MADA occasionally receives questions about garage keeper’s liens and State of Michigan requirements. Garage keepers (i.e. repair facilities) can file for a garage keeper’s lien (GKL) if charges for services done at the request of the owner (as listed on the title) are not paid. Once the vehicle is later sold, the lien entitles the garage keeper to compensation for certain costs, assuming proper regulations have been followed.

The Garage Keeper’s Lien Act has a somewhat complex list of rules and regulations. Dealers should be aware of the requirements, the timeline and verify that appropriate staff is fully knowledgeable of their responsibilities within the act.

Within 105 days of the last day of work performed on the vehicle, the repair facility needs to make application to the Michigan Department of State (MDOS) for the garage keeper lien. The last day work is performed on the vehicle is considered the day the lien attaches.

• Garage Keeper Lien Application form (BDVR-35).

MDOS will process the BDVR-35 then provide the repair facility with a completed TR-42 Certificate of Foreclosure of Garage Keeper’s Lien and Bill of Sale form. This is the document used by the repair facility to sell the vehicle.

The repair facility has 30 days from the issuance date of the TR-42 to send a certified letter with the required information:

• The letter must be mailed, return receipt requested, to all owners, lienholders and MDOS
• The letter must include an itemized list of the amount due, a demand for payment, a statement that all lienholders are being notified of the delinquency, and a statement of daily storage fees
• The letter must also include the date, time, manner, and location of the vehicle sale

The vehicle sale must be at least 75 days after the issuance date of the TR-42. It is important that repair facilities follow the very specific rules for selling the vehicle. The Garage Keeper’s Lien Act states “the garage keeper may sell the vehicle at a public sale…”

• See: Sale of vehicle at a public sale – 570.305

This total process cannot take more than 225 days from the date the lien attaches.

This is a simplified overview of the process. Before applying for a garage keeper’s lien MADA encourages dealers to review additional information and guidelines from the state:

• Repair Facility Manual: Chapter 6, see Section 6-3
• Repair Facility FAQs: scroll to Post-repair requirements >> Obtaining a GKL
• Michigan Legislature: Maximum amount of lien (not including storage) – 570.303(4)
• Michigan Legislature: Maximum amount of lien for storage – 570.304(2)

If you have further questions please reach out to MADA.

School is almost out for the summer and high schoolers with a driver’s license are ready to be on the open road!

If a young driver comes to your dealership interested in a vehicle, it is important to remember that a contract with a minor is not enforceable. A vehicle contract with an individual under the age of 18 can be rendered null and void. This could lead to a vehicle return for any reason and a requirement for reimbursement. (While legally emancipated minors may be able to enter into an enforceable contract, it can be a tricky situation.)

Purchase. Dealers are advised to require a responsible adult to become the purchaser or co-purchaser of a vehicle. An adult, usually a parent/guardian, should sign the buyer’s order, lease or rental agreement, as well as financing documents. This policy should apply if the vehicle is paid fully in cash, or financed.

Warranty. Minors are often interested in your “budget” lot and purchase lower-cost, used vehicles. It is highly encouraged that the dealer explain the warranty, if any, and request an adult co-purchaser acknowledge all aspects of the sale in writing.

Maintenance/Repair. This same reminder extends to the service department. A minor authorizing expensive repairs could attempt to void a service bill based on the fact that he or she is under the age of 18. Make certain that an adult is jointly or individually responsible for vehicle repairs.

If you have questions please call MADA at (800) 292-1923.