Understanding the Lien on Your Vehicle Title
So you have a vehicle you’re trying to get a title for, and you’ve discovered that there is a lien recorded on the title record. This happens all the time, and you might be thinking, “How could that be? I paid off my car, or my car is a charge-off, or it’s a write-off. There shouldn’t be a lien on my title record.” Well, what happens is when a bank receives a final payment on a car loan, what they normally do is they sign the title, stamp it paid, and mail it to you. What they don’t do is file the lien release with the title office or the Department of Motor Vehicles.
Why Banks Don’t File the Lien Release
Why wouldn’t they do that? Well, because it costs them money to prepare the forms, pay labor, and pay the filing fee. So they figure, “Well, we sent this person their title, so that’s all we need to do.” What about if it’s a charge-off or a write-off? Well, the same thing—they’re not going to spend money filing a lien release just because it’s a write-off. Since they already lost money on that car, they’re not going to lose any more money. But if it’s a charge-off, really, they don’t have that as an encumbrance on their balance sheet anymore. Many banks are of the opinion that if it’s a charge-off, they can’t hold the lien—that’s more of a decision for the bank.
How to Request a Lien Release
So what do you do about getting a lien release? Maybe you’ve moved—maybe you moved from one state to another. The title and the lien are in an old state, and now you’re in a new state. Well, it’s very important how you go about requesting the lien release. What you don’t want to do—very important—is just pick up the phone, call, and say, “Hey lender, send me a lien release.”
Why Calling the Lender Won’t Work
Here’s why: when you call the lender, you’re just talking to a receptionist, a clerk, or someone answering the phone. It’s not someone who is very high up in the organization. They don’t have the authority to do lien releases, nor do they have the job description to handle lien releases. Really, nobody in the bank does lien releases by request. Because here’s what it takes to do a lien release: they have to get forms, look up all the right forms for that state (since every state has different forms), fill them in, sign them, put all the information in, and then mail them to you.
The Challenges of Getting a Lien Release
It has to be on paper. There’s no employee at that bank who wants to drop everything, find the right form for you, look up your information, fill it out, find an envelope, and find a stamp. I mean, in this day and age, who even has stamps lying around anymore, right? Everything is online and bill pay. So they don’t have all that; they might have to go to the mailroom, and no one’s going to do it.
The Best Way to Get a Lien Release
So what do you do? To make it easier for yourself, get the form that’s a lien release for your state. You also need what’s called a letter of non-interest and an affidavit of fact.
How to Submit the Request Properly
You prepare all those documents—it’ll take you some time, probably 30 to 40 minutes, maybe an hour—and mail them to the lienholder. Use paper mail—don’t mess around with electronic mail. Put the documents in an envelope with a stamp and mail them to the lienholder. In fact, go a step further: include a return envelope already made out to you with a stamp on it. Now, look what you’ve done. Someone at the bank is going to get that package, open it up, and say, “Oh, here’s a lien release—all I have to do is sign it.”
Making the Process Easy for the Bank
You can make it even easier by adding a little arrow or highlight that says “Sign Here.” They’re going to type your VIN number into their system, see that it’s paid, and see it’s a charge-off or a write-off. They’re just going to sign it. Or maybe they can’t find it—maybe it’s so old that it’s not in the system anymore. In that case, they’re still just going to sign it. They don’t have to go to the mailroom and find an envelope—it’s so easy for them to get it off their desk. They’ll just lick the envelope, seal it, and boom—you’ve got your lien release.
Why Mailing is the Best Approach
You might say, “Well, I don’t want to do that work.” Well, don’t—but then you won’t get your lien release. If you don’t do it by mail, you have almost a 0% chance of getting it. If you do it by mail, you have about a 100% chance of getting it if your loan is paid off, and about an 80-85% chance even if it’s a charge-off. If, for whatever reason, the bank does not respond, the fact that you contacted them in writing now gives you leverage.
Legal Options if the Bank Doesn’t Respond
If the bank refuses to sign it, you can file with your county clerk to have the clerk sign it. You can tell the county magistrate or court clerk that the bank didn’t sign it and that you tried to contact them. They can issue what’s called a court order title signature to sign your lien release. There’s more information about these processes on our website below. The most important thing is to do it by mail—don’t call them—and be prepared to do a little bit of work. You might not think it’s fair, but that’s just how the system works.
A Final Tip for Success
Also, another trick we like to suggest—and we do these all the time; we handle hundreds of these every week—is to make three or four copies of your package and send it to three or four different locations where that lender is located. Send it to their main office, a branch, or a satellite office—whatever works. You only need one response. If you send it to multiple places, you increase your chances of getting it back.
