Help about a lien!

April 13, 2008 2:02 PM

I'm buying a used car, and have a question about the whole title/lien thing....

First off, I did look at some previous questions, but none of them fit exactly my situation, so I really appreciate your indulgence.

I live in VA. The seller of a beautiful 2003 Mustang also lives in VA, about 2 hours away. I've seen the car, had it checked by a mechanic, want to buy it and will be going over this week to the owner's bank to purchase the car. The reason I'm going to the bank is because they still have a lien on the car, and he needs my money to pay off the lien. (I'm buying it for around $5000, if it matters.)

The owner said he talked to the customer service dept of his bank's national branch today and they said that if we do it all in the bank, then they'll give me a "transfer of ownership" document which I can then take to the VA DMV. I'm guessing that from there, I get a title from the DMV and take it back to my bank (BB&T) and then BB&T has a lien till I pay the car off.

Does this all sound right? This is the first car I've purchased, so I just feel a bit ansey about not having the physical title in my hands after I fork over that much money. It sounds right to me, but I just wanted to pick the hive mind's brain first. I'll be monitoring this thread closely today, so if you have questions, let me know. Thanks!

posted by omnipotentq to travel & transportation (4 comments total)

It varies from state to state, but you may not have a title in your hands after forking over the money.

The seller's bank will issue a "lien release," saying they have no more interest in the vehicle. Your bank will have to place a lien on the new title. There is no way you will end up with a clear title in your hands that you then take to the bank and have them attach the lien. What will probably happen is you will get a title in the mail that shows your bank as the lien holder.

I'm a little confused as to how you are paying for the car. If the bank is loaning the money, they will want the car info (VIN, etc.) before giving you a check. They will probably have to be in contact with the seller's bank as well.

I think you need to call your bank in the morning and have them tell you exactly how it all works in your state and with your bank, but in short there is nothing weird about not having a title in hand, as long as you have a receipt and transfer of ownership and registration.
posted by Fuzzy Skinner at 2:14 PM on April 13, 2008

When the current owner gives the bank the money, they will give him a lien release which allows him to apply for a title in his name. When I did this (in Maryland), the only thing the DMV would do when presented with a lien release was to mail a title to the former owner (and I think I needed his signature just for that). When he got the title (a month later), he signed it over to me. The problem is he'll have your money, and no real incentive (other than honesty, something in short supply when deal used cars) to sign it over to you.
You may have a couple of options. In Maryland, the main DMV (for the whole state), would give you a new title while you wait (several hours). If VA does this, you could pay off the car and then go with the old owner to the dmv and get a title (assuming he doesn't just say thanks and drive off in his now paid off car). Having possession of the car and a bill of sale will count in your favor.
You could try to get the owner to sign a "limited power of attorney" for only paperwork involving the car and then you could sign for him at the dmv (but they may still only mail to the address on the title).
I think that AAA handles title work in some cases, so you could try giving them a call if you're a member.
posted by 445supermag at 2:47 PM on April 13, 2008

When I did this (many many years ago, and here in Canada) the bank I was borrowing from insisted I pay the outstanding amount on the lien to the bank directly, and used that paperwork to prove the title was clear. It could be your bank can recommend something similar.
posted by drmarcj at 3:11 PM on April 13, 2008

@Fuzzy Skinner: I think that helps, some. The bank already has the VIN and said they'll cut me a check tomorrow. I'm going to call them in the morning and get their advice on how to handle all of this, though, since I'm uncomfortable with not having the title (as 445supermag described) or any proof of ownership, and then having the owner get the title themselves from their bank.

Thanks to all!
posted by omnipotentq at 3:43 PM on April 13, 2008