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United States: Inside Georgia’s Abandoned Motor Vehicle Act

United States: Inside Georgia's Abandoned Motor Vehicle Act

Many states have laws that provide "super liens" to facilities that tow, repair, and store vehicles. Georgia’s current abandoned motor vehicle statute is an example…

Thursday, Sep 22

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Many states have laws that provide "super liens" to facilities that tow, repair, and store vehicles. Georgia’s current abandoned motor vehicle statute is an example of how these statutes can put the secured party financing source’s lien in jeopardy.

In April 2019, the Georgia Legislature passed the current form of its Abandoned Motor Vehicle Act to provide "a comprehensive and streamlined process" for these facilities to recover their costs and remove a vehicle that has been abandoned and unclaimed. In practice, the Act provides facilities with a channel to extinguish prior-existing, perfected lienholders. The Act’s stated intent is to balance the rights of these facilities with those of the motor vehicle owner and the lienholder. However, financial institutions may doubt whether the rights of lienholders were even considered. Work liens and creditor priorities

Mechanics who perform repair work on motor vehicles in Georgia have a lien for the work performed and the materials furnished. This lien, often referred to as a "super lien," is superior to all liens except, in part, liens of which the mechanic had notice before the work was performed or the materials furnished. When a security interest is perfected on the certificate of title to a vehicle, the title provides constructive notice to future creditors, including mechanics.

Simply put, a company that performs repairs is subject to any lien listed on the certificate of title before the repairs were performed. In order for a mechanic to acquire a superior interest to a vehicle with a prior-existing lien […]

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