We’ve heard all sorts of stories about restorations gone bad, but here’s a new twist. We recently received the following email from an SCMer. I never thought I would have a subject that you might want to share with your readers, but here goes. I ‘have’ a 2000 Jaguar XK8 convertible, probably not much more than a used car, but I enjoyed driving it. It was in need of some major repairs, and I took it to a reputable shop. We went round and round about whether it was worth the expense to get it roadworthy again or not. In the […]
We’ve heard all sorts of stories about restorations gone bad, but here’s a new twist. We recently received the following email from an SCMer.
I never thought I would have a subject that you might want to share with your readers, but here goes. I ‘have’ a 2000 Jaguar XK8 convertible, probably not much more than a used car, but I enjoyed driving it. It was in need of some major repairs, and I took it to a reputable shop.
We went round and round about whether it was worth the expense to get it roadworthy again or not. In the end I went with my heart instead of my head and paid a substantial deposit and went full speed ahead with the restoration.
There were significant delays (parts not being available, etc.) and I was prepared for that. I was also expecting to make more payments as we went along. I was not prepared for the phone call I got from the restorer’s daughter informing me that at age 56, the restorer had dropped dead from a heart attack. The auto restoration business was being liquidated and would I please come and collect my car. It turned out that the car was up on jacks with the rear end removed and definitely not mobile. I was given a week to get the car.
Being desperate, I got ahold of another restorer who said he would take a look at the car and see if it was possible to move the car to his shop and continue the work. He ghosted me. I was then given the number of the family attorney, and initially he was helpful and advised me to file a claim against the estate including any payments that I had made for work that was not completed. My strategy was to reclaim the dollars I had already paid, and then find some other avenue for the car repair work.
After a month I received the paperwork back from the probate court saying it never heard of the deceased owner of the auto repair shop. I have now been ghosted by the family attorney. At this point, I am willing to take a loss on the repair effort and I would like to donate the car to charity, but I am not even sure how I can do that. Meanwhile, I can still see my abandoned car through the windows of the boarded-up shop. It is a forlorn sight. — Steve
Death complicates things
Well, the good news is that Steve still owns the Jaguar and all the parts. The bad news is that he is going to need some legal help to get them back. The worse news is that he will likely have to act quickly before the Jaguar goes away, making its recovery even harder.
Based upon the suggestion made by the attorney, it appears that the restoration shop was simply a sole proprietorship. In other words, the owner was the business, and it stopped abruptly when he died.
When a person dies, the legal process that deals with the settlement of their estate is probate. A court proceeding is established to appoint a Personal Representative (also called an executor) to administer the estate. The PR takes control of the estate assets, sells whatever needs to be sold, sorts out what the decedent’s debts are, gets the proper ones paid, files necessary tax returns and then distributes any remaining assets to the beneficiaries of the estate, all under the supervision of the probate court. Probate is a logical process, but it is time consuming (and often complicated by the involvement of the court), and generally expensive. That’s why so many people put great effort into probate-avoidance in their estate planning.
Lawyer goes silent
Oddly, no one is ever really required to start a probate. Things can sit unresolved indefinitely, until someone decides they need to do something to clean things up or transfer assets. My hunch in this case is that the family lawyer expected the family to act but, for whatever reason, they had not done anything. It may be procrastination, or it may be that the estate is underwater, and no one wants to bother with it. Either way, when a lawyer ghosts you, it’s likely because no one is willing to pay them to get involved.
As a creditor, Steve can start a probate, but it’s risky for him to serve as the PR. Once you get appointed, you can’t just take care of yourself and walk away — the court will likely require you to administer the entire estate unless someone else steps up to take your place.
So, Steve’s best course is to hire an attorney to contact the family attorney and find out what is going on. It may be that the family just needs a push to get things started.
Landlord liens
If that doesn’t work, the next step would be to contact the landlord, as it appears that they have taken possession of the shop and the Jaguar. It’s a good assumption that the rent isn’t getting paid — if it were, then there would be someone managing things whom Steve could talk to and get his car back. When a landlord doesn’t get paid, the law gives them a lien on all of the tenant’s property. The lien allows them to hold onto the property until the rent gets paid. If that doesn’t happen within a specified time (usually 60 or 90 days), the landlord is then entitled to sell the property in a public sale and apply the sale proceeds to the unpaid rent.
The landlord lien applies only to the property of the tenant. It does not apply to Steve’s Jaguar. Showing proof of ownership to the landlord should be enough for them to release the car to Steve. However, the car has been partially disassembled, making it tough to identify which parts belong to Steve’s car. If the landlord releases parts to Steve that belong to someone else, the landlord can be held liable to their true owner. If that becomes a sticky point, Steve’s attorney should be able to negotiate an agreement with the landlord whereby Steve assumes full liability for such mistakes.
This is where urgency comes into play. Steve needs to make contact with the landlord before a lien foreclosure sale is held. If someone buys the Jaguar and/or the parts at a lien foreclosure sale, the landlord will give them documentation of the purchase at the sale, which will give them ownership of the Jaguar and the ability to get a title issued in their name. Once that happens, Steve will have to sue the purchaser to get his car back, which will add greatly to his expense.
Claims against the estate
Steve seems resigned to walking away from the money he already paid the shop, but he doesn’t necessarily have to. Once a probate is filed, he can file a claim against the estate for the unearned money paid to the shop. The payment priority in probate is to first pay the expenses of the administration, then to pay all the creditors, and last to distribute leftover assets to the beneficiaries. If there are assets, Steve may get full or partial payment of his claim.
If the shop was organized as a legal entity — a corporation or LLC — the road might be easier. If there is an officer authorized to act on behalf of the entity, then they can resolve the mess with Steve without any involvement from the probate court. But if there is no one authorized, then it’s back to the probate process to appoint a PR who can then appoint themselves or someone else to act on behalf of the entity.
Sadly, there really isn’t much that Steve could have done to avoid this problem. I would assume the reason why he was initially given only a week to get his car out of the shop was that next month’s rent was due in another week. Looking back, I’m sure he wishes he had been able to act immediately.
A lesson any of us in the shop owner’s position can take away from this situation is that we need to have our business affairs in order at all times in case the unexpected happens. Everyone needs a succession plan, with someone lined up who can step in immediately and take care of business. The same goes for every car collector. Even though a collection isn’t a business, it needs attention and know-how. We all should have a plan for the unexpected, with someone astute enough to carry it out. ♦
John Draneas is an attorney in Oregon and has been SCM’s “Legal Files” columnist since 2003. His recently published book The Best of Legal Files can be purchased on our website. John can be contacted at john@draneaslaw.com. His comments are general in nature and are not intended to substitute for consultation with an attorney.