What is a Lien Release? | Chase (2024)

Buying and selling a car is usually a straightforward process, whether it’s with a private sale or at a dealership. Buyers and sellers find one another via the marketplace, agree on pricing and terms and — if everything checks out — the buyer drives off into the sunset. When the car in question has an outstanding lien on it, however, a lien release may be required. But what’s a lien release, and how does that change the car buying process?

What is a lien on a car?

First things first, let’s understand what a lien is. In simple terms, a lien is a legal claim over something of value. When you take out a loan to buy a car, the lender receives a lien on the vehicle — this allows them to repossess it if you don't make your loan payments. In this way, the vehicle itself is the collateral for the loan.

Once you’ve paid off your car loan in full, the lender — also called the lienholder — should contact your local Department of Motor Vehicles (DMV) to release the lien. Once the lien is released, they relinquish their right to repossess your car. Your obligation to them is over and the car is officially lien free.

What does a lien release do?

A lien release is when the lienholder formally gives up their claim to the vehicle’s title. It lets the car be bought or sold without strings attached. You’ll likely receive a lien release once you’ve paid off your car loan in full. There are some circ*mstances, however, where you’ll need one prior to that (more on that below).

Getting a lien release as a buyer

Let's say you’ve found a deal on a used car you just can’t pass up. Checking to see if it has a lien on it is relatively simple and might save you some trouble later. In an ideal world, the seller will act in good faith and be upfront about it. If not, you can look up the car’s vehicle identification number (VIN) on your local DMV’s database via their website, phone or in person.

If the car does indeed have a lien on it, the seller must resolve it with their lienholder before you buy the car. If the seller requires money from the sale to resolve an outstanding lien, you may also be able to arrange a payment directly to the lienholder. That way, the lender is paid, the lien is released, and you avoid future problems involving that lien.

Getting a lien release as a seller

In some circ*mstances, you may need to sell your car before you’ve been able to pay off the loan on it. Or there could be a lien on your car that you weren’t aware of. It’s rare but can still happen, especially in private sales where legal actions may have affected lien status. You may need to contact an attorney in this situation. Either way, you’ll need to have all liens satisfied and released before you can sell the car. Here’s how:

  1. Check the lien status: Look up the vehicle’s title information on your local Department of Motor Vehicles’ database to see if there are any liens on it. This can usually be done online.
  2. Determine the outstanding lien balance: After determining the car’s lien status, the next step is to contact the lienholder(s) to see what amount you’ll need to cover the lien or what other terms must be met for lien release.
  3. Settle the balance: In most cases you’ll have to resolve the lien on your own by paying money to the lienholder.
  4. Verify release: Once the lienholder has been paid off, they should contact the DMV to let them know the vehicle's title needs to be updated. The title is then transferred to you or your buyer, depending on the specifics of your sale. You may want to follow up with the lienholder to verify the release went through. As an added measure, consider checking the status directly with the DMV.

In summary

Lien releases might sound a little unfamiliar at first, but with a little research, you might notice that they’re not too intimidating. Whether you’re a buyer or a seller, checking the lien title status could potentially save you some unpleasant surprises later on and give you some peace of mind.

What is a Lien Release? | Chase (2024)


What is a Lien Release? | Chase? ›

A lienholder is a person or institution who holds the lien, or legal claim, to your property until the terms of your loan are satisfied. A lien release is when the lender confirms the loan is paid in full and removes the lien. Once released, the car is yours, free and clear!

What is the process called release of the lien? ›

A lien release is a document that is filed in the public land records as the official notice that the lien is removed. Once payment has been received, a contractor has a duty to remove any lien that was filed against the property.

What does lien mean? ›

A lien is a claim or legal right against assets that are typically used as collateral to satisfy a debt. A creditor or a legal judgment could establish a lien. A lien serves to guarantee an underlying obligation, such as the repayment of a loan.

How do I remove a lien from a car title in NJ? ›

NJMVC requires the following items to remove a lien from a title:
  1. Vehicle Title,
  2. Vehicle registration, insurance card or declaration page,
  3. Bill of Sale,
  4. Certified record title search, DO-22 (by mail only, $15),
  5. Or, a certified record vehicle registration, DO-11A (can be obtained same day at a full-service agency, $15).

How do I get my title after paying off my car in Wisconsin? ›

If your lending institution informs you that they electronically released their lien on your vehicle, you will receive a new title in the mail unless there is another loan on your vehicle.

How do you remove a lien? ›

How to Remove Lien
  1. Identify reason for lien.
  2. Clear defaults/dues.
  3. Withdraw associated requests.
  4. Contact bank for errors.
  5. Make required payments.
  6. Delete linked cards/services.

How do I write a letter to release a lien? ›

Specify the property or asset that was subject to the lien. Include details such as the address, make and model (if applicable), and any other relevant identifying information. Clearly state the reason for the lien release. This could be due to payment in full, a change in ownership, or any other applicable reason.

Does a lien ruin your credit? ›

Statutory and judgment liens have a negative impact on your credit score and report, and they impact your ability to obtain financing in the future. Consensual liens (that are repaid) do not adversely affect your credit, while statutory and judgment liens have a negative impact on your credit score and report.

How do you clear a lien amount? ›

Visit the Branch: Personally visit the SBI branch to discuss and resolve the issue. Provide Necessary Documentation: Submit any required documents to substantiate the resolution of the issue that caused the lien. Wait for the Bank's Action: The bank will review the case and, upon satisfaction, will remove the lien.

Is a lien the same as ownership? ›

You hold title on your home, meaning you're the legal owner of the property. But because you owe your mortgage lender the money they lent you to buy your house, they'll put a lien on the property.

What do you get when you pay off your car? ›

5 Once you pay off your loan, the lender will send the lien release to the DMV, which will then send you an updated title. This makes it easier to get the title for your car, but because there are more steps involved, it can take longer.

How do you get around a title with a lien? ›

Request a lien removal

Contact the FDIC directly to request a release letter. You will need the title and proof of payoff. Once you have the necessary documentation, you can file it with the DMV and register the car.

Can I register a car with a lien on the title in NJ? ›

The titling fee increases to $85 if you're registering a financed vehicle with one lien and $110 if it has two liens. You will also have to pay a sales tax fee. These fees can be paid with credit, check, money order, and cash. You will also have to pay a registration fee during this process.

How long does it take to get a lien release from Ally? ›

Your state's Department of Motor Vehicles will either provide you with a clear title or remove our name from the vehicle's title record. If I purchased my vehicle, when will I receive the title? Short answer: we'll mail your title or lien release within 10 business days after we process your final payment.

Is Wisconsin a non-title state? ›

Wisconsin is a title to lien holder (lender) state.

How long does it take to get a car title in WI? ›

How long does it take to receive a replacement title in Wisconsin? If applying for a title online, you will receive your replacement title within 10 business days. If applying in person, you should be able to leave the DMV the same day with your duplicate title.

What is a release of a mortgage document? ›

A release of mortgage, commonly known as a discharge of mortgage, is a legal document issued by the lender acknowledging that the mortgage debt is settled. It effectively releases the property from the lien, allowing homeowners clear ownership.

What is a written release of lien in Florida? ›

Lien Releases

Obtain a Release of Lien, which is a written statement that removes your property from the threat of lien.

How to remove a property lien in California? ›

Pay the debt in full, then obtain and file a “satisfaction of judgment” document with the court. Request the creditor to file a lien release with the county recorder's office and confirm the lien is removed from the property records.

How do I get my title after paying off my mortgage in Florida? ›

Once you pay off your mortgage, you will receive documentation from your lender or broker. You will then need to notify your local records office in order to receive your deed of trust.

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