A recent federal decision provides important support for lienholders and leasing companies confronting tow-yard demands following police- or government-directed impounds. In Santander Consumer USA, Inc. v. Incorporated Village of Hempstead, No. 22-CV-4428 (E.D.N.Y. Sept. 15, 2026), the court rejected the proposition that a secured creditor abandons its interest merely by declining to pay disputed towing and storage fees.
The ruling addresses a recurring title-washing tactic: a tow yard or public authority sends an “abandonment” notice stating that, unless the lienholder or lessor pays asserted charges and satisfies demanded paperwork conditions, the vehicle will be deemed abandoned and may be transferred, sold, or titled free of the lien.
Key Holdings
The court held that a lienholder’s failure to pay tow fees alone does not establish abandonment. A tow yard or municipality cannot manufacture “abandonment” simply because a creditor disputes or does not immediately pay its demands.
The decision also recognizes that the Village provided no meaningful hearing at which Santander could challenge the validity of the impoundment, continued detention, release conditions, or towing and storage fees. The court held that this lack of a hearing violated procedural due process.
Recommended Immediate Response
Every lienholder and leasing company should implement a prompt written response protocol whenever a tow yard asserts charges after a police or government ordered tow.
Immediately send the following demand, identifying the vehicle by VIN and to yard file number:
“[The lienholder] hereby claims the vehicle and offers the sum of $_______ for its immediate release. If you do not accept this sum, [the lienholder] demands an immediate hearing on the validity of the towing and detention and the lawfulness of the fees being charged.”
This simple demand is critical because it:
- Expressly defeats any later assertion that the lienholder abandoned the vehicle or lien.
- Documents a demand for immediate possession and release.
- Preserves the lienholder’s right to challenge disputed fees and release conditions.
- Demands the hearing required before a government actor may permanently deprive the creditor of its property interest.
- Creates a clear record for litigation if the vehicle is transferred, sold, or retitled.
A specific monetary offer is particularly important. In many jurisdictions, a tow yard’s possessory lien exists only so long as the charges are properly due and the lienholder has not tendered, or offered to tender, a reasonable amount to satisfy the lawful charges. If a lienholder makes a reasonable, good-faith offer of payment and the tow yard rejects it while continuing to detain the vehicle, the tow yard’s lien may be discharged. In that event, the tow yard may lose its ability to continue asserting a possessory lien for any amount—not merely the amount offered.
Bottom Line
A lawful initial tow does not authorize a tow yard or municipality to extinguish a lienholder’s rights by declaring the vehicle “abandoned.” Lienholders should act immediately, make an unequivocal claim to the vehicle, offer a stated release amount, and demand a hearing before any title transfer, sale, or forfeiture occurs.
For questions, contact Rudy Meola at (518) 713-2030.