*Subject:** Is It Legal for a City in Colorado to Require a Lienholder to Pay Parking Tickets Before Releasing a Towed Vehicle?

[ColoradoAutoDealer]

Jurisdiction

Colorado

Hello everyone,

I'm seeking advice regarding an issue my business is facing with the City of Greeley, Colorado. We operate a buy-here-pay-here car dealership, and recently some of our vehicles have been towed because the registered owners incurred parking violations. The city has a new policy that requires all outstanding parking tickets to be paid before the vehicle can be released from the impound lot, regardless of who pays them.

Here's the situation:
- We hold a lien on the vehicles, and the registered owners are responsible for the parking fines.
- The city's policy mandates that the fines must be paid to release the vehicles. If I appeal this, the vehicle remains in impound and accrues daily storage fees, which could become substantial while waiting for a court date (approximately two weeks away).
- The policy feels punitive since we, as lienholders, are not legally responsible for the parking citations, yet we cannot reclaim our property without settling someone else's debts.
-This City policy seems to effectively transfer the debt of another party and withhold the property of the lienholder unless they satisfy the debt of another party.

I'm wondering if this policy potentially violates lienholder rights. I've found references in the Colorado Revised Statutes that might be relevant:
1. **C.R.S. § 42-4-2103** – This statute requires towing companies to notify lienholders promptly after a vehicle is towed. Failure to notify could limit the fees that can be charged.
2. **C.R.S. § 42-4-2105** – Discusses liens on towed vehicles but does not seem to authorize cities to require lienholders to pay the owner's parking tickets before releasing a vehicle.
3. The recently revised **Towing Bill of Rights** emphasizes fair practices but does not specifically address whether lienholders can be held responsible for a debtor's parking fines.

My questions are:
- Is it lawful for a city to enforce this policy on lienholders, or could it be considered an unlawful conversion of property?
- Are there any specific Colorado laws or case precedents that protect lienholders from being forced to pay for parking fines incurred by the registered owner?
- What would be the best approach to challenge this policy? Should I pursue a legal complaint, or is it better to negotiate with city officials?

Any advice on how to proceed or references to relevant legal cases would be greatly appreciated.

Thank you for your time and insights!

 

[Zigner]

Any advice on how to proceed or references to relevant legal cases would be greatly appreciated.

Pay what's required to retrieve the vehicle then add it to what the buyer owes you.

 

[army judge]

What is this new law, exactly?

The law is called the Towing Bill of Rights. It's the biggest overhaul in a long time of how our state governs the towing industry. Specifically, we're talking about rules for when companies can and can't tow your car from private residential areas.

It passed during last year's legislative session and went into effect in August 2022.

Does the new law include the parking lots at places like the supermarket or restaurants?

No, the law only covers towing on private residential properties. Think neighborhoods, apartment complexes and mobile home parks. It doesn't cover towing in parking lots for commercial properties such as restaurants and grocery stores, so your car could still be towed from those locations.

What are some of the new rules for residential areas?

The biggest changes circle around when a company can take your car without your consent.

The law also gives the state more power over permit approvals for Colorado operators and issuing fines against bad actors in the industry.

• Towing companies can't take your car simply because you have an expired license plate, unless they're carrying out a police or court order.
• Towing companies must give a 24-hour written notice before removing vehicles located on residential property, with some exceptions. Those include: Court or police orders; Vehicle owner consent; When a vehicle has received two prior notices; Creditor repossessions; When a vehicle is blocking a driveway; If a vehicle is parked illegally in a handicap space; When a vehicle is parked in a fire zone; or Parking without a permit (if required by property).
• Towing companies must release a vehicle at no charge upon request from an owner if still on private property.
• Towing companies must release towed vehicles to owners upon payment of 15% of overall fees, not exceeding $60.
• Towing companies must release the contents on towed vehicles upon request from owners.

Have fewer tows happened because of these new rules?

Towing companies interviewed by CPR say they have scaled back the number of their hauls in the five months since the law took effect.

John Connolly, owner of Arvada-based Connolly Towing, has simply dropped his 380 private residential property customers due to the new law's requirements. The changes have caused too much confusion among customers, he said.

"There are so many different areas of towing from law enforcement towing to residential and junk haul towing," he said. "The new laws don't apply to most areas, but many people think they do."

Shortly after the law took effect, Connolly decided to focus his business entirely on non-residential tows, he said.

Wyatt's Towing, the largest residential tower in the Denver Metro area, has seen business drop about 20 percent since last August. That's mainly because there are more hoops for operators to jump through before making a legal tow, said Trevor Forbes, Wyatt's president and CEO.

"It's a bunch of small changes that are adding up," he said. "A reduction in our revenue also requires less personnel, so we just have less people too."

There's limited data on the state number of tows. That picture could improve, though. Going forward, the PUC is now required to provide lawmakers with an annual report on towing complaints each December.

If your car does get wrongly towed, can you get your money back?

It depends on your situation.

The law gives more teeth to state regulators who oversee the towing industry, including an extra $100,000 for the PUC. That money will go toward hiring an additional full-time investigator.

This Aurora resident was towed illegally and charged $500. With the help of a new Colorado law, she got her money back

There’s a new 24-hour notice for towing in many cases — but there are exceptions.

www.cpr.org

The commission has updated its website to better educate consumers about the new law, including tips for how to submit a complaint. A list of exceptions to the new 24-hour notice rule is also posted there.

If you still think your car has been towed illegally, the PUC suggests filing a complaint through their website with "very specific" details about your situation and why you believe you were illegally towed.

Other details to share include the following:

• What led up to the tow?
• Have you retrieved your vehicle yet?
• Did you park in a lot that required a permit?

CPR has previously reported that complaints can take several days to weeks to resolve.

We answered your questions about Colorado's Towing Bill of Rights law

Everything you need to know if your car got towed and whether it was illegal.

www.cpr.org

 

[Zigner]

Unfortunately, the "Towing Bill of Rights" wouldn't seem to apply to the OP's concern.

 

[Tax Counsel]

Any advice on how to proceed or references to relevant legal cases would be greatly appreciated.

Thank you for your time and insights!

As a practical matter, you want the car, you'll need to pay the tickets. Your contract with your customer should include a provision that any costs you incur in collecting the debt get added to what the buyer owes. If you don't have that, go to a contract attorney and have a new contract drafted.

There is no Colorado statute or case decision that addresses this exact situation. But drawing from general rules of law regarding liens you don't have a dog in this fight. As a lienholder, your only rights to the vehicle are to take possession of the vehicle from the owner when the owner fails to comply with the contract and to payment of your share of the proceeds should the vehicle be sold. You aren't obligated to pay the fines, but the city is not obligated to turn over the vehicle to you as you are not the owner of the car. If you want to sue the city to get a court to determine exactly what status the city's fines have with respect to your lien given the exact language of the ordinance, you can do that. But it'll be costly to do and you're not going to get any legal fees or costs paid back. There is, of course, no guarantee you'd win. If you want to go that route I highly recommend you consult a Colorado Springs trial attorney for advice on that.

And as Zigner correctly stated, the Towing Bill of Rights doesn't apply to tows that are done by the city.

 

[ColoradoAutoDealer]

As a practical matter, you want the car, you'll need to pay the tickets. Your contract with your customer should include a provision that any costs you incur in collecting the debt get added to what the buyer owes. If you don't have that, go to a contract attorney and have a new contract drafted.

There is no Colorado statute or case decision that addresses this exact situation. But drawing from general rules of law regarding liens you don't have a dog in this fight. As a lienholder, your only rights to the vehicle are to take possession of the vehicle from the owner when the owner fails to comply with the contract and to payment of your share of the proceeds should the vehicle be sold. You aren't obligated to pay the fines, but the city is not obligated to turn over the vehicle to you as you are not the owner of the car. If you want to sue the city to get a court to determine exactly what status the city's fines have with respect to your lien given the exact language of the ordinance, you can do that. But it'll be costly to do and you're not going to get any legal fees or costs paid back. There is, of course, no guarantee you'd win. If you want to go that route I highly recommend you consult a Colorado Springs trial attorney for advice on that.

And as Zigner correctly stated, the Towing Bill of Rights doesn't apply to tows that are done by the city.

As the lienholder we are actually considered the priority owner. Yes we are not the registered owner but until that car is paid off we are the rightful owner of that vehicle. You said that we "don't have a dog in this fight" however I disagree. State law requires that the tow companies notify the lienholder in writing when a vehicle has been towed and we are legally allowed to go and retrieve the vehicle from the tow yard. As far as it goes of charging the customer that is a nonstarter. In at least 90% of cases that customer will never come and pay us anything or get the car back. That would again leave us with being required to satisfy another parties debt in order to retrieve our property back. There has to be some provisions that protect another debt from being transferred to a third party. In one recent case the registered owner had $900 in parking tickets on top of the $800 for tow and storage. It is not any sort of justice to demand that of the lienholder. We already have to pay the towing and storage fees but we just can't also pay all of their parking tickets as well. What happened with this car is that we were denied access to the vehicle which was then sold to a junk yard(what the tow yards are required to do) as far as any proceeds to us the tow yards never pay us a dime.

 

[ColoradoAutoDealer]

Pay what's required to retrieve the vehicle then add it to what the buyer owes you.

This is transferring the debt onto another party and as I said in my other post at least 90% of the time the customer just lets their car go and never comes and pays. Yes I could go an take this to small claims court to try and get my money back but you know the saying that you cannot squeeze a blood from a turnip. That being said I should not be required to pay another parties debt.

 

[Zigner]

As far as it goes of charging the customer that is a nonstarter. In at least 90% of cases that customer will never come and pay us anything or get the car back.

That's a you problem

 

[Tax Counsel]

As the lienholder we are actually considered the priority owner. Yes we are not the registered owner but until that car is paid off we are the rightful owner of that vehicle.

Not correct. You are a lienholder, not the owner of the vehicle. While that gives a you the right to take possession of the vehicle if the loan is not paid or the loan agreement is otherwise breached, that is not the same thing as the being the owner of the vehicle. Your rights and obligations as a lienholder are different from that of the owner of the car. While you may consider yourself the owner, when you sell the car and take a lien for the loan amount owed you've given up ownership of the car in exhange for a contract in which the buyer agrees to pay you back with interest and security interest in the car. While that gives you a strong position with regard to your customer and other competing claims, it is not an absolute defense against all the claims that others may also have and it is not the same position as being the owner. It it was, then as an owner of the car you'd also be personally liable for the parking tickets, just like your customer/debtor.

You may claim the car when its been towed, but the possessor of the car also typically has a claim that has to be dealt with. The nature of that claim matters as tothe rights you have versus the rights that the possessor has. That's particularly true when the possessor of the vehicle is the government.

While legally you don't a dog in the fight between the city and the owner regarding the unpaid tickets — you don't personally owe the city for the tickets — the fact that the city is holding the car means you do have to somehow deal with the city's claims to get it to release that vehicle back to you. That leaves you with the options of (1) paying the tickets, have the city give you possession of the car, and then recovering what you paid from the owner/debtor (and your options to deal with the owner/debtor depend in part on your loan contract says), (2) sue the city in court to argue that the city is wrongfully holding the car from you in either a replevin action (an action to recover the vehicle plus certain damages suffered as a result) or in lawsuit suit just for money damges or (3) wait to see what the city does with the car and take the appropriate next depending on what happens, e.g. if the city puts up the car for auction to pay the tickets there are several ways you may assert your lien interest the vehicle to insure you get repaid from the proceeds of sale or from the buyer based on the priority of the claims agains the car.

You seem to be looking for a way to get the car without paying anything. I get that. The problem is that none of the options open to you are totally cost free if the city stands firm. That means you have to weigh the cost of whatever action you take, if any, against what you expect you can get out of the vehicle once you have possession of the vehicle. If you do nothing because the costs will be more than you can get then at least you may have at least a little solace in taking a bad debt loss tax deduction.

These are the kinds of losses are what businesses who extend credit to their customers have to be willing to incur in exchange for the profit and interest potential in the deal. Going forward I suggest you consult an attorney who represents creditors in creditor/debtor disputes to learn what you can do to at least minimize your loss from these situations.

 

[Red Kayak]

This is transferring the debt onto another party and as I said in my other post at least 90% of the time the customer just lets their car go and never comes and pays. Yes I could go an take this to small claims court to try and get my money back but you know the saying that you cannot squeeze a blood from a turnip. That being said I should not be required to pay another parties debt.

Are you running a charity or a business?

If you are running a business then adjust your model to account for such expenses.

If you are more worried about losing customers that cost you money, then officially become a charity.