Removing a Lien in Colorado
If you've financed your car and are still paying off your car loans, there may be a lien on your title. That means you may not have complete control over some decisions regarding your car, such as the level of car insurance you must obtain.
Once your loans are paid in full, you can have the lien removed from your title with the Colorado Division of Motor Vehicles (DMV).
What Is a Lien?
A lien is a type of legal protection for a property owner. It safeguards him or her against the chance that he or she will not receive full payment for the property in question.
A lien on a car title gives the lienholder the right to repossess the vehicle in the event that the car buyer defaults on or ceases to pay his or her car loans.
Types of Liens
While liens on a car title are mostly associated with car loans, there are also other types of liens. Typically these liens will be held for unpaid payments on services rendered to your vehicle. Examples of other liens include:
- Mechanic's liens.
- Towing liens.
- Storage liens.
Who Is a Lienholder?
A lienholder is typically the person or entity that issued the car loan on a vehicle purchase. Usually, a lienholder will be a:
Until the car is completely paid off, the lienholder will typically be in possession of the car title. The lienholder's name may also appear on the car title until the lien is removed.
In the case of a lien being held for unpaid services on the car, the person or company owed will be the lienholder.
Removing a Colorado Title Lien
In Colorado, active liens can be released with the DMV on paper or electronically.
Paper Lien Release
A CO lienholder can release a lien:
- By completing the lean release section on the Colorado vehicle title certificate.
- By writing a lien release on the lienholder's letterhead. The lien release must include:
- Your vehicle's:
- Vehicle identification number (VIN).
- The names of all owners.
- The lienholder's signature.
- The date the lien was satisfied.
- Your vehicle's:
You can present either of these to the CO Division of Motor Vehicles office location to get a new title free of a lien. If the lien release is on a letter from the lienholder, make sure to bring your title certificate with you.
If you have lost your title, you will also need to apply for a duplicate title.
If your lienholder is a participating lender in Colorado's Electronic Lien and Title Program, your lender will simply notify the Division of Motor Vehicles of the lien release. Once notified, the DMV will send the lien-free title directly to you.