I’m Having Trouble Getting Paid … (Help for Automotive Service Companies)

I’ve done the repairs.  Now I’m having trouble getting paid … If this is happening to you frequently, it may be worthwhile to consider your options from a time and financial standpoint.

 

The most effective way to collect the money owed to you is set out in the Repair and Storage Lien Act.  This Act sets out two basic routes.  The route you must use depends on whether or not you have possession of the vehicle repaired.

 

1.  If you have completed repairs on a vehicle BUT have not yet given the keys back to the customer, you may:

 a.  keep possession of the vehicle until the bill is fully paid.  (see Notes 1 and 2)

b.  sell the vehicle to recover the money owed.  It is important to note that the law sets out a procedure that must be followed for the sale to be considered valid.  (see Note 3)

 

2.  If you have completed repairs on a vehicle AND have given the keys back to the customer before the repair bill has been fully paid, you are entitled to place a lien against the vehicle for the amount of the repair bill.  (see Note 4)

 

To protect your claim, you must register your lien claim.  Generally speaking, where other parties have registered claims against the same vehicle, who gets paid first is determined on the basis of the date the repairer gave up possession of the vehicle.  If you do not register your lien you will:

  • not receive a notice of any upcoming sale of the vehicle; and 
  • lose your priority to payment over others who did work before you.  (see Notes 5 and 6)

 

Once you have registered your lien you can arrange:

1.  to have the vehicle seized by the sheriff.  (see Notes 7 and 8) 

2.  for the sale of the vehicle to recover money owed, (keeping in mind that there is a priority in who gets paid first).  (see Note 9)

 

To sum up, your best options to protect your legal rights are: retain possession of the vehicle or if this is not possible, register your lien as soon as possible.

 

NOTES

 All citations taken from Repair and Storage Liens Act, R.S.O., c. R. 25

 

1.     3(1)  … a repairer has a lien against an article that the repairer has repaired for an amount equal to,

(a)   the amount that the person who requested the repair agreed to pay;

(b)   where no such amount has been agreed upon, the fair value of the repair; or

(c)     where only part of a repair is completed, the fair value of the part completed,

and the repairer may retain possession of the article until the amount is paid.

 

2.     3(2)  A repairer’s lien arises and takes effect when the repair is commenced, except that no repairer’s lien arises if the repairer was required to comply with sections 56 and 57, subsection 58 (1) and section 59 of the Consumer Protection Act, 2002, if applicable, and the repairer has not done so.

 

3.     3(3)  A repairer has the right to sell an article that is subject to a lien in accordance with Part III (Redemption, Sale or Other Disposition) upon the expiration of the sixty-day period following the day,

(a)     on which the amount required to pay for the repair comes due; or

(b)     on which the repair is completed, if no date is stated for when the amount required to pay for the repair comes due.

 

4.     7(1) A lien claimant who is entitled to a lien under Part I (Possessory Liens) against an article, and who gives up possession of the article without having been paid the full amount of the lien to which the lien claimant is entitled under Part I, has, in place of the possessory lien, a non-possessory lien against the article for the amount of the lien claimed under Part I that remains unpaid.

 

5.     15(2) A notice of intention to sell an article shall be in writing and shall be given at least fifteen days before the sale to,

(d)  every person who has registered a claim for lien under Part II (Non-possessory Liens) …

 

6.     16(1)  Where a lien claimant has sold an article under this Part, the proceeds of sale shall be applied consecutively,

(d)  where the lien claimant making the sale has a possessory lien … to … every lien claimant who has a registered non-possessory lien …  against the article, who gives the lien claimant making the sale written notice of the amount owing … before … the sale, in reverse order to the order in which the lien claimants gave up possession;

(e)  where the lien claimant making the sale has a non-possessory lien … to … the lien claimant making the sale and to … every other lien claimant who has a registered non-possessory lien … against the article, who gives the lien claimant making the sale written notice of the amount owing … before … the sale, in reverse order to the order in which the lien claimants gave up possession;

 

7.    14(1)  A lien claimant who has a non-possessory lien and who has registered a claim for lien may deliver at any time to the sheriff for the area in which the article is located a copy of the registered claim for lien and a direction to seize the article.

 

8.     14(2)  Upon receipt of a copy of a registered claim for lien and a direction to seize an article … the sheriff shall seize the article … and shall deliver it to the lien claimant who issued the direction.

 

9.     14(5)  A lien claimant who has a non-possessory lien against an article has a right to sell the article in accordance with Part III (Redemption, Sale or Other Disposition) if,

(a)  the article has been seized and is in the possession of the lien claimant;

(b)  at least sixty days have expired since the day when the non-possessory lien arose; and

(c)  any part of the amount to which the lien relates is due but unpaid.

 

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