Paper titles are cumbersome and inefficient. States have different requirements regarding who must keep the documents; many vehicle owners lose the paperwork; and making changes can be time-consuming and expensive. You want to encourage car and truck owners to complete the title and registration process to secure your lien and prioritize your interest over other potential creditors.
In states where an Electronic Lien and Title (ELT) is available, the process is smoother for everyone. You and the other involved parties can manage the titling process electronically. And best of all, you could receive notification of perfection within a business day, depending on the jurisdiction. But ELT isn't available everywhere, and when it's an option, the process varies from state to state.
What is an Electronic Lien and Title?
Several states have adopted ELT systems to improve the vehicle titling process. But what is an ELT? It's a system that creates, saves, and alters vehicle titles electronically. In states with an ELT system, there's no need for paper titles.
How many electronic title states are there?
Twenty-four states have active ELT programs as of March 2020. Lender participation is voluntary in some jurisdictions and mandatory in others.
Ten states require lender participation: Arizona, Florida, Georgia, Louisiana, Massachusetts, Nevada, North Carolina, Pennsylvania, South Carolina, and Virginia. Another 14 states have voluntary programs: California, Colorado, Hawaii, Idaho, Iowa, Kansas, Maryland, Nebraska, New York, Ohio, South Dakota, Texas, Washington, and Wisconsin.
Electronic Lien and Title programs are evolving
There are two important takeaways for lenders in 2020: adoption of ELT programs is ongoing, and the rules and processes vary by state. For example, California currently operates a voluntary ELT program. But the state plans to begin mandatory participation in 2021, according to the DMV.
Each state chooses how and when to implement an ELT program and sets its own rules. The American Association of Motor Vehicle Administrators (AAMVA) created a standard for implementing and using an ELT system. But only six states currently use the AAMVA ELT Specifications: Arizona, Hawaii, Ohio, South Carolina, Texas, and Virginia. The rest have created unique standards or rely on various third-party providers.
Navigating different ELT rules across jurisdictions can be challenging. Instead of spending time trying to stay on top of this constantly changing and complex area of law, you can partner with Wolters Kluwer Lien Solutions to handle the lien and title management process efficiently anywhere.