How to Remove a Lien Holder From a Title at the California DMVby Scott Krohn
A creditor can place a lien on a vehicle as a security interest to ensure payment of a debt before the car is sold and transferred to a new owner. In California and across the country, the most common liens are placed on titles by lenders that provide financing for the purchase of the car. Liens also can be placed by repair shops and impound yards if a vehicle owner fails to pay for work done on the car or for storage. Both types of lienholders must be paid in full before a car can be sold by the owner, but the process of removing the lien is different for each one.
The Electronic Lien and Title Program
In California, the title for a car that has been financed will be held by the lienholder until the principal, interest and all fees on the loan are paid in full. If the lender is a participant in the DMV's voluntary Electronic Lien and Title program, upon receipt of the final payment the lender will transmit an electronic release of its lien on the title to the DMV. The DMV will remove the lienholder listed on the old title, and mail a new certificate of title and registration in the name of the owner.
Removing a Lien Holder that Holds a Paper Title
If the lender is not an ELT participant and instead possesses a hard copy of the lien, the process of signing and mailing the title to the owner after the payoff of the amount due can take up to 30 days. Once you have received the signed title, present it at the DMV within 30 days of the release. You can mail the released title and a transfer fee to the DMV or walk in to a local office. If you're transferring the title by mail, make sure your current address is filed with the lienholder and the DMV.
In California, a mechanic’s lien, also referred to as a storage lien, can be placed on the title of a vehicle for the non-payment of repairs, parts, or storage. The creditor must wait 15 days from the date that the owner was invoiced for the charges or from the completion date of repairs to file the lien. The vehicle can be put up for auction 30 days after placing the lien to recover money owed, if the owner does not pay the balance in full in the allotted time.
Getting a Mechanic’s Lien Released
To get a mechanic’s lien released in California, the vehicle owner must pay the creditor the full amount due, either in cash or with a cashier’s check, before the vehicle goes up for sale at auction. Once the balance has been satisfied, the lienholder can complete an “Unconditional Waiver and Release upon Final Payment” form to release the lien. The vehicle owner then presents the release documentation to the DMV to have the lienholder removed from the title.
After working for 21 years as a licensed adviser specializing in corporate and private finance, Scott Krohn began his writing career in 2008 covering a variety of topics including business, personal finance, health, and IT. He graduated from Cal State University, Long Beach with Bachelor of Arts degree.