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Repair and storage liens (previously called “mechanics liens”) are governed by the Repair and Storage Liens Act.  The Act provides a complete mechanism for dispute resolution, but contains many technical rules. The lien holder must follow these rules precisely in notifying the owner of the liened property in order to redeem, sell or retain the property. The property can be almost anything (watch, car, airplane) but does not include realty or fixtures.

Generally, this Act provides that if a repairer or storer has not been paid, it obtains a lien in the property repaired or stored. The lien creates a claim that is greater than that of the owner, and even over a leasing company who may have a registration under the Personal Property Security Act (PPSA).

 There are two kinds of liens:

• Possessory Liens: the repairer or storer is refusing to release the property until its bill is paid. This lien may be registered or unregistered.
   
• Non-possessory Liens: the repairer or storer lets the owner take the property without paying the bill in full, but registers a lien. This lien must be registered in order to ensure its priority. The repairer or storer can repossess the property at a future date without notice.

As the owner of the property, or anyone with a PPSA interest, this Act is particularly disturbing; the person bringing the property for storage or repair may not be the owner or PPSA registrant. If the person bringing in the property has the authority of the owner, the lien is validly created. For example, an individual might lease a vehicle and then bring that vehicle to a garage for repairs. The individual did not need the leasing company’s permission to bring the vehicle to the garage for repairs. When the individual refuses to pay, the garage will look to the leasing company to pay the bill. The garage may try to sell the property to pay its bill; the leasing company gets paid after the garage and may receive substantially less than the value of the vehicle.

In any repair and storage lien matter, time is of the essence. Owners and PPSA registrants must act quickly to prevent the accrual of storage fees and to safely retrieve the article before any damage can be done.

Call Raquel Levine.

Wolfson Law Professional Corporation
Barristers & Solicitors
2345 Yonge Street, Suite 912
Toronto, ON, Canada  M4P 2E5
Tel: 416.730.1640
Fax: 416.730.0599
kwolfson@corporations.ca