Vehicle Licensing Guide

Recording of Security Interest, Supplemental Liens, or Recording Transfer Of Lien
VLIC-113

PURPOSE:

To provide DMV personnel with information and instructions on recording a security interest (lien), supplemental lien and transfer of lien on a vehicle.

BACKGROUND:

When DMV receives an application for certificate of title to a motor vehicle, trailer, or semitrailer showing a security interest (lien), the certificate of title issued by DMV to the lienholder will show all liens disclosed on the application. The Certificate of Title is sent to the lienholder and the lender will retain the title until the entire amount of the security interest is paid.

A supplemental lien is a lien that is recorded on a Virginia title after the original title has been issued. The owner is responsible for having the new lien recorded by completing an "Application for Supplemental Lien or Transfer of Lien", (VSA 66) and paying the appropriate fee. All security interests are shown on the title in the order of their establishment.

In some cases, a transfer of lien from one lienholder to another may occur if the lien recorded on the Virginia title is sold to another lienholder. The VSA 66 is also used in this situation.

All titles with liens that are not electronic liens print at a centralized location at Headquarters (HQ), and are subsequently mailed to the lienholder the next business day, unless the lender participates in the E-lien program (titles with E-liens do not print until the E-lien is released).

NOTE: Lienholders may not pick up titles at the CSC when adding a supplemental lien or transferring a lien, since these titles will print at Headquarters in overnight batch and are mailed the next business day to the primary lienholder.

When a customer pays off the lien, the lienholder has 10 days to notify the owner and must send the title to the owner showing the lien as satisfied.

Upon receipt of the title, the owner has 3 options: he may (1) exchange the title with lien released at DMV for a clear title (lien removed) for a $10 substitute fee, (2) the customer may bring the title with lien released to DMV and have the lien marked satisfied in the system at no cost if no substitute title is desired or (3) the customer may keep the title that the lienholder has marked satisfied and choose not to have DMV release the lien in the system.

NOTE: Customers who requested DMV maintain an electronic record (CUST held) of a title with an existing lien (not an E-lien), who subsequently satisfied the lien, will be required to pay the substitute title fee to receive a paper title print since the title previously printed in overnight batch and was mailed to the lienholder.

Acquiring a "lien free" title once the lien is satisfied is an option that a customer has since it is not mandated by law or DMV policy that he do so. The lien satisfied by the lienholder on the face of the title is sufficient notice of debt paid.

NOTE 1: In the event the title showing lien satisfaction is lost prior to the lien being released at DMV, the lienholder may request a replacement title with lien intact for the replacement title fee, and the title is printed at Central Title Print (CTP), in overnight batch and mailed to the lienholder of record. If the customer requests a "lien free" title, he must obtain a letter of lien release from the lienholder and pay a substitute title fee before being issued a lien free title.

CUSTOMER REQUIREMENTS:

1. Submit one of the following:
   • Application for Certificate of Title and Registration, (VSA 17A), along with lien and ownership documents, or
   • Application for Certificate of Title-Manufactured Home, (VSA-17B), along with lien and ownership documents, or
   • Certificate of Title for a Motor Vehicle, (VSA 3), with lien information in section C completed; or
   • Application for Supplemental Lien or Transfer of Lien, (VSA 66), and the Virginia title.
     
     NOTE 1: Title does NOT need to be submitted if title is held by an electronic lienholder (see check box on VSA 66) and the supplemental lien is held by the same lienholder.
     
     A supplemental lienholder that is not also the primary lienholder must have the permission of the primary lienholder to record their lien. Possession of the title by the supplemental lien applicant will represent permission. If the title is held by the primary lienholder, the (different) supplemental lienholder must obtain the paper title from the primary lienholder in order to record the supplemental lien.
     
     When the title is electronic, this means that the primary lienholder must request a paper title from DMV, and give the paper title to the supplemental lien applicant. The supplemental lien applicant then uses that title to record their lien. A new electronic lien is established showing both liens (whether or not the supplemental lienholder is electronic) and electronically sent to the primary lienholder. As with paper titles, the supplemental lienholder does not get a title, either electronic or paper at this point.
     
     NOTE 2: If the customer's existing title is in the possession of a lienholder, the customer must submit that title to DMV before a new title may issued, in all cases EXCEPT as stated in "NOTE 1" above.
     
     NOTE 3: On rare occasions it may be impossible to secure the release of a lien from the secured party. In these instances process according to procedures in VLIC-3.615.
2. Submit proof of address. (Refer to VLIC-3.530.)
3. Pay appropriate fees.

DMV SERVICE PROVIDER'S PROCESS:

1. Verify accurate completion of VSA 17A, VSA-17B, VSA 3 or VSA 66.
2. Verify that the customer has an approved proof of address document. (Refer to DMV-177 and VLIC-3.530.)
3. Verify receipt of all required documents.
4. If the box on the VSA 66 is checked that indicates the lien is an Electronic Title, verify that the title information in DMV's records shows the same lienholder.
5. Ask the customer if he would like DMV to maintain an electronic record of the title (no paper title print).
   
   NOTE 1: A customer may request an electronic record be maintained by DMV whether a lien exists or not. An electronic record of the vehicle will be maintained until either the lienholder requests a title print, or the lien is satisfied and the customer requests a title print, or the vehicle is sold.
   
   NOTE 2: When customers request that DMV maintain an electronic record, and a lien exists on the vehicle, if the lienholder is not a participant in the electronic title program, the title will print in CTP overnight batch. The title will be mailed to the lienholder the next business day, regardless of the CUST held to ensure the lienholder receives the title. DMV will still allow the customer to ask for the title to be held electronically for those cases where the lienholder is a participant in the electronic title program.
   
   <<<<<REVISION
   NOTE 3: DMV can accept faxed Applications for Supplemental and Transfer Liens or Replacement and Substitute Titles (VSA 66). Additionally, DMV can also accept supplemental lien applications that contain a stamped or computer generated signature from the lienholder. In both cases, accept and process the supplemental lien if there is no reason to believe there is any fraudulent intent, the documents appear to be official and there is a business check attached from the lienholder who is applying for the supplemental lien.   END REVISION>>>>>
6. Collect applicable fees.
   
   NOTE 1: If lien is recorded at time of original titling of the vehicle no additional fee is required to record the lien other than the title, sales tax (if applicable) and tag fees.
   
   NOTE 2: If the lien is being recorded after the titling of the vehicle, the supplemental title fee is required.
7. Process the transaction.
   
   NOTE: All titles, with liens (not E-lien), will print in overnight batch at CTP and subsequently be mailed to the lienholder.

REFERENCE:

• Code of Virginia §§ 46.2-636, 46.2-637 , 46.2-640, 46.2-641, 46.2-643

CONTACT:

For additional information contact:

• Your CSC Manager/Assistant Manager; OR
• DMV DIRECT Help Desk at (804) 367-6646

PROCEDURE PROPONENT:

VSA/Titles and Registration Division