While I subscribe to the belief that a secured lien holder should always know the location of its collateral, I understand that is essentially impossible to practice. Which is why a secured lien holder may some day find themselves in a position where they find their collateral in the possession of a third party. Often that third party is a garage looking to be paid for repairs, towing or storage with respect to the collateral.
Under Pennsylvania law, the secured lien holder is generally on the hook for repairs and towing charges. The theory being that the secured lien holder receives any benefit bestowed upon the collateral. However, a dispute often arises over storage fees. Particularly, where a garage stores the collateral and then makes no effort to inform the secured lien holder of the collateral’s location.
With typical charges of $25.00-$35.00 per day, these storage fees can quickly accumulate. A garage is entitled to any storage fees incurred after the secured lien holder gave “consent” to storing the collateral. Obviously, if the secured lien holder gave express consent to store the collateral, there is no issue. The problem arises in instances of implied consent. Implied consent will be found when the garage has sent notice to the secured lien holder that they have the collateral and the secured lien holder does not pick up the collateral.
However, most problems arise when express consent is not given and notice is not sent. The secured lien holder after months of contacting the Debtor about delinquent payments finally hears from the Debtor that the collateral has been at the local garage for months. So what does a secured lien holder do?
1. Immediately contact the garage and find out exactly what amount of money they are demanding. Obtain a break down of the charges identifying what is for repairs, towing, storage, etc. Also, find out what they are charging per day to store the collateral.
2. Immediately make a reasonable offer, in writing, to the garage to resolve the matter. Pennsylvania case law provides that if a garage declines a reasonable offer to a secured lien holder, then the garage cannot seek any storage fees if it is later found consent to storage did not exist.
3. It is usually best to settle. However, if the garage is unreasonable, then immediate legal action should be taken by contacting your creditors’ rights attorney.
7 thoughts on “DON’T SUBMIT TO STORAGE FEE EXTORTION”
Great topic! Thanks for sharing
Just read your article. I am trying to reach you regarding your estimated charges to going after a tow company for extorted storage charges. I left you a message on your VM with my number to discuss
If the driver of a vehicle is not present at the time of towing does the law require the towing or storage facility to contact the registered owner and lien holder
That’s a great question, but the answer will depend by state.Pennsylvania requires notice to the owner and lienholder if you seek to collect storage fees from both or if you seek to sell the vehicle.
what if the storage facility has no means to establish a lienholder like when debtor refuses to release that information
In that instance you should perform an independent search through your state’s Department of Motor Vehicles to determine if a lien exists.
Hello, I have a car which was towed in PA and it has been there since May. I am trying to recover it for the lienholder. The bill is $4100.00. I have contacted the state police as this company has had complains before. Notice was never sent. If we do decide on litigation, how long is the process? It is in Bedminster, PA. Thank you..