Blue light auctions are on the rise—but what are they? Also known as a “Title Attached (Delay),” “Title Absent,” or “Title Unavailable” sale, a blue light auction happens when the legal title is not physically present. The title still needs to be produced, usually within 10-30 days after the sale, so buyers need to be prepared to wait for that documentation. There are several platforms that facilitate blue light auctions, including Copart and IAA. Additionally, there are several different reasons why a vehicle may not have the title at the time of the auction, including administrative delays or a pending lien release.
How do Blue Light Auctions Work with a Missing Title?Blue light auctions can be held in person or online. When a seller lists a vehicle, the auctioneer will designate the blue light status if that title is not produced upon registration for the auction. The auction site will also list key details about the vehicle’s condition, age, damage, and so on.
When bidders register for the auction, they can review condition reports, photos, and any announcements being made by the auctioneers. The winning bidder takes possession of the vehicle immediately. Without that vehicle title, the buyer will not be able to register, repair, or sell it. Auction companies are responsible for ensuring that the title is obtained and sent to the buyer; if this cannot be completed within a reasonable timeframe (usually 30 days), then the buyer has the option to return the car or arbitrate the dispute.
Benefits to Blue Light Vehicle Auctions for Lost Car TitleThere are several advantages to buying a car through a blue light auction. First, these auctions are a great way to obtain vehicles at a very low price point. And not every blue light auction vehicle has major defects, further highlighting the benefits to buying through an auction.
Second, for sellers, these auctions provide an option to dispose of vehicles when they are having trouble obtaining a replacement for a lost car title. If the title is tied up in the administrative process but the seller needs to move the car quickly, this is a way to essentially buy some extra time to resolve the missing title issue.
Finally, buyers can also benefit from the quick timeframes that come with auto auctions. Though the auction company is a middle man in the buying and selling process, it greatly speeds up the process on both sides of the transaction. Auctions have created a secondary market for used cars, and the steps the auction companies take to disclose all known issues and vehicle history further create transparency in the marketplace.
What to Watch Out for: Missing Titles and Lost TitlesPursuing a blue light auction is not without its risks. The biggest issue buyers run into is that the title may be delayed—or even impossible to obtain. Though the auction company has a system in place to navigate the title acquisition process, it can still be a hassle when the vehicle’s title is not produced by the seller within the stated timeframe.
Buyers can arbitrate the title issue, which begins with filing a claim as soon as the seller’s window closes. Ultimately, if the title cannot be obtained, the seller can return the vehicle and essentially undo the sale, getting a full refund (minus any fees that may be assessed by the auction company). Though this is a safeguard, the buyer is still left with no vehicle.
How a Court-Ordered Title Can Help with Missing Car TitlesA court-ordered title can provide a solution. Buyers can file a petition with the county court to clear the title blockage and get the title issued in their name. This can be accomplished early in the arbitration process, or even after arbitration has failed, assuming the buyer is in a position to work through the process after the “return window” has closed with the auction company.
Obtaining a court-ordered title can be the difference between a successful blue light auction and starting over with a different vehicle. The team at CarTitles.com can help buyers obtain court-ordered titles for cases of missing or lost titles, and we are experts at navigating the requirements that vary from state to state. Click the button below to connect with one of our experts today.
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The Importance of Vehicle Background ChecksWhen you are purchasing a vehicle, even if they’re handing you a title, you want to make sure that you do some background checking on that vehicle. We’re getting more and more reports of consumers who are buying vehicles from private sellers, you know, Craigslist or Facebook Marketplace or Offer Up, and the seller actually has a title and they’re giving them a title. But what they’re finding is that title is fraudulent. And the person selling the car may have bought it themselves or they may have done this title scam.
Common Title Fraud MethodsWhat they’re doing is they’re either getting blank titles from some rogue DMV employee, or they’re taking another title from another vehicle, washing off the information, and typing on the information on the vehicle they’re selling you. And the vehicle they’re selling you turns out either has liens on it or it’s stolen or it has another claim against it or it’s an incorrect VIN number.
Recommended Verification ProcessWhat we recommend doing is whether you’re getting a title or not, you should run a very good background check on the vehicle when you purchase it.
Why Official Channels MatterYou don’t want to use one of these online services like Carfax or Bumper or similar services. Those are kind of not complete information. Matter of fact, their terms and conditions will tell you it’s not complete. You want to do it using official channels. It’ll take a little longer. You can’t really do it online. You have to do it with paperwork, but it will protect your investment.
Protecting Your InvestmentIf you’re spending thousands or tens of thousands on a vehicle, you don’t want to find out later that that money is all gone because a title was fraud. And even if they hand you a paper certificate, you could find out that they may have done a title pawn or some type of title lien that doesn’t show up on that paper or they used a fake title to get your money from you and then leave you hanging with that vehicle.
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Growing Scrutiny of Montana LLC Tax Avoidance SchemesThe entire Montana LLC title scheme is experiencing renewed intensity. This represents coverage actually from an NBC affiliate in Montana. Therefore, the investigations that various states are conducting are starting to reach Montana where they’re stating out of state vehicle owners using Montana LLC’s to dodge taxes. That’s a pretty significant matter. It’s not just to get a title, it’s dodging taxes. And what the coverage discusses is how other states are actually getting downloaded information from the Montana DMV in order to prosecute people who are using this method to improperly either evade taxes, evade registration fees, sometimes even evading inspection or emissions.
States Target Montana LLC Vehicle Registration StrategyLet’s examine what they say. First of all, they say that the Montana is a magnet for out of state vehicle owners looking to avoid hefty sales taxes and high registration fees. It also explains how there’s businesses specializing in this arrangement. Therefore, there’s companies that help you do this. So far, there’s been three and a half million vehicles registered in Montana, and the other states are starting to clamp down on this, or they have been for a while.
Multi-State Enforcement Using Advanced TechnologyCalifornia, Utah, Wyoming are all cracking down, but there’s other states as well, and they’re warning that the state law in that state requires registration and taxes if the vehicle is primarily operated in California. Therefore, even if you have a Montana LLC, if you primarily operate in California, you have to register in the other state. And the states are using algorithms and AI to do this. They’re using comparison of state databases to identify violators.
New Legal Presumptions Against Out-of-State LLC OwnersAdditionally, there’s a new law in some states that says if a resident controls a vehicle owned by an out of state LLC. This is Wyoming. The state presumes the owner owes registration unless they can prove an exemption. Therefore, if you have a Montana plate on your vehicle and you’re driving around in your home state and one of their license plate readers catches you or you get pulled over or you’re in an accident or even get a parking ticket, they’re going to presume presumption meaning that they’re going to presume you’re supposed to be paying taxes in your home state. Now, you can argue against it and you can say, “No, here’s the reason why.” Therefore, if you’re a legitimate Wyoming resident and you’re on vacation, that will clear you of that violation.
Montana DMV Cooperation and Information SharingAdditionally, the Montana DMV is also starting to get involved. Our motor vehicle department, this is an official with the Montana DMV. Our motor vehicle department is in communication with other states. Therefore, they’re starting to share their LLC information with the other states to see if they can help identify these people.
Serious Legal and Financial ConsequencesOfficials warned that registering vehicles using Montana LLC’s without legitimate ties to Montana can carry serious risks. Steep penalties, back taxes, fine, and even criminal charges if they determine residents have used a sham LLC to evade taxes. Insurance companies can refuse coverage because you have a vehicle registered out of state that you’re not insuring properly. Therefore, if you get in an accident or you hurt somebody, your insurance company might not pay the claim.
Warning About Associated Risks and Legal AlternativesTherefore, be aware that this so-called loophole has risk associated with it. Just like the old Vermont loophole did and they shut that one down and a lot of people got in trouble with that one too. Therefore, you want to use legal methods to get a title. Just be aware that your state is probably watching license plates being driven around from Montana or Delaware because Delaware does this too. And if they find that you are a legitimate resident of your home state with an out of state license plate, they may crack down on you.
Understanding Bonded Titles for Vehicle RecoveryWhen you are seeking a bonded title for a vehicle as a method to accomplish a title recovery, perhaps you misplaced the title, perhaps it wasn’t registered in your name, perhaps the title’s been damaged, you’re going to need at some point to purchase a surety bond. A surety bond is a certificate from a bonding agency which persuades the DMV to issue you a title when your documentation isn’t 100% complete. And a surety bond is provided to you by a licensed bonding authority and it’s something that you have to attach to your documentation for the DMV.
Where to Obtain Your Surety BondWhere do you get one? Well, the surety bond is issued by a surety agency and they have to be licensed. In addition, the cost of the bond is going to be the same no matter where you get it. It’s a fixed price by the government. In most cases, for most vehicles that are reasonably priced, you know, $10,000 or less, the bond is going to cost you about a hundred bucks. Maybe 150 if the vehicle is worth a little bit more money. You can actually get bonds instantly online from many companies.
Online Title Bond ProcessThis company will do an online title bond. You can normally print it instantly from their website. So, you can attach it and file right away. You don’t have to wait for it to be mailed. You don’t have to wait for any kind of processing. As long as the circumstances are pretty straightforward. You can usually get the bond instantly. You put in the state where you’re getting the bond, you put in your vehicle information, it’ll calculate it, give you a quote, and if you want to go for it, just click enter.
Choosing the Right Bonding CompanySo, if you’re doing a bonded title for a vehicle and you want to get a surety bond, many insurance companies will sell them, many bonding companies will sell them, but sometimes they’re not as title friendly. Many bonding agencies sell bonds for like construction companies or attorneys or other contractual requirements and they may not be as familiar with the surety bond for a vehicle title process. So, here’s a source. You can go online, click the link probonds.com, put in your state, put in your information, and it’s pretty straightforward, and they know how to do bonds for vehicle title applications.
DMV Bureaucracy Serves a PurposeWhen you encounter challenges at the Department of Motor Vehicles and struggle to process a title or obtain clear answers from their staff, one important factor to understand is that all the inconveniences and administrative barriers they place before you, along with the seemingly endless runaround, exists for legitimate reasons. Much of this complexity stems from their efforts to combat fraudulent activities. Their intention is to ensure the title acquisition process remains sufficiently challenging to prevent individuals from obtaining titles for vehicles they have no legal right to possess. They are safeguarding the interests of previous owners.
Export Vehicle ComplicationsRegarding export vehicles, numerous clients encounter significant obstacles when attempting to export a vehicle without proper documentation, often thinking to themselves that since they are exporting it, the requirements should be minimal. However, there are compelling reasons for these strict requirements. Many vehicles that have been stolen or carry various types of legal encumbrances, such as liens or designations as junk or parts-only vehicles, are frequently utilized as export assets because individuals believe that if they do not need to obtain a title domestically, they can simply export the vehicle and transport it to another nation.
Customs and Border Protection InspectionsUnlike other categories of commodities, the Customs and Border Protection agency conducts thorough inspections on vehicles during the export process. Typically, customs officials focus their inspection efforts on items entering the country. For instance, when someone ships a truckload or container of bananas into the United States, customs officials will examine the shipment to verify its safety, confirm proper documentation, and ensure everything meets legal standards. One might question why they would concern themselves with items being exported, since those items are departing the country.
Vehicles receive special attention because if a vehicle leaves the country and happens to be stolen or carries a lien or other legal complications, authorities want to halt that transaction immediately. This vigilance proved effective in a recent case.
Real-World Example of Export Fraud PreventionIn Norfolk, Virginia, authorities discovered containers holding 18 stolen vehicles destined for overseas shipment. This represents a common method for individuals to extract value from vehicles they have obtained through improper means, whether stolen, encumbered by liens, or designated as parts-only or junk vehicles, especially when they lack the appropriate paperwork. They attempt to bypass domestic requirements by shipping these vehicles internationally. This explains why customs officials conduct inspections on vehicles being exported.
Legal Requirements for Different Vehicle CategoriesIf your vehicle is classified as junk or parts-only, regulations typically require the vehicle to be disassembled into major component parts, specifically into 18 different components, before it can be legally shipped. If the vehicle carries a lien, you must obtain explicit permission from the lien holder. Therefore, numerous rules and requirements govern this process.
Proper Export ProceduresIf you plan to export a vehicle, ensure you follow the appropriate channels and procedures. Our website, cartitles.com, provides comprehensive instructions for completing export paperwork for vehicles. We also offer consultation services with a certified title examiner who can guide you through this complex process.
Understanding DMV Protection MeasuresThis explains why you sometimes encounter difficulties with DMV procedures that may seem unfair or excessive. However, these measures exist to protect either the previous owner from unauthorized vehicle transfers or to prevent vehicles from being improperly transported to other countries.
Bill of Sale LimitationsRemember that while having a bill of sale is beneficial, this document alone does not establish anything definitive about ownership rights. A bill of sale merely demonstrates that you provided someone with money and they were willing to provide you with a receipt for that payment. It does not prove they were the rightful owner. It does not prove they possessed the legal authority to sell the vehicle. It simply serves as a receipt showing you gave someone money.
Final RecommendationsTherefore, you want to ensure you follow the correct process to obtain proper ownership documents, enabling you to legally title and register that vehicle.
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