Car dealerships with service departments often encounter the complexities of automotive repair, and one area that can lead to customer questions and even disputes is storage fees. Understanding when and how these fees can be applied is crucial for maintaining customer trust and ensuring smooth business operations. This guide breaks down the regulations and best practices surrounding storage fees for automotive repair dealers, providing clarity for both dealerships and their customers.
When Can a Car Dealership Charge Storage Fees?
Yes, a car dealership, acting as an automotive repair dealer, is legally entitled to charge reasonable storage fees under specific circumstances. These situations arise primarily after a legal claim, known as a lien, has been established on the vehicle. A lien essentially secures the dealership’s right to payment for services rendered or storage provided. Storage fees become applicable in the following scenarios:
- Accident or Vehicle Recovery: If a vehicle is towed to the dealership’s premises and stored there due to an accident or because it was recovered after being stolen, storage fees can be applied. This acknowledges the dealership’s provision of space and security for the vehicle while awaiting owner or insurance instructions.
- Completed Repairs: Once the repairs that were agreed upon and authorized by the customer are finished, and the invoice has been presented, or after 15 days from repair completion (whichever comes first), storage fees can commence. This timeframe allows customers reasonable time to retrieve their vehicles after repair work is done. Efficient repair processes, supported by well-organized service bays and industrial tool chests that keep tools readily accessible, can help minimize delays and related storage concerns.
- Post-Inspection/Tear Down: Following a visual inspection or partial disassembly (tear down) to diagnose the issue, the dealership will provide a repair estimate. If the customer declines to authorize the repairs or fails to collect the vehicle within a specified timeframe after receiving the estimate, storage fees can be charged. It’s a recommended practice for dealerships to clearly state this timeframe and the potential for storage fees on the initial inspection or tear down estimate itself, ensuring transparency from the outset.
It’s important to note that to legally charge storage fees and benefit from a lien, the car dealership must hold a valid automotive repair dealer registration. This registration underscores their legitimacy and adherence to industry regulations. Furthermore, insurance companies also play a role. Insurers who intend to inspect a vehicle are expected to do so promptly, within six business days of receiving a claim, as per California Fair Claims Settlement Practices Regulations. This timeframe is relevant to avoid unnecessary storage fee accrual while waiting for insurance assessments.
Image alt text: A mechanic efficiently uses an industrial tool chest in a car dealership service bay to access tools needed for engine repair, highlighting the importance of organized workspaces.
When Storage Fees Cannot Be Charged
Conversely, there are situations where dealerships are not permitted to charge storage fees:
- During Active Repairs: Storage fees cannot accumulate while the vehicle is undergoing the repairs that the customer has authorized. Fees can only start after these repairs are completed and the customer is notified that their vehicle is ready for pickup. This principle was affirmed in the legal case Owens v. Pyeatt (1967).
- During Tear Down: Similar to active repairs, storage fees cannot be charged while the vehicle is undergoing a tear down for diagnostic purposes. Tear down is considered part of the repair process. Only after the tear down is complete, an itemized repair estimate is provided, and the customer then declines repairs or delays vehicle retrieval beyond a specified timeframe, can storage fees begin. Again, clear communication about potential storage fees on the tear down estimate is a best practice.
Defining Reasonable vs. Unreasonable Storage Rates
What constitutes a “reasonable” storage rate? Legally, a reasonable rate is one that is comparable to rates charged by other automotive repair businesses in the same geographic and demographic area. This benchmark ensures fairness and prevents price gouging.
On the other hand, certain fees are considered presumptively unreasonable. These include:
- Administrative or filing fees (unless directly related to DMV documentation or lien sales)
- Security fees
- Dolly fees
- Load and unload fees
- Pull-out fees
- Gate fees (except when after-hours vehicle release is specifically requested by the owner or insurer)
These “unreasonable” fees are generally viewed as add-ons that inflate costs without providing tangible storage-related services.
Understanding Liens and Their Trigger Points
A lien is the legal mechanism that allows a dealership to claim storage fees. A lien occurs under these conditions:
- Completion of Contracted Repairs: A lien arises when the dealership completes the agreed-upon repairs and presents the invoice to the customer. If contact with the customer is lost, a lien also occurs 15 days after repair completion. Dealerships then have a 30-day window from the lien date to apply to the DMV for authorization to proceed with a lien sale if necessary.
- Vehicle Towing and Storage (Pre-Repair): If a dealership takes possession of a vehicle solely for towing and storage before any repair agreement, a lien is also established. The process for a lien sale in this scenario depends on the vehicle’s value.
Maintaining a valid automotive repair dealer registration is essential for a dealership to enforce a lien and charge storage fees, as well as to legally pursue contracts for repair work.
Image alt text: A well-organized car dealership service bay featuring multiple industrial tool chests, emphasizing efficiency and professionalism in automotive repair operations.
Towing and Storage Services: Specifics
When a dealership provides both towing and storage, the combined charges are deemed reasonable if they do not exceed the rates charged for similar services requested by public agencies like the California Highway Patrol or local police departments. This provides a clear benchmark for fair pricing.
Interestingly, if a dealership tows and also repairs a vehicle, the towing service authorization must be separate from the repair estimate. This separation ensures transparency and prevents confusion about what the customer is authorizing.
Dealerships providing towing and/or storage services are legally obligated to provide an itemized invoice to the customer, detailing all charges. Furthermore, they must display a “Towing and Storage Fees and Access Notice” in a public area of their facility and have copies readily available. This notice informs customers of their rights and the applicable fees.
Navigating Interactions with Insurers
Dealerships often work with insurance companies, and specific scenarios arise in these interactions:
- Declined Repairs (Total Loss): If a dealership assesses a vehicle as a total loss and declines to perform repairs (even a tear down), but agrees to store the vehicle, the situation falls under vehicle code and civil code provisions related to storage and lien sales.
- Insurer Inspection Delays: Insurers are required to inspect vehicles within six business days of a claim notification. Delays beyond this can lead to complaints to the California Department of Insurance (CDI).
- Delays in Total Loss Vehicle Retrieval: If a vehicle undergoing repairs is later deemed a total loss, storage fees can only begin after the customer is notified that the authorized repairs are complete and the vehicle is ready for retrieval as a total loss.
- Insurance Coverage for Storage Fees: If a customer’s insurance policy covers storage charges, the insurer is responsible for paying reasonable storage fees resulting from accidents or vehicle theft recovery. Payment can be made to the dealership, the insured, or a claimant (if not at fault).
Resolving Storage Fee Issues
The Bureau of Automotive Repair (BAR) actively investigates and mediates consumer complaints regarding storage fees charged by automotive repair dealers. Customers unable to resolve issues directly with a dealership’s management are encouraged to file a complaint with BAR. Insurers can also refer storage-related issues to BAR for mediation. BAR’s role is to facilitate fair and timely resolutions. If storage rates are deemed reasonable, BAR typically closes the case.
To proactively prevent storage fee disputes, dealerships should prioritize clear and consistent communication with customers. Documenting all communication on work orders and invoices is crucial. Transparency, adherence to regulations, and efficient service operations – potentially enhanced by well-equipped service bays with industrial tool chests for organized and accessible tools – are key to minimizing misunderstandings and maintaining positive customer relationships in the realm of automotive repair and storage fees.
