The lender agrees to accept a reduced amount in order to release the lien on the property and enable the sale to go through. (creditpilgrim.com)
When you pay off the car, the lender releases the lien and you own the vehicle free and clear. (sapling.com)
You can't sell short without your lender (and any other lien holders) agreeing to the sale and releasing the lien so that the buyers can get clear title. (realtormag.realtor.org)