by Scott Krohn
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A lien will be imposed on the vehicle’s title to provide a security right to the creditor in the automobile until the balance due is paid in full. The most common title liens are placed by institutions that provide financing for the purchase of vehicles. A repair shop or escrow may also impose a lien against a title for non-payment of services rendered or for daily storage fees. These liens are called, respectively, mechanical and storage liens. They must also be paid in full to be released, but the process is different from the one involving removal of a lender’s lien.
A lender will place a lien on the vehicle’s title to prevent the transfer of ownership to another party before the loan is paid off. Depending on the state in which the car is registered, the vehicle owner or lien holder may retain the title until the loan is paid off. If the title is owned by the vehicle owner, the name of the lender will be displayed as the lien holder. Liens against vehicle titles are also registered with the Department of Motor Vehicles in the state where the vehicle is registered.
Free a Lender
The process of releasing the lender as a lienholder can begin when the principal, interest, and all fees associated with the loan have been paid in full. Once the loan is satisfied, the lender will send proof of payment to the vehicle owner, which can be a completed “Notice of Recorded Lien” form or a written letter on institution letterhead stating that the loan was repaid. The title listing the lien holder will be sent with these documents if the lender had the title. All documentation must be submitted to DMV, which will provide a new certificate of title showing only the name of the vehicle owner.
Storage and mechanical liens
A mechanic’s lien can be imposed on a vehicle if payment for repairs, parts, or services is not paid during a period defined by each state. In Tennessee, for example, the repair shop must wait at least 30 days before filing for a lien. Storage liens, which are commonly placed by trailers or boats, are generally enforced for non-payment in the same manner. Both liens allow the vehicle to be sold at auction if payment is not received by the deadline set by the state.
Release of storage and mechanical liens
While the process of releasing a lender’s lien is similar across the country, each state establishes protocols to eliminate mechanical and storage liens. Some states, including California, require the lien holder on a mechanic or storage lien that has been paid in full by the vehicle owner to complete specific forms to release the lien. The release form can be submitted to the DMV to release the title lien holder. The release process for these types of liens can also be executed using escrow accounts administered by county offices that coordinate debt settlement, as well as filing release documents with the state DMV to remove the name. of the lien holder of the vehicle title. .