taxes

Motor Vehicle Tax Guide

Liens – Storage or Mechanic

When a motor vehicle owner fails to pay for storage or mechanic service costs, the service provider, as a lienholder, may attempt to recover costs by foreclosing on the lien. The lienholder may then recover costs by holding a public sale or auction of the motor vehicle, as provided by Occupations Code Chapter 2303 and Property Code Chapter 70. The tax consequences of purchasing a foreclosed motor vehicle depends on who purchases the vehicle, as outlined below.

Purchase of a Foreclosed Motor Vehicle

A purchaser may take title to a foreclosed motor vehicle through a public sale or auction. The purchaser can be a third party, a storage or mechanic lienholder, or a licensed dealer.

Third Party Purchase

If the purchaser of a foreclosed motor vehicle is a third party, when an application for title and/or registration is presented to a county tax assessor-collector, motor vehicle tax is due on the sales price (i.e., total consideration) paid for the motor vehicle.

Lienholder Purchase

If the lienholder purchases the motor vehicle through a public sale or auction, motor vehicle tax is due on the amount to extinguish the lien, including storage and repair fees, or the sales price. If the sales price is greater than the amount of the debt extinguished, motor vehicle tax is due on the sales price. The lienholder’s books and records should reflect the debt, which is generally the amount of the lien.

Licensed Dealer Purchase

If the purchaser of a foreclosed motor vehicle is a licensed dealer, it may apply for title only without remitting motor vehicle tax if the motor vehicle is held for resale or rental purposes only. An application for registration is presumed to be use of the vehicle by the dealer, and motor vehicle tax is due.

Documentation

Standard presumptive value (SPV) does not apply to a motor vehicle acquired through a storage or mechanic’s lien. The sale price (i.e., total consideration paid) and the amount of debt extinguished by foreclosure should be documented on the foreclosure form.

Texas Department of Motor Vehicles (TxDMV) Form 130-U, Application for Texas Title and/or Registration (PDF) documents the purchase of a motor vehicle. When a public sale is held, an auction sale receipt from a governmental entity may be accepted in lieu of the seller’s signature on the Form 130-U (PDF).

If the federal government conducts the sale, it does not provide the purchaser with Form 130-U (PDF). The federal Form 97, United States Government – Certificate to Obtain Title to a Motor Vehicle contains information sufficient for the registration and titling of the vehicle.

96-254
(11/2025)