GARAGE KEEPER’S LIENS

Political correctness changed the name of the Garagemen’s Lien Act to the Garage Keeper’s Lien Act, but it changed none of the substantive powers of the act. Powers that put repair shops in a better position than almost any other category of creditor! This powerful piece of legislation, and the common law which underlies it, gives you more rights to get paid than a bank, or GMAC, or Ford Credit, or the tax man, or even a bankruptcy trustee!

The legal theory behind garage keepers’ liens is that by repairing, adding accessories, or even storing a vehicle the garage keeper has added, or at least preserved its value. Thus, the garage keeper may have enhanced or preserved the value of a vehicle that is the secured collateral of another creditor. In common law, a creditor is not allowed to enrich himself by seizing the improved vehicle without paying for the garage keeper’s services.

Common law required the garage keeper to keep possession of the vehicle to protect his lien (his right to be paid). The Garage Keepers Lien Act provided a way for shops to protect their lien without having to keep the vehicle. This was done because it was economically important to allow commercial and farm vehicles to be immediately put back to work while guaranteeing the shop that they would be paid. Fortunately, the act was made to apply to personal vehicles.

To keep your right to be paid, the Garage Keepers Lien Act allows you to exchange your lien based on your possession of the vehicle for a lien based on a registration with Alberta Registries. This inexpensive (less than $20) and quick process (faxing a one page form!) grants you a six month window in which to use all available remedies to recover payment. It also places you in first place among any creditors attached to the vehicle for the six-month period. This period can be extended in certain circumstances where the debtor is avoiding seizure.

To register the lien you need (1) the name and address of the registered owner/lessee, (2) the vehicle’s VIN, and (3) the amount of the indebtedness. For your lien to be valid, you must (A) have had the owner or their agent sign an acknowledgment of the amount of indebtedness when they took possession of the vehicle, and you must (B) register your lien within 21 days of surrendering possession of the vehicle. It is in your interest to file the lien as soon as possible since legitimate liens or ownership interests created between your surrender of the vehicle and registration of the lien will be the only ones which have precedence over your valid garage keeper’s lien.