Receiving Titles from Lien Holders in a Timely Manner.

Last year the Authorization for Payoff form was replaced with a new updated Authorization for Payoff & Lien Holder Notification form. The new three part form replaces the old two part form. The new form now includes the required notification to the lien holder. The requirement for dealers and lien holders in regards to vehicles that have been traded in as part of a sale now require that a notification be provided to the lien holder and notification be given to the consumer that is trading in the vehicle. The new language on the form also specifies to the lien holder that they are required to deliver the title with the appropriate lien release to the dealer within 9 days of receipt of this notice and payment satisfying the lien. The form also specifies to the lien holder whether the dealer is including the payment for the lien with the notice or that it will be made with the specified time allowed by law.

The diagram below specifies and outlines the timeline of lien holder notification.

The changes to the lien holder requirement made last year are outlined below. Section 2(a)(b) and (c) show the lien holder requirements previous to last year. These are no longer the rules regarding lien holder notification and payment. The new rules and regulation as outlined in Utah Code begin with section (6).

(OLD LANGUAGE)

(2) A lienholder who has been paid in full by a dealer in accordance with the terms of this section shall deliver to the dealer a properly executed title that releases the lien within:]
(a) one business day after the business day on which the funds are
received when the funds are in cash, cashier’s check, certified check,
teller’s check, or other certified source of funds; are received when the funds are in the form of a check drawn on a local
(b) three business days after the business day on which the funds originating depository institution; or
(c) six business days after the business day on which the funds are received when the funds are in the form of a check drawn on a non local originating depository institution.

(NEW LANGUAGE)

(2) (a) A dealer shall, at the time of sale of a motor vehicle with a trade-in, notify in writing the person trading in the vehicle that the person remains responsible for any unpaid loan, lease, or other obligation related to the vehicle being traded in.
(b) The person trading in the vehicle must separately acknowledge receipt of the notice and acknowledge in writing the person’s continuing obligation related to the vehicle being traded in.
(3) The notice and acknowledgment required under Subsection (2) may be combined with an authorization for payoff and shall contain the following:
(a) the customer’s name;
(b) the customer’s address;
(c) the dealer’s name;
(d) the dealer’s address;
(e) notice to the customer that the motor vehicle the customer is trading in is subject to an unpaid loan, lease, or other obligation;

1. notice to the customer that the customer remains responsible for the unpaid loan, lease, or other obligation despite the trade-in of the motor vehicle; and
2. acknowledgement by signature of the customer that the customer remains responsible for payment of the unpaid loan, lease, or other obligation.
3. (a) A dealer shall within seven calendar days of the date of a trade-in, notify a lienholder on the motor vehicle that the vehicle has been traded in.
4. The notice under Subsection (4)(a) is not required if the lien is fully satisfied within seven calendar days of the date of a trade-in.
5. The notice to the lienholder required by Subsection (4) may be combined with an authorization for payoff or a notice to the person trading in the motor vehicle subject to the lien and shall contain the following:
6. notice that a motor vehicle subject to the lienholder’s lien has been traded in;
7. notice that the person trading in the motor vehicle subject to the lien has been provided with a notice as required by Subsection (3);

(c) the date the motor vehicle was traded in; and
(d) (i) a statement that payment for the lien accompanies the notice; or
(ii) a statement that payment will be made within the time frame required under Subsection (1).
(6) A lienholder shall deliver to the dealer a properly executed title that releases the lien within nine calendar days after the day on which the funds are received if the lienholder:
(a) has possession of the title for the motor vehicle; and
(b) has been paid in full.
(7) (a) A lienholder who does not have possession of the title but has its account paid in full by a dealer shall provide the dealer with a written statement that the lienholder no longer claims a lien against the motor vehicle.
(b) The statement described in Subsection (7)(a) shall be provided within the time limit required by Subsection (6).

If any financial institution does not make appropriate payoff as required by law, dealers are highly encouraged to file a complaint to MVED. While MVED actions are limited, we can track who the violators are and will have valuable information to increase penalties. All complaints are strictly protected and don’t disclose who filed the compliant. We also encourage you to contact IDS if you have repeat offenders and we will contact the League of Credit Unions and the Bankers Association to have the problem addressed. Your information will be strictly protected. The new form is readily available at any of the three IDS offices, as well as our display booths at either Brashers Auto Auction of Utah Manheim Auto Auction. Also for your convenience this form as well as all our other forms and products are available on our dealer website at www.idsinfo.com.