Need to get some banks involved to insure your security as either buyer/seller. Whoever holds the loan probably holds the title but a bank can usually work out what they need to get it released upon satisfying the note and then transfer that title to the buyer.
If you're the buyer, start with your bank. If you're the seller start with the loan company and ask them how they wish to handle payoff/release lien. It's a fairly common deal but don't rely on chat boards for all info, check with bank/loan company to be sure.
If the seller has a local lienholder, you make the check out to the lienholder, who will take the proceeds and pay off the loan, and give the balance to the seller, and the title to you. Do not in any case pay the seller directly unless he can provide you with a clear title.