An auto loan borrower left his vehicle at a repair shop and failed to pay for the repairs. The repair shop has since moved the vehicle to a storage facility. The repair and storage fees are around $30,000, which exceeds the vehicle’s value. Are the liens for the repair and storage services junior to our lien? We have the vehicle title, which shows our lien, and we have not received any communications from the storage facility.

The repair shop may be able to assert a common law artisan’s lien for its repair work, which would have priority over your bank’s earlier perfected security interest in the vehicle, but not for the storage fees.

Illinois courts have held that a common law lien for repair services has priority over a secured lender’s lien. However, this common law priority lien does not extend to storage services. Consequently, we believe that the repair shop would have priority over your bank’s lien on the vehicle, but only to the extent of its charges for repair services.

Additionally, we note that Illinois’ statutory liens for vehicle repair and storage would not have priority over your bank’s lien in this situation — such statutory liens are “subject to the lien of any bona fide security interest as defined in the Uniform Commercial Code upon the same chattel recorded prior to the commencement of any lien herein created.” And recent legislation added notification requirements that would disqualify the storage facility from imposing a lien for storage fees if it fails to provide certain notices to a vehicle’s lienholder, which it evidently failed to do in this situation.

For resources related to our guidance, please see:

National Bank of Joliet v. Bergeron Cadillac, Inc., 66 Ill.2d 140, 144 (1977) (“As the defendant had a common law possessory lien for services and materials in connection with the repairs it made, its lien takes priority over the plaintiff's earlier perfected security interest under the provisions of section 9-310 of the Uniform Commercial Code.”)

Navistar Financial Corp. v. Allen’s Corner Garage & Towing Service, Inc., 153 Ill.App.3d 574, 576 (2d Dist. 1987) (“The common law lien has no provision for forfeiture and sale, but is limited to the right to possession of the chattel until all charges are paid.”)

Navistar Financial Corp. v. Allen’s Corner Garage & Towing Service, Inc., 153 Ill.App.3d 574, 578–579 (2d Dist. 1987) (“Having decided that defendant was entitled to a common law lien as a common carrier, we now turn to the question it raises on direct appeal, whether it may also claim a lien for storage charges. . . . Since defendant retained and stored the truck for no reason other than to be able to insist on its lien rights, the trial court was correct in denying it a lien for storage charges.”)

Ally Fin. Inc. v. Pira, 2017 WL 6014258 at *9 (2d Dist. 2017) (“. . . the artisan's common-law lien covers only “reasonable charges” for the work that imparted the added value to the goods in question. See supra ¶47. This holds true regardless of whether the owner and the artisan contract for the storage of the goods following the completion of the artisan’s work.”)

Labor and Storage Lien Act, 770 ILCS 45/1 (“Every person, firm or corporation who has expended labor, skill or materials upon any chattel . . . at the request of its owner . . . shall have a lien up on such chattel . . . for the contract price for all such expenditure of labor, skill or materials, or for all such storage, or in the absence of such contract price, for the reasonable worth of such expenditure of labor, skill and materials, or of such storage, for a period of one year from and after the completion of such expenditure of labor, skill or materials, or of such storage, notwithstanding the fact that the possession of such chattel has been surrendered to the owner, or lawful possessor thereof.”)

Labor and Storage Lien Act, 770 ILCS 45/4 (“The lien created by this Act shall be subject to the lien of any bona fide security interest as defined in the Uniform Commercial Code upon the same chattel recorded prior to the commencement of any lien herein created . . . .”)

Labor and Storage Lien Act, 770 ILCS 45/1.5(a) (“Any person, firm, or private corporation seeking to impose fees in connection with the furnishing of storage for a vehicle in the person’s, firm’s, or corporation’s possession must provide written notice, by certified mail, return receipt requested, to the lienholder of record prior to the assessment and accrual of such fees, regardless of whether it enforces a lien under this Act. . . .”)

Labor and Storage Lien Act, 770 ILCS 45/1.5(b) (“. . . If a person, firm, or private corporation fails to comply with the notification requirements set forth in subsection (a) of this Section, storage fees shall not be assessed and collected and the lienholder shall be entitled to injunctive relief for possession of the vehicle without the payment of any storage fees.”)

Labor and Storage Lien Act, 770 ILCS 45/1.5(e) (“Notwithstanding any provision to the contrary in this Act or the Vehicle Code, a person, firm, or private corporation seeking to impose storage fees for a vehicle in its possession may not foreclose or otherwise enforce its lien under this Act unless it first complies with the lienholder notification requirements set forth in subsection (a) of this Section.”)

Labor and Storage Lien Act, 770 ILCS 45/1.5(d) (“An action under this Section may be brought by the lienholder against the person, firm, or private corporation in the circuit court.”)