What is a lien?
A lien is a claim on property to ensure payment of a debt. When you borrow money to purchase a car, the lender files a lien on the vehicle with the state to insure that if the loan defaults, the lender can take the car. When the debt is fully repaid, a release of the lien is provided by the lender.
How to Obtain a Lien Release
- Satisfy the terms of the loan by paying the balance of the loan back to the lender, including any interest incurred. Pursuant to Industry Guidanceissued by the Department, the lender must execute a release of the security interest and mail or deliver the release to the owner upon clearance of the payment, and no later than three business days following such clearance. The lender will also notify the Department of Motor Vehicles (DMV) that the loan has been paid in full.
- If you don't receive the lien release, submit a request to your lender for proof that the loan has been satisfied. This request can be made through the DMV or directly to the lender.
- Visit or contact the DMV and verify that they received the loan satisfaction documents and any liens are removed from the vehicle's title. A new title will be provided or issued to you at this time.
- To obtain a lien release you may be asked to provide a copy of the Title for the vehicle that you are requesting be released. If the Title has been lost, you will have to request a replacement from the DMV.
Responsibilities of the Lien Holder (Lender)
Acquiring a vehicle title lien release is required in order to transfer ownership of a vehicle. Delays in obtaining title to such vehicles due to the lien holder being slow to mail or deliver the release can cause problems for purchasers and dealers. Section 2121 of the New York Vehicle and Traffic Law specifically states:
“Upon the satisfaction of a security interest in a vehicle the lien holder shall immediately upon clearance of payment execute a release of his security interest in a manner prescribed by the commissioner and mail or deliver the release to the owner…”
The Department urges New York state motor vehicle finance companies in New York to cooperate in complying with New York Vehicle and Traffic Law by mailing or delivering a lien release immediately upon satisfaction of the lien on a motor vehicle.To avoid being subject to action by the Department, all regulated financial institutions financing motor vehicles sales shall release liens and deliver the lien release no later than three business days after clearance of payment.
Obtaining a Lien Release from a Closed or Failed Bank
The FDIC may be able to provide you with a Release of Lien for a home, vehicle, boat or other personal property if the lien holder or a subsidiary was a bank that failed and was placed in FDIC receivership.
If the lender was a credit union you should contact the National Credit Union Administration.
