The Expert Podcast

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 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 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 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, "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. They already lost money on that car; they’re not going to lose any more.

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.

So what do you do about getting a lien release? Maybe you’ve moved from one state to another, and the title and the lien are in an old state, but 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 up, and say, "Hey lender, send me a lien release." 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 high up in the organization. They don’t have the authority to do lien releases, nor do they have the job description to handle them.

Really, nobody in the bank does lien releases by request because here’s what it takes to do one: They have to get a package of forms, look up all the right forms for that state—every state has different forms—fill them in, sign them, put all the information in, and then mail them to you. 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 has stamps lying around anymore? Everything is online and bill pay. So they don’t have all that; they might have to go to the mailroom. No one’s going to do it.

So what do you do? To make it easy and better for you, get the lien release form for your state. Also, get what’s called a Letter of Non-Interest and an Affidavit of Fact.

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Prepare all those documents—it’ll take you some time, probably 30-40 minutes, maybe an hour—and mail them to the lienholder on paper. Don’t mess around with electronic mail. Put it in an envelope with a stamp and mail it to the lienholder.

In fact, go a step further: put a return envelope already made out to you with a stamp on it. That way, someone at the bank will get that package, open it up, see the lien release form, and all they have to do is sign it. There’s a little arrow or highlight that says "Sign here."

They’ll type your VIN number in, see that it’s paid, see that it’s a charge-off or write-off—whatever it is—and they’ll just sign it. Or maybe they can’t find it; maybe it’s so old that it’s not in the system anymore, so they just sign it. They don’t have to go to the mailroom and find an envelope—it’s so easy for them to get that off their desk. They’re just going to lick the envelope, seal it, and boom—you’ve got your lien release.

You might say, "Well, I don’t want to do that work." Well, don’t—but you won’t get your lien release if you don’t. If you try by phone, 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. You can file in your county clerk’s office to have the clerk sign it. You can say, "The bank didn’t sign it; I tried to contact them." Then, you can get your county magistrate or court clerk to do 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—do it by mail. Don’t call them. Prepare to do a little bit of work. You might not think it’s fair, but that’s just how the system works.

Another trick we suggest—and we do these all the time; we handle hundreds of these every week—is when you mail it to the lender, make three or four copies of that package. Send it to three or four different places where that lender is located—their main office, a branch, a satellite office—whatever.

All you need is one to come back. If you send it to multiple places, you increase your chances of getting it back. If you have more questions, we have title consulting available at the link below.

We offer title services, checklists, and even some of these forms that you can get directly from our website.

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