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Vehicle Liens and salvage auctions – COPART, IAAI

Lien searches are useful. Whenever you buy a vehicle, and we do mean whenever, run one. At an average cost of less than $20, it’s the best insurance money can buy. Many dealers are shocked to learn that some auctions don’t do lien searches so, if you don’t do a search, no one else does. Some of our Members are regular buyers at “salvage” auctions. Some of the bigger players in this area are Copart and Impact Auto Auctions now IAA Canada.

For years we have noted that when an insurance company “writes off” a total loss vehicle and sells it at one of these sales, there are often undischarged liens. Many will get discharged once the insured pays the loan with the insurance proceeds. But there have been instances where, for a number of reasons, the loan does not get paid off, or does not get paid off in full, or no one even realizes there is a lien on the unit.

For dealers, this can be a nightmare. These vehicles are usually purchased in pretty rough, non-drivable condition, and it takes a great deal of time and money to make them roadworthy for resale.

Dealers have experienced instances where they invest the time, labour and money in repairs only to find there is a lien registered and they cannot sell the vehicle. Even worse are cases where the dealer does sell it and their customer finds the lien and expects a refund because they cannot sell it, or they have the vehicle repossessed by the lien holder. We have seen, and dealt with, all these scenarios many times.

Of course, everyone blames the dealer for not doing a lien

search, although no one has an answer as to what happens if the dealer finds one! We can tell you the solution is time consuming and difficult with minimal co-operation from auctions, insurers and banks.

The dealer, meanwhile, is left to deal with a very angry consumer and no one to help. Naturally, if the dealer is a Member, they turn to the UCDA for help.

Impact Auto Auctions, for example, advise us that their policy on liens is that the buyer is responsible to run a lien search to “confirm that no Lien exists prior to repairing, rebuilding and/or reselling a Vehicle”

Copart’s policy is that they expect buyers to report any liens found within 90 days after delivery. They will then assist by enlisting the seller to secure lien discharge as soon as possible. If the lien cannot be removed in a timely manner, the sale would be reversed and the buyer refunded the purchase price, but not the cost of any repairs performed.

We want to see our Members protected. Given the aggravation that liens can pose months and even years after these sales, it’s hard to imagine a better investment than a lien search as part of your buying process.