Appeals Court Rejects Tow Yard Front-loaded Storage Fees

Pick-up Truck, Tow Truck, Accidents and Disasters, Roadside Assistance, Insurance

Tow yards in New York cannot charge storage fees after towing a vehicle for police unless they follow the strict set of rules in New York Lien Law 184. Tow yard overcharging is a persistent problem because tow yards see no downside to pushing the envelope, hoping that lienholder/lessors are unaware of the legal limits and will just pay whatever fees they demand. 

One of the most important rules is that storage fees cannot be charged until a notice is sent to the vehicle owner and lienholder advising the the vehicle can be recovered.

Recently, a New York tow yard tried to push the envelope by charging $2,550 in upfront storage fees. Upfront storage fees are charged before the required notice is sent. In short, the tow yard ignored the notice rules and piled on storage fees anyway.  The court invalidated the storage fee lien holding that the rules must be strictly followed. (Nissan v Bills Sales & Service, App. Div. 533443, October 27 2022)

This case has two important takeaways for lienholders and lessors who face storage fee demands. First, storage fees should never be paid for days before the tow yard sends notice that the vehicle can be recovered. Second, tow yards cannot use an upfront storage fee, or other invalid fee, as the reason to prevent the lienholder/lessor from recovering vehicle. In other words, tow yards cannot use an improper fee as the excuse to hold a vehicle and pile on more storage fees into the future.  Lienholders/lessors who hold tow yards accountable for following the storage fee rules will save a lot of unnecessary losses. 

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