What Every Texas Business Should Know About Worker’s Liens

As Houston business lawyers, we are sometimes asked by local business whether a repair shop can keep or repossess a vehicle.

In Texas, a worker who repairs a vehicle, motorboat, vessel or outboard motor may retain possession of the article until the amount due under the contract for repairs is paid, or if no amount is specified by contract, the reasonable and usual compensation is paid.

If a worker who repairs a vehicle, motorboat, vessel or outboard motor relinquishes possession of the article because the worker is given a check, money order, or credit card and the payment is stopped or dishonored, the worker may be able to repossess the article.  If the check, money order, or credit card transaction on which payment is made is stopped, has been dishonored because of insufficient funds, no funds or because the drawer or maker of the order or the credit card holder has no account or the account upon which it was drawn or the credit card account has been closed, the worker maintains their lien and is entitled to possession of the article.

Although a worker may maintain their lien if payment is not made, the worker may only repossess the article if the owner of the vehicle has signed a notice stating that the article may be subject to repossession under Section 70.001 of the Texas Property Code.  The notice must either be provided in (a) a separate document than the repair contract or (b) in the written repair contract, credit agreement, or other document as long as the notice is boldfaced, capitalized, underlined or otherwise set out from the surrounding material so that the notice is conspicuous, and must include a separate signature line than the rest of the contract or invoice.  If the above conditions are met, the worker may take possession of the article either pursuant to judicial process or without judicial process if they do not breach the peace.

If the article is repossessed, the article must be promptly delivered to the location where the repairs were made or to a licensed storage facility, and must remain there at all times.  Also, if a worker obtains possession of an article registered in Texas, the worker must give notice to the last known registered owner and each lienholder of record not later than the fifth day after possession is obtained.  If the vehicle is registered outside of Texas, the notice must be given no later than the 14th day after possession is obtained.  The notice must be sent by certified mail, return receipt requested and must contain: (a) a request to move the motor vehicle; (b) a request for payment; (c) the location of the vehicle; and (d) the amount of accrued charges.

Additionally, if the worker keeps a vehicle that is registered in Texas in their possession for thirty days after charges accrue, the worker must give notice to the owner and to each holder of a lien recorded on the certificate of title.  The worker must also file a copy of the notice with the county tax assessor-collector.  The notice must include the amount of the charges and a request for payment and must be given by certified mail, return receipt requested.  The notice should include: (a) the physical address of the real property at which the repairs to the motor vehicle were made; (b) the legal name of the person or entity that holds the possessory lien for which the notice is required; (c) the taxpayer identification number or employer identification number, as applicable, of the person or entity that holds the possessory lien for which the notice is required; and (d) a signed copy of the work order authorizing the repairs on the vehicle.

Before a worker retains possession or takes possession of a vehicle after nonpayment for repairs, the worker should consult an attorney in their jurisdiction.  Failure to do so could result in liability for wrongful repossession.