Towing, Storing, and Mechanic’s Lien Shenanigans
In today’s ever-changing financial landscape, Credit Unions must do everything they can to keep a competitive edge. With inflation high and consumer credit card debts skyrocketing, we have seen an uptick in motor vehicle defaults. However, another area that we have seen an increase in issues that Credit Unions are dealing with is liens from towing, storage, or mechanic’s shops on their collateral. Unfortunately, all of these dealings haven’t been with reputable shops.
Under Section 713, Florida Statutes, towing and storage companies and mechanic shops are granted a lien on a vehicle for the services they perform. If they are not paid for their services, they have the ability to sell the vehicle free and clear of any lien if they follow the correct steps, as set forth in the statute. For some Credit Unions, when they receive the required Notice Of Claim of Lien and Proposed Sale they look at it as if they have two options: (1) either pay what is owed to the company or (2) chalk it up as a loss. However, there is a third option that we have had a lot of success with in preserving the rights of our clients as to the collateral and giving them an upper hand in dealing with these shops.
In many instances, we have seen that Credit Unions are having a hard time getting reliable information from the shops as to the nature of the charges and the condition of the vehicle. In some instances, they have not even been able to have a representative inspect the vehicle to determine the condition in order to make an informed decision as to paying off what is owed. In these situations, sometimes a phone call or a strongly worded demand letter from an attorney’s office can rectify the situation without needing to get too involved. However, this is not always the case. What we have found is that there are (shockingly) some shops that are less than honest about the vehicle and are good at playing games. In this situation, we will need to step it up a notch.
Under Section 713.78 (for towing and storage liens) and 713.585 (for mechanic’s liens), a lienholder on a vehicle that has been set for auction can stop the sale by posting either a cash or surety bond (a surety bond will only cost you roughly 10% of the total amount of the bond) with the Clerk of Court, equal to the total amount due for the charges set forth in the notice, and the daily fees up until the day of the sale. This sounds simple but, in our experience, it has been that many Clerks rarely deal with this type of proceeding and are unfamiliar on how to proceed. We have found a good way to navigate this and ensure that our client gets the outcome they want. First, we file a complaint in the county court of the location of the shop, contesting the amounts owed. This facilitates the process and makes it easier for the Clerk to process the bond with an open case with a case number.
Then, a few days after the case is filed, we go in person to the Clerk’s office and file the surety bond for the full amount owed. I have filed roughly twenty (20) bonds in these types of situations and every single time it has taken around an hour to complete the process. Every time the Clerk at the window had no idea what to do and had to involve their supervisor, who also had rarely, if ever, seen this, so they had to reference their procedures. This is why I prefer to go in person in order to help facilitate the matter if they have questions/concerns (which they almost certainly will). Once the bond is filed with the Clerk, they will issue a Notice, which states that the sale is cancelled, and the shop has to return the vehicle to the Credit Union. I will then drive to the shop and hand deliver to them a letter from our office and a copy of the Notice stating that they have to release the vehicle. In most instances, it is prudent for the Credit Union to have their repossession agent meet me at the shop to pick up the vehicle immediately, as the less time it stays at the shop after the cancellation of the sale, the better.
Once the bond is filed, and the car is released, the process is not over. The shop does have the ability, under the Florida law, to file an action to collec
t on the bond. This would entail a hearing to determine what they are owed under the law and that amount would be taken out of the bond. However, we have not seen this happen. If no action is filed within sixty (60) days, we will ask the Court to release the bond and close out the case.
Dealing with towing, storage, and mechanic’s liens can be a very easy and smooth process, but it can also become a nightmare that involves many headaches and much frustration. If the latter presents itself just know that there are options for the Credit Union. Each case is unique and we recommend you contact an attorney to discuss your rights and the best way to proceed. If you have any questions involving these types of liens, or any other matter, please reach out to us at (850)388-0500 or email.
An Interesting Interpretation on Florida’s Legal Chameleon – Homestead
Florida is known for many unique things, its beautiful beaches, Disney World, and NASA, but one often overlooked unique thing is its homestead laws. The Florida Constitution provides certain homestead protections for individuals that can, at times, be difficult to understand and are often subject to changing interpretations.
When it comes to Florida’s homestead laws, what is important to know is that a person’s homestead property is exempt from forced sale under process of any court and no judgment, decree, or execution shall be a lien thereon, except for the payment of taxes and assessments thereon, obligations contracted for the purchase, improvement, or repair thereof, or obligations contracted for house, field, or other labor performed on the realty. Article X, Section 4. It is also important to understand that if married, you cannot alienate the homestead by mortgage, sale, or gift without the joinder of your spouse. This becomes important to understand when dealing with a mortgage. If the subject property is a married couple’s homestead, both spouses must at least sign the mortgage. Otherwise, the lender may not have a valid and enforceable mortgage lien. An issue that may arise is what happens when you are dealing with a non-owner spouse, meaning one that is not listed on the deed. Or a situation where a married couple is permanently separated (not legally divorced) and are thought to have abandoned the homestead and waived any rights. These issues were recently discussed in Isaacs v. Fannie Mae, 47 Fla. L. Weekly D2632 (Fla. 3d DCA December 14, 2022).
In Isaacs, a husband and wife separated, resulting in the husband permanently abandoning the homestead, quitclaiming his interest in the property to the wife, and purchasing a separate primary residence (he even claimed a homestead property tax exemption). After years of separation, the wife acquired a mortgage that the husband did not join and sign. Sometime after acquiring this mortgage, the wife passed away. The lender sought to foreclose the mortgage and the husband objected, arguing that the mortgage was invalid, as it was her homestead, and he did not join in alienating the property by signing the mortgage. The trial court agreed with the lender that the husband abandoned the property by conveying his interest and acquiring his own primary residence. Following the entry of a foreclosure judgment for the lender, an appeal ensued, whereby the Third District Court of Appeal held that the mortgage was not valid, as the husband did not join. In reaching its decision, the Third DCA held that a non-owner spouse’s abandonment of the homestead does not constitute a waiver. Rather, under Article X, 4(c), a spouse, if married, must join in the mortgage. Here, the wife was married at the time of the mortgage and it was her homestead. Therefore, the husband had to join. The fact that the husband conveyed his interest in the property, and owned a separate primary residence where he was claiming a homestead residence was of no relevance to the Court, based on its interpretation of the Florida Constitution.
It is important to note that the interpretation of Florida’s homestead laws is always changing, hence it being a legal chameleon. If faced with a situation where the subject property is homestead, it may be wise to have both spouses at least sign the mortgage, or the non-joining spouse sign a waiver of their homestead rights, regardless of whether they are separated. It is also important to note that a tenancy by the entirety and homestead protections for spouses are severed once a divorce is finalized by the Court through a final order.
If you have any questions about Florida’s homestead protections and how they may impact your ability to enforce a mortgage or finalize a transaction, please do not hesitate to contact one of the lawyers at SVL for legal advice.
Staff Spotlight on Carrie Walrath
Carrie joined the SVL team in May 2022. She is a legal assistant in our post-judgment department. She has an associate degree in paralegal studies and has work experience as a chief clerk/traffic clerk in probate court, as a court clerk in the city court system, and has also been employed at a family law firm. Carrie’s background with the Georgia court system is what drew us to her! She is an outstanding asset to our firm.
Carrie is married to her husband Dennis. They have been married twenty years (almost twenty-one!). Carrie has two sons, who are turning twenty-eight and twenty next month. Dennis and Carrie both enjoy traveling and camping. Their favorite place they have visited is out west to explore Yellowstone. She also says nothing compares to the Grand Canyon. When camping, they go on hiking adventures to see all the views and amazing sights.
When Carrie is not at the office, she loves to read. Her favorite authors are Stephen King and John Grisham. She also likes to go on walks and spend time with her friends and family. One more fun fact about Carrie is that she has her commercial driver’s license (CDL) and can operate heavy equipment!
Thank you, Carrie, for all you do – SVL is lucky to have you!
Staff Spotlight on Tanisha Gibson
Prior to joining the SVL team in March 2022, Tanisha was a teacher for ten years. She received her education degree from Ashford University in 2018. Her son Jakarri was her inspiration to pursue this line of work. Tanisha spent her teaching career with VPK age children, preparing them for the transition to kindergarten. We are very grateful to have Tanisha as one of the legal assistants in our collections department at the firm. She has a determined work ethic and is a very valuable team member.
Tanisha’s son, Jakarri, is a fifth grader who loves football, playing the position of quarterback. From what we hear, he is a very talented player! He started playing at the age of four and has won two championship rings, six trophies, and has received the best quarterback award. Jakarri has Tanisha watch both NFL and college football with him during the active seasons – this time together is very special to Tanisha!
When Tanisha is not at the office, she enjoys shopping, spending time with Jakarri, and eating at vegan restaurants. A fun fact about Tanisha is that she has her business license and owns a clothing boutique, which she is planning to open soon. Thank you, Tanisha, for all that you do! You are extremely appreciated.
Each Christmas season, the SVL team adopts a family in hopes of making the season more special for them. We partnered with ECHO Outreach Ministries this year and we were able to help a mom and her three children have a Christmas to remember! Thank you to our team who made this a success.