Car Lien And Georgia State Lien Laws
You have a lien on your car that may not even occur to you daily. However, a car lien may impact the auto insurance coverage you must carry and the sales process if you decide to sell your car. For example, if you decide to sell privately, you'll need to pay off your car loan for the lien on the car title to be removed so that the title can be transferred to the buyer.
What Are Car Lien
A lien on a car gives the lienholder a legal right to the vehicle until the loan is paid in full. If you have a lien on your vehicle and want to sell it, you may need to take some extra steps. If you plan to buy a car from a private seller, you should first check the lien status to ensure the seller can transfer ownership to you.
Lienholder
Your auto loan lender is typically the lien holder on your vehicle and may also hold the title. Depending on your state, the lien holder will file the lien with your state's transportation department or department of motor vehicles. When your car loan is paid off, the lienholder typically sends a lien release document to the state transportation agency so that the car's title can be updated and transferred to you.
A lienholder has several rights as the legal owner of your vehicle. First, if you default on your loan, it has the right to repossess your car. Furthermore, lien holders may require you to have certain types of auto insurance coverage — typically comprehensive and collision coverage — until you pay off your loan.
A mechanic may be able to place a lien on a vehicle in some states. Mechanics can place a lien on a car in states that allow mechanic's liens if they perform work and aren't paid for it within a certain amount of time.
Buying Or Selling A Car With A Lien
If you buy a used car from a private party and they don't own it outright, you won't be able to get the title until the seller pays off their car loan and the lien holder transfers the title. Similarly, if you intend to sell your car, you will most likely need to pay off your loan so that the title can be transferred to you and then transferred to the buyer.
If you live in a non-title-holding state, you will possess the title, not the lien holder. Depending on your state, the lien holder's information may appear on the title, and certain actions may be required to release the lien once you have paid off your loan. In Georgia, for example, when you pay off your car loan in full, the lender should provide you with a release of lien. Before selling your car, you must have that document attached to your title.
Contact your lienholder if you cannot pay off your car without first selling it. The buyer may be able to write a check to your lienholder for the remaining loan amount and receive the car's title in exchange.
Lien Laws In Georgia State
Because of a lien's impact on a property owner's title, Georgia's lien laws are generally strictly construed/interpreted against the lien claimant. Although recent Georgia decisions have shifted the strictly construed standard for interpreting liens to a substantial compliance standard, the process for filing and perfecting a lien claim remains a minefield. However, with the help and input of lien claimants, property owners, legal practitioners, trade associations, and legislators, the lien statutes were recently amended to clarify and remove some of the hidden but avoidable liens.
The new laws went into effect on March 31, 2009. In general, liens filed under the old statute will be subject to the statute in effect when the claim of lien is filed. The drafters of the new legislation and the legislators who enacted it planned ahead of time to reduce the risk to lien claimants, lien filers, and practitioners. Because many of the time requirements in the current statutes have been expanded in the new statutes, compliance with the current provisions will frequently result in compliance with the new statutes, but not always.
Filling A Lien Claim
One of the first provisions outlined in the current
O.C.G.A. 44-14-360 et seq. is that the lien claimant must file their lien within three months of providing services, labor, supplies, or material to the project. Suppose a lien was properly filed within three months. In that case, one must consider whether the services, labor, supplies, or material performed or delivered were within the scope of the original contract or repair or "punch list" work. While services, labor, supplies, or material performed or delivered within the scope of the original contract are covered by the current lien statute, repair or punch list work is highly questionable.
Notice Requirement
According to the current statute, at the time of filing their claim of lien, the lien claimant shall send a copy of the claim of lien to the owner of the property or the contractor, as the owner's agent, by registered or certified mail or statutory overnight delivery.
44-14-361.1(a)(2) O.C.G.A. For lien claimants, lien filers, and attorneys alike, the at the time of filing language has confused. There has been some debate about whether the term "at the time of filing" meant that day, contemporaneous with filing, within 24 hours of filing, etc.
Validity
Only tentative lien rights are created when a lien is properly filed. A lien is currently valid in Georgia for twelve months from the date the claim became due, which is the last date labor, services, or materials were rendered to the project. As a result, the lien claimant must perfect the lien before the twelve-month period expires. The lien claimant must sue to recover the claim amount to perfect the lien.
44-14-361.1(a)(3) O.C.G.A. The lien claimant must sue the correct account debtor within the time frame specified; otherwise, the lien claimant risks losing its lien rights.
Notice Of Suit
Once the party filing the lien has successfully filed suit, they must prepare and file a notice of the suit to perfect their lien (also known as a notice of commencement of lien action). The notice of suit must be filed in the county where the improved property is located, signed under oath, and include specific information. The lien becomes invalid if the notice of suit is not filed or does not contain all of the required information. A valid notice of suit must include the following information, as specified in
O.C.G.A. 44-14-361.1(a)(3) and (4):
- The correct property owner's name;
- A legal description of the liened property;
- The lien's deed book and page number;
- The name of the person who filed the lawsuit;
- The location where they filed their lawsuit;
- How the suit was filed;
- The number of the filed suit;
- The date on which the lawsuit was filed.
Find The Lien Information
Check the lien status of a used car before purchasing it from a private seller. There are several approaches you can take.
Georgia DDS
- Georgia DDS allows you to conduct online lien searches using the vehicle identification number, or VIN, of the vehicle. This 17-digit number can be found on the lower left side of a car's windshield, inside the hood, on the engine, or near the driver's side door. It could also be on the vehicle's registration card and insurance documents.
Vehicle Registration
- Examine the car title if you have it. If the vehicle has a lien, the lienholder may be listed on the title.
Vehicle History Report
- Purchase a vehicle history report. A vehicle history report can provide a lien history and important information such as odometer readings, previous owners, and major damage — all of which are important to know if you plan to purchase the vehicle.
For information on how to remove a car lien, click on the link below:
