Guide in Removing California Car Lien

Before a vehicle is sold and transferred to a new owner, a creditor can place a lien on it as a security interest to assure payment of a debt. Lenders who offer to finance the car purchase place the most general liens on titles in California and across the country. If the owner fails to pay for repairs or storage, repair businesses and impound yards can also issue liens on vehicles. Before an automobile may be sold, both types of lienholders must be paid in full, but the method for removing the lien is different for each.

How To Remove a Lienholder from Vehicle Title in California?

The procedure for removing a lienholder from a vehicle title is similar to transferring a regular title, such as when buying or selling a car. The key distinction between removing a lienholder from the title and transferring title to a private party is that you, the present owner, will act as both the seller and the buyer, signing in all relevant spaces on your title transfer document(s) as both the seller and the buyer, i.e., Title Certificate. The DMV will delete the lienholder's release signature (and stamp) from your vehicle's record and issue you a new title without the lienholder information on it. The lien holder will then have no legal recourse to your vehicle.

Step 1: Complete the Front of the Certificate of Title

Assuming you have your vehicle's title, start by signing Line 1a on the front of the title. This transfers ownership of the vehicle to the parties listed on the back of the title, which you'll fill out as yourself next. Sign as both the seller and the buyer in the odometer information box on the front bottom half of the title. Note that the odometer section is only required if your car is under 20 years old.

Step 2: Complete the Back of the Certificate of Title

Unless you've moved to a new address, in which case you'd complete the back of the title with your updated information, you'll write in your information exactly as it appears on the front of the title. Fill in the new owner(s) information on the reverse of the title, which will be you and a second party (if one exists). If you're adding a second owner, fill out Line 3b with their details and choose the correct AND or OR check box. If you select OR, neither of you will be able to sell the vehicle without the other's signature. If you select AND, the title must be signed by both you and the second owner when the vehicle is sold. Put a zero in Line 9a (Purchase Price), as in "zero dollars." Put the date of the purchase on which you'll be removing the lien. You may use the current date. Also, on Line 11, write the term "NONE" to indicate no new lienholder.

Step 3: Download and Complete a REG 256 (Statement of Facts) Form

After that, you'll need to download and fill out a REG 256 form (Statement of Facts). You'll need a REG 256 to get a smog check exemption, as well as a Use Tax exemption if adding a second owner (for the first time and no consideration, i.e., no money, barter, or exchange for goods or services). Complete Section B of the Statement of Facts form (Statement for Smog Exemption), indicating that the vehicle's lessor and lessee are changing, but the vehicle's lessee or operator remains the same. If you're adding a second owner, you'll also need to fill out Section A of the Statement of Facts form (Statement for Use Tax Exemption). Mark if the addition of a second owner qualifies as a GIFT or a Family Member. Page 2 of the REG 256 must be signed. On the top of pages 1 and 2 of the REG 256, write in your car's license plate, vehicle identification number, and year/make.

Step 4: Complete the Transaction with the DMV

You've completed all of your paperwork preparations. It's now time to process your documents. You'll need to exchange your old Certificate of Title for a new one that includes only your name and information, not that of your previous lienholder. To finish this purchase, you have two options. The California Department of Motor Vehicles will mail you your new Certificate of Title once you've finished.

Online

This is a quick and simple choice because it does not involve a trip to the DMV, and the total fees (for both the online provider and the DMV) are relatively modest because no use tax is due. You prepare your DMV documentation and mail them for processing when removing a lienholder from the title online.

In Person

You can pay your fees and submit your documentation at a State of California DMV branch office or a privately operated local DMV service provider. A quick approach to remove a lien from your title is to go to a local DMV service provider. The California DMV has approved these firms to provide a full range of DMV registration services in-house. DMV service providers charge a small processing fee. However, there is usually little to no wait time.

FAQs About CA Car Lien

What is a Lien Holder?

In terms of the lien sale process, the lienholder is the person or corporation who is conducting the sale. They are the person or company who must pay a balance or have a car withdrawn.

What is a Lien Sale?

A lien sale is a DMV procedure that can be used by individuals, mechanics, body shops, junkyards, or law enforcement to collect fees due for unpaid and overdue services, to notify registered owners or interested parties or legal owners that a balance is due, or to notify that a vehicle has been abandoned or diminished. It permits the lien holder to recoup their costs in the case of a mechanic or body shop. It allows law enforcement or individuals to notify interested parties that this vehicle must be removed or sold and or destroyed in the event of law enforcement or persons.

What Causes a Lien Sale?

  • If you do not pay a repair shop/mechanic for services, they will file a lien against your property to recoup their costs.
  • If you've left a vehicle on someone's private property and they want it removed.
  • If law enforcement has determined that a vehicle has been abandoned,
  • If a junkyard has taken possession of a vehicle.

What are the Different Types of Lien Sales?

  • Vehicles abandoned or abated are sold in a lien sale within 15 days if their worth is less than $500. The police or junkyards mainly carry these out.
  • Short liens or autos worth less than $4000: This lien sale is for vehicles worth less than $4000. They normally take around 31 days to complete, and the highest price that can be charged is $70.
  • Long liens or automobiles worth more than $4000 or in storage: this lien sale is for high-value vehicles or vehicles in storage. By default, the lien sale for storage facilities will take time. The duration of these lien sales is normally between 60 and 90 days. Also, keep in mind that the lien sale is highly detailed and divided into two phases.
  • Vessel lien sales under $1500 are "short" liens on boats. The only stipulation is that you bring in an evaluation from a vessel dealer certifying that it is worth less than $1500.
  • This is a boat's version of a "long" line: vessel lien sales worth $1500. This takes about 60 to 90 days to complete and does not require an appraisal.

How Much Does a Lien Sale Costs?

  • According to the DMV rulebook, the following are the maximum fees that can be charged:
    • $70 for a short-term loan
    • Long-term loan: $100
  • Note that these prices will vary - some organizations undertake lien sales in large volumes and charge a minimal fee for their services. In addition, some organizations charge a service fee plus fees linked with the fee, such as postage, an ad that needed to be placed, or other costs associated with the lien sale that needed to be paid.