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020-12 Mechanic's Lien Not Applicable to Financial Institutions

Registration and Title Bulletin - #020-12

Date: June 4, 2012

To:

All County Tax Assessor-Collectors

Subject:

Mechanic's Lien Not Applicable to Financial Institutions

PURPOSE

To provide clarification regarding the filing of a mechanic's lien by a company or financial institution that has financed or purchased a mechanic's contractual financial agreement.

DETAILS

Texas Property Code, Chapter 70, Subchapter A, provides a legal remedy for a mechanic to file a lien on a vehicle that the mechanic has repaired and retain possession of the vehicle until the amount due is paid.

A mechanic's lien cannot be filed if a customer enters into a financial agreement with a company or financial institution or with the mechanic for the cost of the repairs. This includes agreements that the mechanic subsequently sells to another financial institution.

COUNTY ACTION

Please be advised companies or financial institutions that finance or purchase existing contractual financial agreements from mechanics are ineligible to file a mechanic's lien under Texas Property Code. Please reject and do not accept mechanic's liens when a financial agreement supports the application.

CONTACT

If you have any questions, please contact your local TxDMV Regional Service Center.

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