispute escalates.

2. Determine the Value of Your Lien

California allows you to include:

  • Brokerage fees

  • Auction fees

  • Transportation costs

  • Storage fees

  • Administrative expenses

  • Any contractual fees owed to you

Make sure the amount is accurate and supported with proof.

3. Complete the DMV Form REG 668 (Possessory Lien)

Auto brokers must complete the DMV REG 668 form, which includes:

  • Vehicle information

  • Owner information

  • Amount owed

  • Basis for the lien

  • Date services were completed

  • Statement that lien is being claimed legally under CVC §3068

This form triggers the lien process with the DMV.

4. Mail the Lien Notices (Within the Timeline)

California requires lien claimants to send notices within strict deadlines:

  • Within 10 days of starting the lien process

  • You must notify:
    ✔ The registered owner
    ✔ Legal owner (lienholder)
    ✔ DMV

Notices must be sent by certified mail.

If deadlines are missed, your lien may be invalid.

5. Wait for the Required DMV Response Period

After notice is mailed, you must wait the DMV-mandated period for:

  • Owner to pay

  • Owner to contest

  • Other lienholders to respond

If nobody responds within the waiting period, the lien proceeds automatically.

6. Conduct a Lien Sale (If Allowed)

If the owner does not pay:

  • You can request approval for a DMV lien sale

  • The vehicle may be sold at public auction

  • You can recover:
    ✔ Debt
    ✔ Storage costs
    ✔ Administrative fees

If the vehicle sells for more than the debt, remaining funds go to the owner (you do not keep the extra).

Why Mechanics Liens Are So Effective for Auto Brokers

Mechanics liens are powerful because:

  • They are legally enforceable

  • They allow you to maintain possession of the vehicle

  • They create urgency—owners don’t want to lose their title

  • They give you priority over many other creditors

Clients who ignore invoices usually respond VERY quickly when they receive a DMV lien notice.

Avoid These Common Mistakes

Many auto brokers lose their lien rights because they:
❌ File the wrong DMV form
❌ Miss the 10-day notice deadline
❌ Fail to provide proof of services
❌ Overstate the amount owed
❌ Don’t send certified mail
❌ Try to sell the vehicle without DMV approval

Following the steps precisely ensures your lien is valid and enforceable.

Final Thoughts: Mechanics Liens Give Auto Brokers Real Power

If you’re an auto broker in California dealing with unpaid invoices, a mechanics lien is one of the strongest tools available to you. It allows you to:

✔ Recover unpaid commissions
✔ Protect your business from financial loss
✔ Legally pressure non-paying clients
✔ Enforce your rights through the DMV

Understanding the lien process can dramatically improve your collection success rate.

Need Help Filing a Mechanics Lien in California?

Preparing a lien as an auto broker can be overwhelming if you’ve never done it before. If you need help:

  • Completing DMV forms

  • Drafting the lien notices

  • Calculating fees

  • Filing the lien legally

  • Preparing for a DMV lien sale

👉 Reach out to us — we help auto brokers file mechanics liens correctly and recover unpaid invoices faster.

Mitchell Levinbroker, mechanics lien, california