- A certificate that releases a lien must accompany a car with a lien listed on the title or the lien holder must sign the title directly releasing the lien. The state cannot transfer the title into another party's name without a release of lien. This helps to protect lien holders from losing their collateral if the car owner defaults on the loan. If the seller cannot pay the loan in full to receive a release of lien, some other options may be available.
- When selling a car with a current lien against it, the buyer, or the buyer's bank, may choose to write a two-party check to the seller. The check would be made out to the seller and the lien holder. Therefore, the seller would not be able to cash the check directly, only endorse the check to the lien holder. The buyer may also write two checks. One to the lien holder for the balance owed and one to the seller for amount of the purchase price above the lien amount. If the lien holder is local, a release of lien can be issued when the check is received or the lien holder can release the lien by signing the title.
- A person can sell a car with a lien against it to a buyer approved by the lien holder to take over payments on the car. The buyer would need to apply for financing with the current lien holder for the balance owed on the loan. If approved the lien holder would release the lien by signing the title directly, or issuing a release of lien to the seller. The lien holder would then put his name back onto the new title in the buyer's name. The buyer would make the car payments and the seller would be relieved of the lien.
- A car with a lien against it can be traded in or sold to a licensed car dealership. The dealership would pay the lien off and receive the release of lien to attach to the title before putting it on the lot to sell to someone else.
