What must a dealer do if they sell a liened vehicle?

When a dealer sells a liened vehicle, the correct action is to mail or transfer funds to the lien holder. This step is essential because the lien represents a legal claim on the vehicle by the lender, and it must be settled for the title to be transferred to the new owner without any encumbrance. By sending the funds to the lien holder, the dealer ensures that the existing debt associated with the vehicle is paid off, which will typically lead to the lien being released.

After this transaction, the lien holder will then provide the necessary documentation to clear the lien from the vehicle's title, allowing the dealer to facilitate a clean transfer to the new owner. This process is crucial because selling a vehicle with an unresolved lien can lead to legal complications and the potential for the new buyer to face issues if the lien is not cleared.

In this context, other options may involve steps related to managing a lien, but they do not directly address the primary responsibility of dealing with the lien in the course of completing a sale. For instance, removing the lien prior to sale is generally not possible unless the lien is paid off, and simply notifying the DMV or providing a new title application doesn’t resolve the crucial obligation to settle the debt with the lien holder first.