3 Ways a North Carolina Repair Shop Can Keep or Sell a Car Over an Unpaid Bill
A repair bill that’s bigger than you expected can leave you in a tough spot.
North Carolina law gives the repair shop some options when you can’t pay, and you have a few of your own.
Here’s how a repair shop can keep or sell your car, and what you can do before it gets there.
Note: This is general information, not legal advice. Lien rules and fees are subject to change, so confirm the current requirements with the North Carolina Division of Motor Vehicles.
1. Holding the Car Until You Pay
A repair shop can hold your car until you pay under the lien statute, which gives it a lien for the reasonable charges of the work.
A business that tows or stores cars as part of its work gets the same lien.
The lien arises only when the shop has possession of your car.
If the shop hands the car back voluntarily, the lien ends.
Taking the car back later doesn’t bring the lien back.
The lien also generally outranks a lender’s claim on your car.
It has priority over perfected and unperfected security interests.
Cars seized under G.S. 20-28.3 are the exception.
2. Selling It at a Private Sale
If a repair shop wants to sell your car without an auction, the statute allows a private sale in any manner that is “commercially reasonable.”
Before that happens, the shop has to give notice at least 30 days ahead of the proposed sale.
The notice names the date on or after which the shop proposes to sell, and that date is your deadline.
To block a private sale, tell the shop you want a public sale instead.
Once the shop gets that request, it has to give notice of a public sale as if it had never given notice of a private one.
A private sale also can’t end with the shop owning your car.
The shop can’t buy it, directly or indirectly, and a sale to the shop is voidable.
3. Selling It at a Public Sale
When a repair shop picks a public sale, you get notice at least 20 days before the sale.
The notice names the shop, describes your car, states the amount due, and gives the date, hour and place of the sale.
The sale has to be in a county where part of the work was done, or in the county where the debt was contracted for.
The shop also has to post the notice at the courthouse door in the county where the sale will be held.
A newspaper notice has to run once a week for two weeks in a row, with the last one at least five days before the sale.
If your car’s market value is under $3,500, the shop can skip the newspaper notice.
The courthouse posting still applies.
A public sale also lets the shop bid.
A lienor may purchase at public sale, so the shop that holds your car can end up owning it.
The Certified Letter and Your 10 Days
Before a North Carolina repair shop can sell a car that is required to be registered in North Carolina, it has to go through the Division of Motor Vehicles.
The shop has to wait 30 days after the charge came due before it can enforce the lien.
For towing and storage charges on a car, the wait is 10 days.
After that, the Division mails a certified letter saying a lien has been asserted and the shop intends to sell the car.
It goes to the title holder, to the person the shop dealt with, and to each lender or other claimant the Division knows about.
The Division sends it by certified mail, return receipt requested, or certified mail with electronic tracking.
You have 10 days from the day you receive it to tell the shop, not the Division, that you want a hearing.
If you don’t ask in that time, the statute treats it as giving up your right to a hearing before the sale.
What a Hearing Request Changes
A timely hearing request puts a court between the shop and your car’s title.
If you ask in time, the Division of Motor Vehicles will transfer the title only under an order from a court.
How Storage Charges Add Up
To end a repair shop’s lien, you have to pay the amount it secures, plus reasonable storage and other expenses, before any sale.
The lien covers storage as well as the repair work.
If your car sits on the lot after the work is done, those storage charges join the repair bill under the same lien.
A substitute vehicle the shop provides while yours is in the bay can be added too.
Rental of substitute vehicles is among the covered charges.
Every charge still has to be reasonable, since the lien covers reasonable charges only.
Psst! How much do you know about liens? Take our quiz and see if you can ace it.
Quiz
Lien Law Pop Quiz
Answer nine questions on liens, from kennels to construction sites. We bet you can’t get them all right. Prove us wrong?
If a motel guest skips out on a room bill, an innkeeper’s lien under North Carolina law can reach which of these?
Where the Sale Money Goes
When a repair shop sells your car, the money goes first to the reasonable expenses of the sale, and then to the debt the lien secured.
Anything left over goes to the person entitled to it.
If that person can't be found, the surplus goes to the clerk of superior court in the county of the sale.
A buyer for value at a properly conducted sale gets the car free of any interests over which the shop had priority, which can include a lender's claim.
That holds even if the shop is the buyer.
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