How to purchase a used vehicle with a lien?
 

Susan and I are considering the purchase of a 2014 horse trailer from a private party. The current owner is still making payments on it, so there is a lien involved. All the used vehicles I have purchased had clear titles, so I never had to deal with this before. The Maryland MVA web site simply says that to register the trailer I will need a lien release. So, I didn't find that particularly helpful.

Can anyone give me a quick outline of how this would go down?

Will I make a payment for the balance of the loan directly to the lien holder? Then I get a lien release from that entity, then get the title from the seller?

Seller needs to pay off the loan and get the release from the bank. From experience the bank will only deal with the person with the loan. I've had it happen same day but also 5-10 days.

This has always been a difficult situation in MD if it is anything like a car and the trailer is registered in MD. In order for the current owner to pay it off and get the lien release they may need the purchase money from you to do it. Once the owner pays it off then the bank sends them the lien release which looks like a duplicate title in MD, other states do thing differently depending on the state. Depending on the bank it typically takes about two weeks to get the lien release from the bank. This means if they need the purchase money from you, you will need to trust they will deliver once they have your money. The best way to handle this is to only give them upfront what is needed for the payoff then the balance at delivery. Ask if they can upfront as much as they can so less out of your pocket up front. Try to do the transacation at a branch of the bank that holds the loan as well. Also negotiate to take the trailer with you on their tags so you have it in your posession, this is probably going to be a sticky point to win though. They may also be willing to sign over the title to you with the payoff deposit so you at least have that. For registration in MD it will require the original title plus the lien release. Be sure to write up a contract spelling everything out.

Mark,

Do not do this, I have seen everything including a bankrupt lien holder, which delayed the process for several years.

It is the sellers responsibility to provide a clear title at the point of sale.

If the seller cannot produce a clear title move onto the next vehicle.

There is always another vehicle.

Good luck.

Mark,
Since you have sufficient land to park the trailer off public roads, perhaps you can get the following agreed to with the seller:

• Have the seller bring the trailer to leave at your property, and let them take their tags.
• Go to a branch of the bank holding the lien. Pay bank directly for the remaining loan balance.
• Have the bank hold the balance of the purchase monies in escrow, as well as the original title, already signed over to you.
• When the lien release is prepared, have the bank mail you both the title and lien release (or arrange to pick up in person). Simultaneously, they can send the monies balance to the seller.

Not sure how fussy the bank will be, but all this seems very doable to me. If seller won't agree to this process....walk away.

FWIW, MVA now requires the pink(?) lien release that looks like a title. They no longer take a release letter from the bank.


Buying a vehicle w/ a lien is fairly straightforward if not a little inconvenient. Meet the seller at the bank who holds the loan (call bank ahead of time to set this up); pay the bank the amount they are owed; pay the seller the difference. Have seller sign title over to you and give the bank your info. Bank should mail you the lien release title if they don't have it on hand (scheduling ahead of time they may be able to send the document to the branch you will use.) Fairly common situation.

Times 2 and has worked this way in VA. Most important part to lessen your inconvenience is to notify bank inadvance. That way they should be able to have everything ready in advance. IIRC horse trailers are $$$$ so be careful.

Maryland musty be different. Any car I ever bought with a lien (my own), I never got the title in hand until I paid it off.


I did sell a car with a lien to a guy in MD. I met him at a branch of his bank and the bank worked with my CU to make the payment. So they sent the title to his bank to hold till he paid it off.