Notice Requirement for Auto Lenders Using Electronic Titling Takes Effect Jan. 1, 2025

12/18/24

After a long and arduous path, OBL was finally able to successfully repeal language in ORC 4505.131 that was added to the Transportation Budget last year that significantly impacted the process when a motor vehicle with an electronic title is paid off. The process required the lender to provide a written notice to the vehicle owner asking whether the owner would like a physical, paper title or an electronic title, and if the individual chooses a paper title, getting and providing the paper title at no cost. This change diverged significantly from typical practice, where lenders issue a lien release letter, and vehicle owners have the option to obtain a paper title from the Bureau of Motor Vehicles themselves, if desired. It also was a logistical and administrative nightmare and left banks in a position to choose what law to violate.

OBL was able to negotiate and successfully the repeal of this language and replace it with language that will require lienholders to include a statement in lien release letters directing consumers to the BMV's website for additional information on electronic titles. The new language included in the bill can be found in ORC 4505.13(B) with the key portion excerpted below:

"The holder shall send written notice, which may be sent electronically, either at the time the security interest is placed on the motor vehicle or at the time the security interest is discharged, to the owner with reference to the web site address of the bureau of motor vehicles that includes the owner's titling options once the security interest is discharged. This notice may be included in a communication to the owner confirming that the security interest has been discharged.

The registrar of motor vehicles shall include on the bureau of motor vehicles web site the titling options, including fees, for the owner of a motor vehicle when the security interest in that motor vehicle is fully discharged."

The goal was to provide lenders with maximum flexibility to provide the notice in a communication already being sent to the customer. The notice requirement to provide notice to the customer will take effect January 1, 2025. The BMV has provided the following website address to be included in the notice: www.bmv.ohio.gov/titles-lien-release.aspx .