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Lien Rules Unsettling, Oregon CUs Tell State Legislature
PORTLAND, Ore. (12/16/13)--Oregon credit unions and the Northwest Credit Union Association are pressing for changes in a state law that allows mechanics to place liens on vehicles for unpaid work (Anthem Dec. 12).
 
The league, accompanied by representatives from $3.38 billion asset OnPoint Community CU, Portland, Ore., testified before the state House Consumer Protection Committee last week.
 
Under Oregon law, mechanics who work on vehicles may enforce a lien against the title holder if they are not paid for the work performed. To do so, the law requires mechanics to obtain authorization to complete the work, and notify any existing owners and lienholders of their intention to file the lien. If the lien is placed, others with interest in the vehicle--including the mechanics' customer and any lenders--are stripped of their title rights.
 
The Oregon Department of Motor Vehicles processes mechanic's liens without requiring mechanics to demonstrate that they have met the legal requirements. Some mechanics have placed liens for inflated amounts--with additional fees for storage and other unsupported items--and gained possession of vehicles, then disposed of them, NWCUA said.
 
The vehicles original title holders--Oregon consumers and lenders--are left with few options, NWCUA said. Filing suit to regain the title requires posting a bond for twice the amount of the mechanic's lien and paying legal costs that are not reimbursed by the defendant, even if the plaintiff prevails in litigation. That financial burden, along with the time and documentation required to build a case, usually make such lawsuits prohibitive, NWCUA said.


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