Vehicle Titling Out of State One of the most common questions that comes up is whether you can register or title your vehicle out of state. You live in a certain state and you want to title it somewhere else. Well, the first question to ask is why would you want to do that, because depending upon the reason could determine whether you can or can’t. Now in most states, they don’t give out titles or registrations to out-of-state residents. The federal guidelines for DMV say that in order to get a title in your state, you’re supposed to be a resident of that state. If you’re not a resident of the state, they’re going to ask you, “Well, why do you want to title it here?” Registrations and titles are for use in that state.
Proving Residency Maybe you have a piece of land there, maybe you have a business there, maybe you vacation there, maybe you’re a snowbird and you come from New York down to Florida. There are certain exemptions; however, you have to prove what’s called a domicile or a nexus to that state, and if you don’t have a legitimate connection to the state, you’re probably not going to have your application approved.
State Titling Complexity The reason you want to go to a different state is because it’s easier to get a title there. Well, there are two problems with that argument. First of all, there are no easy states. Everybody thinks their state is hard because that’s the only state they have experience with. Every state is going to be hard to get a title unless you have all the right paperwork, unless you have the actual title certificate from the last owner properly signed over to you. It’s going to be hard to get a title because that’s what you’re supposed to have, and if you don’t have it, technically you’re not supposed to get a title at all.
Titling Processes But there are some processes you can use in order to get a title. Sometimes those are simple, but most times you have to jump through a bunch of hoops. For example, in New Jersey, they have the process where it’s a defective title document process. It’s 15 steps. It may take you months. In some states, you can do a bonded title, but it’s not going to be easy because getting a title is considered to be like getting money out of the bank—you have to have the right credentials.
Avoiding State Requirements Why would you want to go to another state? Well, if you think it’s going to be easier, that means you’re trying to avoid something difficult in your state. That’s the key word—avoid or evade. If you’re trying to evade something in your state, like an inspection or taxes or paperwork, trying to go out of state is going to get you into trouble because when you get that title from out of state, you have to do one of two things: Either you have to transfer it to your state, or you have to drive around with an out-of-state plate in your local state.
Driving with Out-of-State Plates If you drive around with an out-of-state license plate, the problem is you’re going to get pulled over. Because when you are seen driving a vehicle with an out-of-state plate on a regular basis, at some point you’re going to get pulled over. They’re going to start asking you questions: “Why didn’t you register in your state?” Most states have a law that says you have to title or register your car in that state within a certain period of time—not from when you bought the vehicle, but a certain period of time from when you moved to the state. So if you already lived in the state for 30 days, the clock is over.
Schemes and Insurance Issues There are a lot of schemes that people use, like forming a corporation in another state, putting it in that corporation’s name, and then driving it around. The problem is you have to figure out where you’re going to get insurance. Your insurance policy is going to ask you for what’s called a garaging address. A garaging address doesn’t necessarily mean you have to have a garage; it just means where your car is parked on a regular basis.
Garaging Address and Insurance Complications If, let’s say, you get a corporation in Oklahoma and title it in Oklahoma, your insurance company’s going to say, “Well, where do you keep the car?” If you say Oklahoma, okay, that matches your registration. But what happens if you live in Georgia and every day you park your car in your driveway in Georgia? If something happens to that car and you have an insurance claim in Georgia, they’re going to ask you, “What were you doing in Georgia?” If they find out that you improperly gave a wrong garaging address, they’re going to decline your claim and you’re not going to get paid.
Catch-22 and Legitimate Reasons On the other hand, if you try to put Georgia as your garaging address, they’re going to ask you, “Well, then why are you titling it in Oklahoma? What’s the reason for that?” It’s a catch-22. So, the short answer is, unless you have a very good legitimate reason to title in another state, like you have a second property there or you have land there, trying to jump around different states in the long run is going to get you into trouble.
Task Forces and Penalties There are a lot of interstate task forces—agencies that are collaborations between different states’ departments of motor vehicles, state police, tax authorities—that are looking for people trying to use loopholes to get their titles in other states. In most cases, using the loophole ends up costing more money and more hassle, and it’s not even as good as just biting the bullet and doing it in your own state.
Schemes and Criminal Offenses Many people feel like they want to get away with something, so they’ll use these loopholes. But many of them are now getting prosecuted. We’ve posted news stories before where some of these schemes of forming LLCs in other states, putting titles in those names to avoid taxes or avoid inspections, have resulted in people getting into legal trouble. It’s just a matter of time before, when they go back and audit your ownership, they could go back four or five years and find out that you avoided taxes. They’ll charge you penalties and interest, and in some states, it’s actually a criminal offense because you avoided taxes.
Legal Advice and Forums Another thing you might want to consider is anytime you’re looking to do something with out-of-state documents and legal matters, you might want to get advice from an attorney. Sometimes you can get something from an attorney where you may not be able to find the right answer online. Some of these online forums or websites or chat boards will tell you, “Yeah, just go and do this loophole,” but they may not know what they’re talking about. A lot of people are getting into trouble because they didn’t know what they were doing was improper—they just saw something on a website.
Legitimate Cases Food for thought: out-of-state may seem like it’s a good thing, but just make sure that it’s for a legitimate reason. Look, if you’re truly a snowbird and you live in Illinois and you go down to Palm Beach every year for the winter, and you have a car down there, that’s fine. That’s probably legitimate. But if you’re in New Jersey and you have a car you can’t get a title for, and it’s salvage, and you think maybe you can get an easier inspection in North Carolina, it’s not going to work.
Consequences of Schemes Even if it seems like it’s going to work, it’ll cost you more money and then get you into trouble. Just food for thought, because we see this happening a lot. It doesn’t really affect us either way, just make sure that you know what you’re getting into if you’re trying to jump around states. Most states have a law on the books that makes it a crime—a misdemeanor—to evade responsibility or requirements for titling a vehicle by going to another state.
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Common Questions on Bill of Sale and Title One of the most common questions we get has to do with a bill of sale and a title and how they relate to each other and how you can get a title with a bill of sale maybe or how they’re different. And this is a great YouTube video from a channel that follows court cases. This YouTuber gets live feeds and recordings from various court cases around the country, and they play them on YouTube, which gets a lot of views. In this case, the person had a vehicle that was impounded by a towing company.
Towing Company Title Verification Some of you may be familiar with this, where your car is impounded, and you try to get it out, but the towing company makes you show a title in order to release your car, and for good reason. You don’t want somebody to get your car out of impound just by paying a fee, and it’s not their car. So, the towing company is going to make sure they’re only giving the keys to that car to the actual owner by verifying the owner by looking at a title.
Bill of Sale vs Title at the Towing Yard They’re going to look at the title for the vehicle and make sure your name is on it before they hand over the car to somebody that just says, “Hey, give me that car out of your impound.” So, what happened with this person in the video was they went to the impound yard to get their car out after it was there for a few days. They wanted to pay the fee, but they didn’t have a title; they only had a bill of sale. And the towing company said, “No, we’re not giving you this car because we don’t know if it’s your car.” So, the person had to leave.
Fees Accumulate as Title is Verified To take the car, and in the meantime, the towing company racked up more storage fees. The person came back a few weeks later with a title, and now they had to pay more money. This person is in court complaining that they shouldn’t have to pay this money because they had a bill of sale. So, watch what the judge says. This is a very good legal description of how the government, the courts, and the DMV feel about a bill of sale.
Bill of Sale vs Title Legality “But I have a bill of sale; I bought the… I don’t care. A bill of sale is something somebody could write on the back of a napkin. Well, I’m not going to register my vehicle with the state.” So, you’re not the owner of it according to the state. You can see how the government looks at titles and bills of sale. If you don’t have your name on the title record with the government, they don’t consider it to be yours. A bill of sale is just a receipt that you gave somebody money.
Notarized Bill of Sale and Ownership You might say, “Well, it got notarized.” But who notarized it? Who signed it and verified that was the person? This is a very good example of a judge who’s not part of the DMV, not really part of the title system, who looks at the case and says, “Look, I don’t care if you had a bill of sale. Anybody could write that. Anybody could write up a bill of sale. It just means that somebody took your money. That’s all a bill of sale means. It’s somebody who’s willing to take your money and give you a receipt for your money.”
Ownership Issues with Bill of Sale It doesn’t prove any ownership. It doesn’t prove they own the vehicle; it doesn’t prove you own the vehicle. For example, I could go to Enterprise Rent-a-Car right now and rent a vehicle. I could drive it off the lot, put an ad on Craigslist or Facebook, and say, “Hey, I’m selling this car without a title. I’ll give you a bill of sale.” I give somebody a bill of sale; it doesn’t mean they’re the owner because just because I gave them a bill of sale, it doesn’t mean I was the owner. I didn’t have the right to sell it to them.
Hidden Crisis in the Automotive IndustryThere is a hidden crisis about ready to hit the automotive retailing industry and it’s related to the pandemic even though that’s been over for years. The reason is there will be fewer lease returns and fewer used cars for that matter. Remember back in 2021 and 2020 when dealerships were shut down for the pandemic, there weren’t as many cars sold or leased. Remember, used cars—the used car inventory doesn’t come from a used car factory; it comes from vehicles that were sold two or three years ago, now coming back into the marketplace.
Impact of 2021 Leases on 2024 MarketIf you had a three-year lease on a car, which is the most common lease term, in 2024, leases that are coming due were put out in 2021. In 2021, there were much lower volumes of vehicles sold or leased. So, if you’re a dealership, you normally would have a big off-lease pool of vehicles that you can draw from. In 2024, you’re not going to have that pool, which means used car inventory is going to be very difficult to come by. People who bought cars in 2021 didn’t lease them—they bought them. There were fewer cars sold that year, but also, those people may keep them longer than before.
Slim Used Car Market AheadSo, it’s likely that the late-model used car market is going to be very slim for the next 12 to 18 months. What is that going to mean for the industry? Automakers will have a challenging future, and leasing rates fell from 1 in 3 to 1 in 6—half the number. Certified pre-owned cars will see a reduction in supply because there’s less of them. What’s that going to do for prices? Well, prices might go up on used cars again, which might make it difficult if you’re in the used car market. It might also be a good time to look at a new car versus a used car.
Outlook on the Future of the Car MarketHow long is it going to last? Well, according to JD Power, one of the largest automotive consultants, the used vehicle supply won’t return to 2023 levels until the end of the decade—that’s five to six years away. So, if you’re looking at the car market this year, next year, or down the road, you might want to hang on to the used car you have if it’s a nice one, or consider a new car that might not be much different in price from the used car that might be in the marketplace.
Future Considerations for Car BuyersInterest rates are still going to be high, so if your vehicle inventory in your family is such that you may need to replace one or more of your vehicles, consider what the marketplace is going to be like in the next few years to make plans for which car to consider, which car to buy, or which car to keep.
Misdirected Transfers in Financial FraudOne of the scariest things we’re seeing in financial fraud are these misdirected transfers where it could be a title company doing a real estate closing. It could be a purchase from a company. We had one a couple weeks ago with a fire department. A municipal fire agency was purchasing a fire truck, and they sent their money to pay for the fire truck to the wrong place. And how does this happen? It happens where hackers will break into a system or an email of a company. It could be a small company.
Compromise of Email ChainsIt doesn’t have to be any of the companies involved in the transaction. It could be an associated company, could be like a home inspector or even a contractor. On these email chains, they’ll have all the information about an upcoming purchase. For example, in a real estate transaction, there are lots of people involved in that transaction: home inspectors, mortgage brokers, insurance companies, utility companies, electrical, cable TV. Any of these companies involved in the closing will know when the closing is happening. So, a lot of these emails are CCed to all these people so everybody knows when the closing is happening, how much it is, and what the details are.
Cybercriminals Targeting TransactionsThese hackers will gather up all this information and, at some point, they’ll say, “You know what? We’re going to attack this transaction.” And what they do is, when the time is right, they send an email to the person paying the money, saying, “Here’s where you send the money. Here’s your wire transfer.” They make the email look like it came from the right place. They have all the right names, all the right logos, all the right information.
Consequences of Misdirected PaymentsThe poor buyer sends their money to a hacker, and it’s overseas, and it’s gone. The same thing can happen in business if you’re buying a large piece of equipment. The hackers will monitor it, maybe the supplier’s some low-level tech person. They get the information, they send the buyer the wire transfer information, and it’s wrong. So, this cybercrime is very, very difficult.
Simple Prevention TipThere’s an easy way to prevent it: if you just send a test payment before you send any big amounts by wire transfer. Send 100 bucks, 50 bucks, whatever it is, and make sure that it goes through properly to the right place. For the kind of money we’re talking about, it’s very important to prevent it. Because if you don’t prevent it, you could lose all your money for your down payment on a house. If you’re a business, you lose your purchase of the equipment. In the case of that fire department, you know that was money they had saved up for years to buy a new piece of apparatus, and without that, it put their community at risk.
Practical Steps for ProtectionDo this test anytime you send a large transaction. You can check out our website, verifyescrow.com, for instructions. There’s no cost. It’s something that is just a free checklist of how to do a large transaction. You want to send a test wire transfer before you send anything large and then verify with the actual recipient that they got that small payment before you send the whole amount.
Montana LLC Loophole Scam Update Okay, here’s another update on the infamous Montana LLC loophole scam. As we talked about before, there’s a lot of enforcement action from the government regarding this evasion scheme. This is the latest, and we were referred to this by a conference call we had with some government agents and DMV employees. We’re a member of a coalition called EART (Electronic Automobile Record Transfer), which is a coalition of vendors, companies, and DMVs trying to implement electronic titles.
Government Crackdown on the Loophole In one of the conference calls, somebody brought up the Montana loophole, and they said their state is actively enforcing against it. They also mentioned an article showing that California is doing the same thing. The person who mentioned it wasn’t from California but from another state, which I won’t mention. This Montana LLC scam involves individuals with a title problem or those trying to avoid paying sales tax, skipping inspections, or circumventing regulations. They form an LLC in Montana, put the car in the company’s name, get a license plate, and drive around with it. Montana has low requirements for inspections, no sales tax, and easy title processes.
Legal Ramifications and Increased Scrutiny Many people trying to streamline their titling process, lower costs, and reduce paperwork use this loophole. However, in many cases, it’s completely illegal, and other states are catching up on this—just like they did with the Vermont loophole, which was not technically illegal but an improper out-of-state registration. This article highlighted that states are cracking down on this directly with consumers. Trevor, a California resident, was surprised when state investigators and deputies arrived with a search warrant to seize his car and phone. The crackdown comes from states realizing they’re losing sales tax and that improperly registered cars are on their roads without the correct inspections.
Methods for Tracking Loophole Violators States are discovering these cases through three main methods:
Insurance and Title Complications The insurance issue creates a catch-22. If you tell your insurance company the car is in Montana but it’s in California, they’ll deny coverage if there’s an accident. On the other hand, if you tell them it’s in California, they’ll ask why the car is titled in Montana. Either way, this puts you at risk of losing your insurance or facing penalties. All 50 states, including territories like Guam and Puerto Rico, have this issue on their radar. They are using ALPRs, AI monitoring, and local police to run background checks on suspicious registrations and titles.
Legal Consequences and Caution This is a serious nationwide issue, with people facing tax evasion charges, penalties, and even prison time. Authorities are cracking down on LLC-owned vehicles from Montana that are operating in other states. If pulled over, drivers could face questions about their licenses, insurance, and the LLC’s purpose. These loopholes can lead to severe consequences, including imprisonment.
Awareness If you’re using this loophole to avoid taxes, inspections, or paperwork, there are legitimate ways to handle titling issues without risking penalties. We’re not giving legal advice, so before attempting anything, consult an attorney to understand potential risks. Cases of arrests and prosecutions related to this scam go back five or six years, so ignorance of the law won’t be a defense.
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