Judicial Foreclosure of VSF Liens on Low-Value Vehicles

JUDICIAL FORECLOSURE OF VSF LIENS ON LOW-VALUE VEHICLES

THE METHOD OF LAST RESORT

By Brian Edward Walters, Attorney at Law

            Sometimes it feels as though Texas Department of Motor Vehicles offices have different standards for when you can foreclose on a vehicle storage facility lien depending on who is in the office and what time it is. We have heard stories about requiring different levels of documentation, including things like the certified mail tag, certified mail tag with stamp from the post office, the return receipt, the return receipt signed by the former owner, and even requirements that the DMV send out a notice to the owner before a title will be issued.

These differing paperwork requirements can quickly create a situation where the VSF cannot foreclose on its lien and sell a stored vehicle even if the VSF has done everything that is legally required. Bureaucracy at its finest, folks! So, what options do you have when your VSF has a vehicle that is abandoned, ready for sale, but you cannot get title through the usual channels? The answer depends both on the value of the vehicle and on how much money you must invest in the process. This article discusses the process for vehicles that are valued at or less than ten thousand dollars.

            The standard process for VSF lien foreclosure is what is known as a “non-judicial” foreclosure. Simply stated, that term means that you have avoided taking a trip to the courthouse in order to execute the VSF’s lien rights on the vehicle. It is similar in many respects to a foreclosure on real estate where the property is sold at the courthouse steps. In both cases, title to property transfers hands in a “lack of payment” situation without anyone going before a judge. There is, however, another method of foreclosing on the VSF lien known as the “judicial foreclosure.”

            Judicial foreclosure involves filing a lawsuit with the appropriate court and asking that court for an order granting the foreclosure of the lien. Which court you file in will depend on many factors, each of which is very important to getting an enforceable court order. It should be noted that this is not the same process as suing for title to a vehicle (which is only appropriate in a district court or, in some cases, a county court-at-law). Also, as previously stated, this discussion is limited to low-value vehicles (less than $10,000 in value).

            Justice courts (formerly known as “small claims courts”) are courts of very limited jurisdiction. Typically, they only hear claims involving $10,000 or less in controversy, whether in a lawsuit, eviction, or debt claims. However, justice courts are also allowed to hear cases where a person seeks foreclosure of a lien on personal property (i.e. not real estate) that is valued at $10,000 or less. In many cases involving damaged or abandoned vehicles, the vehicles will be within that range, giving justice courts the ability to grant the foreclosure request.

            Despite justice courts being able to grant the foreclosure, the process is far from simple. Rules about where to file, who to include in the lawsuit, and how to get the judgment are complex. It is almost always necessary to hire a lawyer for a judicial foreclosure because if you fail to include a necessary party to the proceeding, the court order will not be worth the paper on which it is written. Additionally, the parties involved (whether the justice of the peace, state agencies, or their attorneys and paralegals) will have questions about the proceeding that you will probably not be able to answer. That being the case, it is strongly recommended that you lawyer up for this process.

            Despite this being a bit of a law-intensive process, it is a good solution under many circumstances. First, if you have a vehicle that can’t be sold or junked without a title, it will simply waste away on your property forever. Second, if the DMV in your area is requiring paperwork you cannot get, you are stuck with that vehicle. Third, if there was someone left off the notice letters, you typically cannot go back and “re-notice” them because the delivery timelines have passed. In each of these situations, judicial foreclosure is a good last resort.

            While judicial foreclosure costs more in time and money than non-judicial foreclosure, it can be a handy tool under the right circumstances. It will require an attorney who is familiar with towing and storage laws as well as one who can educate the judge and, likely, opposing counsel on the subject. Finally, like any lawsuit, it absolutely must be done the right way the first time or it will be a fruitless endeavor. If, however, you can get the right person on the job (and typically do this for a few vehicles to get a better price), you can end up with title to vehicles that were otherwise stuck in legal limbo.

No State Income Tax - Vote Yes for Proposition 4 in Texas

On November 5^th, voters will go to the polls to vote on proposed constitutional amendments that were passed by the Texas Legislature.  In order to be the most informed on each proposal, you can access information at the following link. 

https://lrl.texas.gov/scanned/Constitutional_Amendments/amendments86_tlc_2019-11-05.pdf

There are 10 propositions that contain the language that will be on the ballot, the easy to understand analyses, and then comments from supporters and opponents.  Although this is a long document, it reads very quickly.  We believe it is a very good tool to  help you decide how you would like to vote.

We want to bring Proposition 4 to your immediate attention.  The way the ballot language is written, is confusing.  This proposal would amend the Texas Constitution to prohibit the Legislature from imposing a state income tax on individuals.  If you are opposed to a state income tax, you will want to vote YES on this measure.  Information regarding this ballot proposal is in page 19 of the document.

At Southwest Tow Operators, we believe it is important to keep you informed on what is upcoming.  If you have any questions about any of the 10 propositions, please feel free to contact us.

Storage Rate Increase

As you all know, we have been fighting hard for years to get an increase in our daily storage rate.   The climate has not been conducive to passing any bill that had a fee, much less a fee increase.

Last session, we were successful in getting a very small increase of .64 on the daily storage rate and .64 on the impound fee (and $1.11 for storage of over vehicles over 25 feet in length). H.B. 1140 is not effective until January 1, 2020.

We certainly believe you deserve more, especially since it is our first storage fee increase in 15 years. However, we will take the baby step and continue to work hard to get that raise.

In addition to this, Texas VSF’s store thousands of abandoned vehicles for 45 days or more prior to auction and ONLY COLLECT A SMALL FRACTION OF THE STORAGE DUE.

TDLR’s proposed rule for this increase is attached. TDLR can’t change the amount of the increase. They calculated the increase EXACTLY as the statute requires. However, this is your opportunity to give your PUBLIC COMMENT on what you think about the increase.

We are NOT giving up on obtaining a fair increase. We need your help:

• Send in a public comment to   erule.comments@tdlr.texas.gov BEFORE the Sept. 16 deadline.
• Write a letter to Governor Abbott explaining how your costs have increased in the last 15 years without an increase. Address: P.O. Box 12428, Austin Texas 78711. Link to Governor’s office email: https://gov.texas.gov/apps/contact/opinion.aspx.
• VISIT your State Representative and HAND DELIVER THE SAME LETTER. Do this at least every 3 or 4 months between now and the next session (January 2021).
• Encourage your tow operator friends to join SW Tow Operators. We need numbers and funds to support our efforts.

We will be gathering data on how many storage days go unpaid and how our costs have increased. Please help us out by responding to the surveys we will be sending out.

The Texas Department of Licensing and Regulation https://www.tdlr.texas.gov/towing/vsfproprules.htm">proposes amendments to the Vehicle Storage Facilities Program rules (16 Texas Administrative Code (TAC), Chapter 85, §85.722). https://www.tdlr.texas.gov/towing/vsfproprules.htm">The proposed rule implements House Bill (HB) 1140, 86th Legislature, Regular Session (2019), which amends Occupations Code, Chapter 85.

The proposed rule was published in the August 16, 2019, issue of the Texas Register (44 TexReg 4281).  The Department will accept comments on the proposal until September 16, 2019.

The Department encourages anyone interested in the Vehicle Storage Facilities Program to https://www.tdlr.texas.gov/towing/vsfproprules.htm">review the rule proposal online.  Comments may be submitted by email to erule.comments@tdlr.texas.gov.

Regards,

Southwest Tow Operators

Towing & Recovery & VSF Session- Plano, Texas October 22, 2019

TDRL’S “BACK DOOR” REGULATION OF INCIDENT MANAGEMENT TOWING FEES

Almost every incident management towing company knows that TDLR does not set incident management towing fees. While those fees can be regulated and capped by the county or a city, TDLR generally has deferred to either an “unregulated” view of incident management towing fees or deferred to the city or county to set those rates. However, lately there has been a substantial uptick in TDLR “back door” regulating the prices charged by incident management towing companies.