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Industry Letters

Motor Vehicle Sales Finance Companies: Prompt Delivery of Certificate of Title

March 17, 2006

TO: Motor Vehicle Sales Finance Companies

RE: Prompt Delivery of Certificate of Title


The New York State Automobile Association informed us that its members are experiencing problems with lien releases. Consequently, we are reminding all motor vehicle lenders that New York law requires motor vehicle lienholders to immediately execute a release of their security interest and to deliver the release to the owner or any person authorized by the owner to receive the certificate. Section 2121 of the New York Vehicle and Traffic law specifically states:

“Upon the satisfaction of a security interest in a vehicle the lien holder shall immediately upon clearance of payment execute a release of his security interest in a manner prescribed by the commissioner and mail or deliver the release to the owner or any person who delivers to the lien holder an authorization by the owner to receive the certificate. Payment sufficient to satisfy the security interest by an insurer of the owner shall be deemed an authorization by the owner for delivery of the release of the security interest to the insurer….”  

Kindly note, that vehicle purchasers cannot register their vehicles without a Certificate of Title. Lengthy delays in obtaining title to such vehicles due to the tardiness of a lienholder to mail or deliver the release can cause financial harm or adverse legal consequences to purchasers and motor vehicle dealers. When a purchaser is unable to register the vehicle due to a lender’s failure to release its security interest, temporary registrations expire and the purchaser can no longer operate the vehicle legally. Purchasers disgruntled by delays in registering their vehicles have complained to the dealers from whom the vehicle was purchased, only to discover that the lender is the key to solving the delays.

The transfer of title to a motor vehicle cannot be completed in a timely manner without the cooperation of New York State motor vehicle lenders. Your cooperation in complying with New York Vehicle and Traffic law by mailing or delivering the lien release immediately upon satisfaction of the lien on a motor vehicle will be appreciated by all concerned and will alleviate the need for remedial action by the Department.

Should you have any questions regarding this letter, please contact Deputy Superintendent Regina A. Stone at (212) 709-5500.

Very truly yours,

Diana L. Taylor
Superintendent of Banks

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