Pub. 1 2021 Issue 1

26 HOW TO RESPOND TO YOUR LENDERS DEMANDS REGARDING LIEN PERFECTION AND REGISTRATION By R. J. “JIM” SEWELL, JR., MTADA General Counsel LEGAL UPDATE R. J. “JIM” SEWELL, JR. MTADA GENERAL COUNSEL I t goes without saying that perfection of the lender’s lien on vehicles financed is a big deal. As we’ve stated in this column in the past the process is very simple. Always put the lien on the TRP. In most cases once the TRP is issued with the lien included and the fee is paid by the charge to the dealer’s account the job is complete and your contractual obligation to the purchasing lender has been accomplished. Bruce and I confirmed this fact during a conference call with the DMV just recently. Over the past couple of months multiple dealers have contacted Bruce and me about correspondence or telephone calls from their lenders demanding that the dealer see to it that “. . the title is issued with the lien shown . . .” for a financed vehicle and in some cases demanding the Retail Installment Sale Con- tract be repurchased if it is not. It is important to understand exactly what your con- tract with the lender says you must do. Those I have read, like Ally, FIB, and most others I believe, re- quire that the lien be perfected by the dealer. So the first step is to find your agreement with the lender and understand what the language of that contract requires. Those that I have read all have similar language to the following taken from a current Ally Retail Plan Agreement: Section 4. Registration and Titling. Dealer shall promptly register and title vehicles sold pursuant to a Contract in a manner sufficient to perfect in Al - ly's favor a valid and enforceable first priority se - curity interest in the vehicle. Dealer shall promptly complete the necessary forms and documents at the time of sale and forward them together with the appropriate fees to those public officials who are responsible for issuing the certificate of title or registration. If a first priority security interest in the vehicle is not perfected within ninety (90) days of Contract consummation, Dealer shall accept reassignment of the Contract and pay the full amount of the unpaid balance under the Contract to Ally upon demand. You will see that the Ally contract language men- tions “register and title” but the important language is the reason for the requirement – to perfect Ally’s first priority security interest. Although a lender may say that the dealer must see to it that the vehicle is registered, in Montana (other states where the