Repossession

AUTHORITY:
Tenn. Code Ann. Sections 55-3-118, 55-4-10155-4-119 and 55-4-122

DESCRIPTION:

  • When a purchaser fails to meet the terms of a loan agreement, the vehicle may be repossessed by the lienholder.
  • A county clerk may routinely be presented with applications for title and registration for vehicles that have been repossessed by a lienholder and subsequently sold. There are a few scenarios related to repossession a county clerk may encounter:
    • The owner purchased the vehicle by contract (lien instrument) with a lienholder, titled and registered the vehicle, with the lien properly noted, but the owner failed to make agreed payments of the loan agreement (lien instrument). 
    • The owner purchased the vehicle but failed to title and register the vehicle
    • The owner purchased the vehicle, titled and registered the vehicle, but no lien was noted on the certificate of title.
    • After repossession, a dealer has held the vehicle for resale (on the back of the certificate of title, the lienholder will sign as seller to the dealer as buyer)
    • A vehicle is repossessed and there is no evidence of a certificate of title in any state, a repossession bond allows the lienholder to apply for title only as legal owner of the vehicle.
  • To support the application for title and registration and any applicable state and county fees, the following should be submitted:
    • Certification of Sales Under Special Conditions (always required)
    • Proof of sales and use tax paid (always required)
    • A true copy of the previous lien instrument, under which the vehicle was repossessed (not required, but could be included in supporting documents)
    • A copy of the court order (if the lien was not noted on the title, the lienholder may have to seek legal remedy to obtain the vehicle)
    • A copy of the notice of sale (not required if the lien is noted on the title)
    • Bill of sale or auction sales receipt (not required with repossession bond)
    • Odometer Disclosure Statement (required if vehicle is less than 10 years old)
    • Odometer Discrepancy Certification (required if vehicle is less than 10 years old, and the odometer brand is “not actual” or an odometer reading has been corrected)
    • Emissions compliance statement (if applicable)

NOTES

  • State law requires that each owner in the chain of ownership must title and register the vehicle (with the exception of dealers and insurance companies). If the previous owner did not title and register the vehicle and/or pay applicable sales and use tax, those fees and taxes are still due.
  • If more than one lien is noted, the first lienholder will notify all subsequent lienholders of the repossession. Subsequent liens do not have to be discharged to accept the application for title and registration.
  • If the fees are not paid, the county clerk does not have to issue registration plates.
  • Dealers may use dealer plates on repossessed vehicles held for resale.
  • When selling a repossessed vehicle out of state, some states may not accept Tennessee’s Certification of Sales Under Special Conditions form and the lienholder may need to apply for title only as legal owner of the vehicle.

RELATED TOPICS:
SALES UNDER SPECIAL CONDITIONS
DRIVE OUT TAG
TEMPORARY OPERATION PERMIT
TITLE ONLY

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