When a tow company takes possession of a vehicle, a variety of legal obligations are impacted. One of these is the creation of a bailment. A bailment describes a legal relationship where physical possession of property is transferred from one person to another person. In the tow business, a bailment is established once a motor vehicle belonging to someone else comes into the possession of the tow company. The owner of the vehicle is “bailor” and the tow company is the “bailee.” But what do these fancy legal words mean?
I had a client tell me an all too familiar story the other day. His tow company was in a dispute with a trucking company over the amount of the bill. While the dispute raged on, the tow company continued to hold the truck, trailer, and cargo. One day when push finally came to shove, the tow company received a letter from a fancy downtown law firm threatening to sue the tow company for replevin and other causes of action if the tow company did not release the truck, etc. while the dispute over the bill continued.
For those of you that have attended a TowLawyer seminar, you might remember Michael McGovern’s notable way of teaching the possible risks of wrongfully perfecting tow liens. It goes something like this, Mr. McGovern approaches a tow operator sitting in the front row and, much to their surprise, temporarily takes one of their personal belongings like a hat, pen, notebook, etc. and informs the owner that he is not giving it back. The tow operator usually exclaims something like “you can’t do that!” Mr. McGovern then smiles and asks: “why not? What that’s called?” Most every tow company in the room says “stealing” or theft or the like and then McGovern (correctly) compares his action of stealing the hat, etc. to a tow company wrongfully holding or refusing to release a towed vehicle without a legal right.
When claiming a possessory lien on unclaimed motor vehicles, most state statutes require the tow company to inquire with their state’s Department of Motor Vehicles (DMV) to determine the vehicle’s owners and lienholders. If the DMV’s records indicate “no record found,” most states allow a tow company to proceed with a lien sale if the tow company publishes an appropriate public notice and the subject vehicle is not retrieved in a certain number of days.
Consumer complaints about the price of a tow bill are nothing new. Usually, it’s the tow company that is the target of the complaints. However, with the rise of administrative fees being charged by cities, some cities are also drawing the ire of the general public.
If an impounded vehicle goes unclaimed, every state has a law requiring the impounding towing company to notify the last known registered vehicle owner and lienholder, if any, of the impound, the amount of outstanding charges, and the possibility that the vehicle will be sold if it remains unclaimed. These requirements must be met to perfect a lien, if one exists. The notice must be sent via certified mail within a specified number of days, typically five to seven days.
Releasing impounded vehicles can be a tricky affair. You need to be sure that the person or company to whom the impounded vehicle is being released has been duly authorized by the vehicle owner. Otherwise, you might find yourself at the wrong end of a lawsuit seeking money damages for improper release of an impounded vehicle.
In the tow business, it is common for companies to refuse to release vehicles until the full bill for towing and storage has been paid. Although this is rarely discussed, the legal basis behind a company’s refusal to release a vehicle centers on whether or not the tow company has a possessory lien. Stated another way, generally, it is unlawful to retain someone’s property without some legal basis.