Car repair shops must file bond with DMV before seeking ‘mechanic’s lien’ starting in 2022

Nov. 28, 2021

Disputes over payment for car repairs can sometimes cost vehicle owners and auto mechanics money, time and in some situations the car itself.

The 2021 Oregon Legislature passed a law to create some financial breathing space for these disputes under House Bill 2311. The new law will take effect Jan. 1, 2022.

Car owners don’t need to do anything, but automobile repair businesses need to prepare.

Under current Oregon law, if an auto repair business does not receive payment for repairs to a vehicle, it has the right to apply for a possessory lien through DMV and to sell the vehicle to recover its costs. This “mechanic’s lien” is based on Oregon Revised Statute 87.152.

Under HB 2311, as of Jan. 1, 2022, auto mechanics must first have a surety bond or an irrevocable letter of credit in the amount of $20,000 filed with DMV before they can apply for a mechanic’s lien. This protects vehicle owners in case a mechanic’s lien is found to be invalid.

As of Jan. 1, DMV will not accept mechanic’s lien applications without the bond or letter on file first unless the claimant also:

  • is a franchised dealership, as defined under ORS 650.120(5);
  • is a manufacturer, as defined under ORS 650.120;
  • holds a towing business certificate issued under ORS 822.205; or
  • is a national auction company titling the vehicle pursuant to ORS 87.152(3).

Those required to file a surety bond or letter of credit must certify to DMV every year, in writing, that the bond or letter remains in effect.

If you are a mechanic or own an independent auto repair shop and need more information about filing a mechanic’s lien from DMV, please call DMV Customer Assistance at 503-945-5000 or 503-299-9999 in the Portland Metro Area.

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Newsrooms: David House at [email protected]  or 503-945-5270.

https://content.govdelivery.com/bulletins/gd/ORDOT-2fcee86?wgt_ref=ORDOT_WIDGET_8