I have a sign in my shop that says " Items for repair that are left over 30 days will be sold to cover cost " And I DO I send a regestered Letter telling the person that its ready , if its not picked up I sell it . They have been notified .

I was told that if you sell the item, you may keep the cost of the repair, but the additional money from the sell belongs to the customer. If the customer does not return to claim the money, it then is supposed to be turned over to the state. The state then is responsible for the efforts to reach the customer. This is when the state puts an insert into the local paper for "unclaimed property". I'm in Texas and that's how I was told it works here.

For those of you who repairs for a living:

.... Legally when are we allowed to declare the guitar as abandoned and remove it from the shop?

This has happened to me on a few occasions, repairs and commissions. In Virginia the law states that after 30 days you can start charging storage fee's and after 3 months it's yours. I've never charged anything but after a while I've sold the stuff. It does indeed take up shop space when your shop is very small like mine. I was building two electric bass's for a guy who bought all that materials, wood, tuners everything but the pickups for one of them. HE completely disappeared off the map. Two years later I finish the bass's and one of them is now being used by the bass player in my band.

To drag this one out back from the dead....
There is a concept in American Law called a "Mechanic's lean" or something along those lines...

The idea is that you charge for services.. If they either refuse to pay, or don't show back up to pay within some period of time... you can file a lean on said item with the Magistrates court... There is some sort of required legal proof that you tried to contact them for payment and such... This gives you a bona fide legal claim to take possession of the item.... which then becomes legally yours.... You typically don't need a lawyer to go before the Magistrate's court... just to have your ducks in a row...

This allows you to do this sort of thing without the worry about the fellow suing you or trying to file theft charges against you.... I suppose he could still try - but at that point, you have a lawful judgement in your hands.....

So.. That's the direction I would go.. I would head on over to the local Magistrate's court and find out what the rules are... what paperwork you have to fill out, etc... because you don't want to find out that the local laws would allow you to be charged with some flavor of Theft if you sold junk left laying around....

Thanks