Oregon Sets New Surety Bond Requirement for Auto Repair Shops

The Oregon State Legislature recently approved House Bill 2311, which impacts auto repair shops exercising possessory liens (also called mechanic’s liens). As of January 2021, revisions were made to Oregon Revised Statutes, Section 87.152 to include a security requirement of $20,000 to be held by repair shops or any mechanic that executes a possessory lien. The security may be a letter of credit or an Automotive Repair Certificate of Possessory Lien Bond. 

The security requirement does not apply to those who repair motor vehicles and are:

• Responsible for creating, asserting, attaching, or claiming the lien against an abandoned car
• A franchised car dealership (as defined in Section 650.120, Oregon Revised Statutes) 
• A manufacturer (as defined in Section 650.120, Oregon Revised Statutes)
• A certified towing business (in agreement with the Oregon Revised Statutes, Section 822.205) that only creates or otherwise deals with a possessory lien for storing or transporting a vehicle

What Qualifies as Repair Work on a Motor Vehicle?

Auto repair work is defined as any of the following activities in connection with a motor vehicle: 

• Repairing
• Altering
• Making
• Storing
• Transporting
• Performing labor
• Supplying materials 

Not all auto repair shops will be required to file a Certificate of Possessory Lien Bond, just those issuing or attaching the lien. 

Why Do Those Making Possessory Liens in Oregon Need a Bond?

Typically, an auto repair shop would place a possessory lien on a vehicle if the vehicle owner abandons the car without paying the mechanic for the work that was completed, leaving it in the custody of the shop—this is not a common occurrence and possessory liens are seldom used. 

The security requirement (a surety bond or letter of credit) is placed to ensure that an auto repair shop is not illegally placing a possessory lien on a vehicle and causing financial damage to customers.