Renewing A Collateralized Loan: Do we have to re-file the lien?>

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Renewing A Collateralized Loan: Do we have to re-file the lien?
by Sam Ott
BIO AND CONTACT INFO

QUESTION: If we renew a consumer loan that has an auto as collateral and give the customer new money do we have to re-file our lien on the auto?

ANSWER: If your original security agreement contains language that contemplates the security interest covering a renewal of the loan and the lien does not specify an initial loan amount, you are not required to re-file or file a new lien. Generally, the lien entry filing system utilized by most states does not list the amount of the indebtedness. If the indebtedness is listed on the lien and the total amount outstanding after the renewal exceeds the amount listed on the lien, you may need to re-file. Check with your attorney regarding your state law and court cases that may address this issue.

First published on BankersOnline.com 3/5/01

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