How To Legally Get A Vehicle Title

Vehicle Title Fraud

Here’s another video in our series on vehicle title fraud and this has to do with properly signing over titles. Look, if you have a vehicle title that needs to be signed by the owner, sometimes it’s tempting for a person to say, “Well, I’ll just sign their name on the back.” In some cases, the signature is not immediately verified. But many times, what will happen is if there’s not a supporting notarized bill of sale or notarized transfer form, the DMV will then reach out and contact that owner to ask them, “Did you sign the document?”

The Risk of Forged Signatures

Even if the new title’s already issued, they might do this after the fact. So you could find out later that your title gets revoked and you’re prosecuted for fraud because the DMV knows that fraud is a growing problem. Since they don’t verify the signature at the time of sale, what happened in this story is there was a tree company that had a bunch of trucks, and somebody fraudulently got a duplicate title by forging a document. So, let’s say you are a person or company that owns a vehicle, and that vehicle is in your name, you have a title in your name, and somebody forges a signature to get a duplicate title and then transfers it to themselves. Now they own the vehicle.

Challenges in Obtaining Duplicate Titles

A lot of times, you may run into some frustration, wondering, “Why can’t I just get a duplicate? Can I just call up, fax something over, or do it online?” The reason they don’t do that is because they want to make sure that the person getting the actual duplicate title is really the person who’s the owner. They don’t want to just be giving out your titles to anybody, and they do it for protection.

Understanding DMV Bureaucracy: Protection Over Convenience

It does make it a little less convenient for you to get a new title for your vehicle, but it does protect you from having problems with the vehicle later. So, the next time you’re complaining about how hard it is to do vehicle title paperwork and how much the DMV gives you the runaround, don’t despair. It’s made difficult for a reason. Yes, they are a little bit bureaucratic, but they’re also doing it to protect vehicle owners to make sure that there’s no title fraud and nobody is losing their vehicle.

The Importance of Title Transfer Restrictions

Look, you wouldn’t want it to happen to you. If you had your car in your driveway, and one day you come home and find out that the title’s not in your name because somebody forged a title, you’d wish for more complex restrictions on title transfers. So, it does make it a little harder when you have to do it legitimately, but it also protects you from title fraud.

Ensuring Proper Title Handling

Make sure if you are doing anything with a vehicle title—getting a new title, or a title recovery—that whatever is being done is done properly. If you’re not doing it yourself, if you’re hiring somebody or paying someone to do the title work for you, ensure you totally understand what they’re doing. Make sure you check on your own that it’s legitimate, legal, and appropriate for your scenario. Don’t take anybody’s word for it or a website’s word for it that what they’re doing is legal. Make sure you double-check it yourself and match up that what they’re doing is correct for your scenario so you don’t run into a problem later where you have legal issues or your title gets revoked.

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Elon Musk: Inefficiency in the DMV

Feedback Loops in Government Services
One way to think of economy is just in terms of feedback loops. The feedback loop for government-provided services to be excellent is weak because if, like if you have a government monopoly or anything, you as a consumer have no alternatives. Think of the Department of Motor Vehicles like the DMV. It’s very inefficient. You wouldn’t want the DMV to make cars.

Challenges with Government Monopolies
And if you don’t get good service from the government, what do you do? Who do you complain to? Competition breeds excellence because two organizations or more organizations are fighting to make the end consumer happy. One will gain market share if they do a better job than the other.

The Case for Limited Government Involvement
So, that’s why we really want government to do the least because it’s just got the broken feedback loop for improvement.

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Using Mechanics Liens To Get Titles

Why Mechanics Lean Titles Are Challenging
So why is it so hard to get a mechanics lean title for a vehicle and why is it not always the best way even to try to get a title? For many years, a lot of times repair shops, garages, towing companies have used the mechanics lean or towing lean process to get titles for vehicles. A lot of times they thought they were abandoned, and they wanted to get a title. They even sometimes took payments from outside parties to go through a fake mechanics lean process to get a title. A lot of times people with title problems will ask, “Well, can I just put a mechanics lean on the vehicle or I’ll just file for an abandoned mechanics lean?”

The Purpose of Mechanics Lean
Here’s the problem: the mechanics lean process is a privilege provided to licensed automotive repair shops in order to get paid for work that a customer stiffed them on the bill. So, somebody brings in a car to get fixed then decides they don’t want to pay. The mechanics lean is designed exactly for what the words mean—mechanics lean. It’s not really a title process; it’s a way to get paid for your mechanics work. However, that privilege is very frequently abused—or “abused” is a strong word, but it’s expanded to try to get mechanic shops to get titles for vehicles that maybe it’s a different story.

Government Tightens Mechanics Lean Process
So what the government has done, the different state DMVs have done, is to make the process very, very, very hard to do—harder than any other process. It’s harder than a bonded title, harder than a court-ordered title, harder than any other type because they want to make sure if the repair shop is doing it, that’s actually what they want to do. And here’s an example why. Here’s a very common case; you could look any day of the week, week of the year, and you can find more cases like this where some repair shop owners are doing title fraud.

Repair Shop Owners Committing Fraud
Those are the key words of the headline: repair shop owners title fraud. What they will do is make up fake work orders and fake records to say they’re filing a mechanics lean. They use the process to get titles for vehicles that maybe they bought at an auction with no title. Maybe their buddy bought it on Craigslist, maybe it has a lean they’re trying to get rid of, and because of the fact this process is very frequently abused by repair shops, the government knows this. The government is not stupid. They know that this process is a loophole that a repair shop can use to get a title, so they scrutinize every single one that comes through, and they audit them. They also use AI and algorithms to catch shops that are doing too many mechanics leans.

Government Scrutiny and Auditing
How do they find that out? Well, what they do is they look at your payroll, and they look at your sales tax you collect, and they know how big your shop is, right? So if you have one or two employees and you do sales tax that maybe says you work on three cars a day, 100 cars a month on average, they know that you should maybe do two or three mechanics leans a year based on the stats. If all of a sudden you’re doing more than that or you do three in one month, now they’re going to scrutinize that business. This is how people get caught, and this is what happened here, and they’re charged with a crime. This is actually a fraud crime in most states that you can get in trouble for.

Legal Consequences of Title Fraud
The Department of Motor Vehicles, which is titles, arrested these people for the scam involving illegal lean sales of vehicles. There were five vehicles—not that many, five vehicles—but they were $60,000 vehicles because they added up to $300,000. Some high-end exotic vehicles. Falsifying title documents is the same as stealing it. This is their compliance enforcement officer. So if you’re ever tempted to use fake records or fake mechanics lean, or let somebody do it on your behalf, this is how they look at it as the government: falsifying title documents is the same as stealing it.

Mechanics Leans as a Privilege
That’s what they say. Now, whether you agree with this or not, we don’t have an opinion about it; it’s just the way that it is. The government knows that mechanics leans are necessary for legitimate licensed garages to get paid for their cars. But they also know that when you give that privilege, some people are going to abuse it, and some people are going to try to get away with getting free cars. How bad is the penalty? Well, they could face prison terms of 20 years—20 years—and restitution, meaning that they might have to pay back that $300,000. Now they’ll probably plea bargain it down a little bit, but it’s still going to be probably a felony.

The Fraudulent Mechanics Lean Case
One of the people was the owner of S&M Auto Body, right? So another one was the owner of Sharp Transmission. Investigators say they falsified work orders for repairs and then sold the vehicles, right? So basically, they’re stealing the vehicles. They sold the vehicles to the same person. Fraudulent repair orders were used to complete lean sales for these vehicles, even though work was never done. Falsified title requests were sent to the DMV to get a title. Vehicles were personally used by one of the people; they sold it to one person, and he owned a dealership.

Using a Mechanics Lean for Legitimate Titles
So the way it works is a mechanics lean is a powerful tool, but because of the fact it’s so powerful and it’s a loophole, it will be scrutinized more than any other type of paperwork. So if you’re thinking about using mechanics lean to get a title, just make sure that it’s actually what happened, and what happened is somebody brought a car into a shop for repairs, you have a signed repair order, and they didn’t pay the bill. Now, if you have a vehicle you need to get a title for, and you’re thinking that’s the method, you have other ways that’ll work better: court order title, bonded title, prior owner contact—all these methods. You’ll find them on our website, and they’re actually easier than a mechanics lean.

Mechanics Lean Process Is Complicated
With a mechanics lean, you have to send out all kinds of notices, you have to do auctions, you have to do affidavits, you have to do more work than any other title method, and it’s probably not going to work because they’re going to scrutinize it and audit it.

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How Digital Car Titles Are Doing

So many of you have asked how exactly are we working on getting vehicle titles easier to get so they’re not, you know, paper documents old school and they’re more electronic. Well, as part of the eART Coalition, we are working state by state tirelessly to get states to get electronic titles. And here’s an example of how that works. This is a directive we’re working on with the state of Massachusetts, and here’s all the gatekeepers and the stakeholders that are working on this. Here’s us right here, car titles, you see.

Stakeholders Involved
And you also have ADESA, one of the largest auto auctions. You have TRAR, which is a major automotive company. You have Copart, which is a salvage auction. A lot of major players in the automotive and document industry, and we put together a project with each state based on what their rules are. This particular inquiry went directly to the lieutenant governor of Massachusetts, and it says under signatories, we would like to request your support in directing the registry of motor vehicles.

The Role of RMV
The RMV, that’s what they call it in Massachusetts, the registry, not the department, to adopt necessary rules or policies to facilitate the acceptance of electronic signatures on all documents required to complete motor vehicle title transactions. It’s real simple. And then we put the supporting information, we put all the different benefits.

State-Specific Title Processes
It’s tedious because we have to do it one state at a time. It’s not like there’s a national title system; every state has a separate vehicle title process. So this is how we do it: we go through the state’s rules and regulations, find out who handles it, put together a package for them, and also offer support.

Third-Party Involvement
As they’re doing this, they might need programming, they might need knowledge of other states, they might need information from third-party vendors like the companies you see on this list. All of those companies are involved with the title process, and the states want to make sure that third-party vendors are also part of the solution. So each of us are committed as a company to providing support for the state to be able to do this but also to make it easy for them to do it so that there’s no friction in this changeover.

Success in the Works
So this is how we’re working on it. It’s happening behind the scenes. It may take a few years to have this all done, but we’re doing it one state at a time. It’s been very successful. As you probably remember from previous reading, the state of California put a lot of their titles on the blockchain, which is a great start. And other states are doing the same thing. We will not stop until we make it easier for consumers to get titles for vehicles because we know how hard it is.

The Goal for Consumers
We know what kind of problems you have getting titles for vehicles. At the moment, we try to make it easier by being able to do the paperwork for you if you want, but in the long run, we want to make it easier for everybody so you don’t need to have that kind of professional assistance just to get a title for a car. Because if it’s your car, you’re supposed to have a title.

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The Difference Between A Lien And A Title For A Vehicle

Title vs. Lien
So in the course of determining ownership of a vehicle, many times the phrase title versus lien comes up in the conversation. So what is the difference between a title of a vehicle and a lien on a vehicle? Well, a vehicle title is a certificate, it’s a legal government document, looks like this, that is issued by a government agency. In most states, that agency is called the Department of Motor Vehicle or Motor Vehicle Department. Sometimes it’s called the Department of Transportation. Some states have a different name like Secretary of State.

State Agencies and Titles
Either way, every state has a government authority that issues titles. It’s not a document you can buy from a company. You can’t print one out from the internet, can’t download a document. It’s a physical document, it’s kind of like a $100 bill, right? You can’t print a $100 bill from the internet.

What is a Lien?
What is a lien? Well, a lien is a claim against the title. So if you have a title for a vehicle and it has your name on it as the owner, if you borrowed money against that vehicle either when you purchased it or later on, there will be a section down here for lien holder where it’ll be filled in the name of that lien holder. The lien holder puts their name on the title record to protect their interest, to make sure basically they get paid back, and make sure that you pay the notes on that car. In order for you to get that title document in your hands, you have to have that lien removed from the title record. That’s called a lien release.

Lien Release and Title Document
If the lien is showing on the title record, in most states the Department of Motor Vehicles cannot give you the title. In fact, the lien holder, the bank, the lender, is probably holding on to that paper certificate. And when you pay them their last payment, then they give that to you.

Lien Controversy: Failure to Notify DMV
So what is the big controversy about liens and lien releases? Well, here’s what happens. Many times when a lien is no longer active, whether it’s paid off, whether it’s a charge off, a write-off, bankruptcy, or some other type of dissolution, the lien holder does not give any notice to the title authority, to the Department of Motor Vehicles.

Lien Holder Process
If you pay off the loan, all they’re going to do is take that title certificate they have in their file cabinet, stamp it paid, sign it, and mail it to you. They will not update the records at the Department of Motor Vehicles. As far as they’re concerned, there’s still a lien on the vehicle. The lender figures, well, you have the title, we signed it, so you’re good.

Cost of Filing Lien Releases
Why wouldn’t the lien holder just tell the DMV the lien is cleared? Well, here’s why: it costs money. In order to file a lien release, they have to pay a fee. It might only be 10 or 15 or 20 dollars, but imagine doing that a thousand times a day for all your customers. It’s $20,000 a day, it’s $100,000 a week, that’s $5 million a year. If they could save that money by not doing lien releases, that’s free money in their pocket.

Problems Without Lien Release
Plus now they have to have extra employees that do these filings, send them in. They’re saving a lot of money. So they figure they send you the title, it’s stamped paid, you’re good. Well, what happens if you lose that title? Well, then that’s a problem. Or what happens if another person buys that car and the title doesn’t go with it? That’s a problem because now, as far as the DMV is concerned, there’s still a lien showing.

Other Issues with Liens
What happens if you have a charge-off or a write-off? Well, the DMV definitely doesn’t hear about that. The lender is not going to tell them about a charge-off or a write-off, and that car is going to be encumbered, it’s going to be blocked until that’s cleared.

How to Remove a Lien
So how do you get the lien removed? Well, there are only two people in the entire world that can sign a document to remove that lien. One is the lien holder, the other is a magistrate or a judge. So here’s how you do it. First, send a lien release request package to the lien holder. Don’t try to do this by phone, don’t try to do it by email, don’t try to do it by any kind of message. Send a package.

Lien Release Package
Here’s an example of a lien release package. It’s got a bunch of documents in it, put it all together—a lien release, a letter of non-interest, a declaration, an affidavit. Four documents. Send it by mail to the lien holder. Don’t email it, don’t scan it, don’t text message it, put it on a piece of paper.

Why Mailing is Important
Here’s why: that lien holder company, and you’ve heard us say this before, does not have a team of people. They do not have a department of people sitting around waiting to do lien releases for people. Everybody in that company has another job, they’re working on some other task.

Making it Easier for the Lien Holder
So if you just call them up and say, “Hey, give me a lien release,” yeah sure, whatever. They have other jobs to do. They’re not going to go find—think about how long it takes to find these papers. In fact, when we do lien releases for customers, half the job is finding all the right forms, not so much filling them in, it’s finding the right ones.

Facilitating the Process
The lien holder is definitely not going to do it. So if you want to do it for them, that will get it done faster. Get all the right documents and then fill them in. Put the VIN number, your name, your address, all the details so they don’t have to do any work.

The Importance of Minimizing Their Effort
Because as soon as that lien holder has to do any kind of work, they’re going to just forget it. They might tell you they’ll do it, but they never will. Sometimes they’ll even tell you, “We’re not doing this.” You want to mail it to the lien holder, and when you mail it to them, go the extra step. Put a return envelope in that mailer, that’s what we do. Put a return envelope already filled out with your name and address and a stamp.

Ensuring Smooth Processing
So literally that employee at the lien company, all they have to do is sign it, put it in the envelope, there’s already a stamp, put it out in the mail. They don’t have to do any work. They don’t have to find an envelope, find a stamp, go to the mailroom, anything. As soon as they have to do any kind of work, they’re just going to forget about the whole thing.

Dealing with Complex Cases
Also, if there’s any kind of gray area about that lien—if it’s a charge-off, if it’s a write-off—if they can just pull it up in the system, they type in your VIN number, oh, write-off, sign it, boom, send it. If they have to do research, find documents, that might keep them from giving you your lien release.

Lien and Title: Final Clarification
So remember, a lien and a title are two different things. A lien is a claim against the title. A title is the ownership of the vehicle. Also, a very common misconception—if you borrow money from a bank to buy a car, they’re not the owner of the car, you are the legal owner. They’re just a lien holder, they have a claim against it, but the car is yours. You own it.

Court Process for Lien Release
So as soon as you get that lien released, whether it’s through bankruptcy, charge-off, write-off, signed release, that car is yours. Now what happens if you mail the package to the lien holder and they don’t reply, they don’t respond? Well then, what you can do is file a petition to the court in the county where you reside. It’s called a court-ordered title.

Court-Ordered Title
You’re asking the court to declare you to be the owner of the vehicle free and clear based on a court order. You have to show them, “Look, I reached out to the lien holder in writing, they refused to comply, they didn’t object to it, they didn’t come get the vehicle, they didn’t do anything, so they’re abandoning the vehicle to me. I want you, the court, to make me the owner.” And then they can sign the lien release. If they sign it, it’s as good as gold.

Conclusion: Lien and Title Differences
Those are the differences between the two. Don’t confuse lien and title, two different things. If you have a vehicle that has a lien on the title record, you have to clear that up first before you get a title, even if it’s not your lien, even if it’s somebody else’s.

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