Have you ever tried to export a vehicle and wondered why the Customs and Border Protection (CBP) needs all of those documents and forms? Did it seem like a very complex and bureaucratic process? Well, in the moment of trying to export a vehicle, you may not have thought that that process was beneficial to you, thought it was just a pain in the neck or something that really didn’t have any purpose. However, after seeing this article and seeing this reason for having these documents, you’ll probably see that it’s a good thing to have this customs process be as complicated as it is. Leave your comments below and let us know what experience you’ve had with exporting a vehicle and what questions you have about the process.
The HS7 FormWell, here’s one of the forms: the HS7 form. It’s the infamous document that all exporters hate to see, hate to have to face. It’s one of many that are needed to export a motor vehicle, and motor vehicles are defined very clearly by CBP. You know what all the definitions are. Exporting a motor vehicle: the 19 CFR is the section that’s jurisdiction over all of this. Basic requirements of pursing and attempting to export a used self-propelled vehicle shall present to customs at the port of exportation both the vehicle and required documentation describing the vehicle to include the VIN. The required documentation normally is going to be the title, and it must be presented 72 hours prior to export because they’re going to do a background check on the vehicle, and that’s going to be important here in a minute. You’ll see why that’s an important part of it.
Documentation RequirementsAnd as you can see in the second section, the owner must provide to customs the original certificate of title or certified copy and two complete copies of the original. So, you need the original title and two photocopies. If there are any third-party ownership claims, like a lien or another second owner, you have to have it in writing the description of the vehicle and a release of that lien holder or leased vehicle. So, it’s pretty clear what you need. You need the HS7 form and a couple of other documents.
Importance of Proper DocumentationThe reason why is, and a lot of times exporters or clients will say, “Well, look, this vehicle has no title. It’s never been titled, hasn’t been titled in a long time.” Well, that’s the trick. Here’s the reason why this is important: a stolen 1968 Chevrolet Corvette was found 37 years later, right before being shipped to Sweden. So this 1968 C3, they used to call it a Stingray, had the little four louvers in the front quarter or the front fender. It says here nearly everyone wants to get their hands on one of these. It was a great car. 1968 was one of the probably the pinnacle of the Corvette model line.
Case Study: 1968 Chevrolet CorvetteSo, here’s the car. In 1969, the owner had their worst nightmare. He lived in New York. The car was stolen. He had just gone through a divorce and paid $6,000 to keep the car in his name. He went years without knowing what happened to the car. After years of unknowns, luck finally turned up. The Corvette had been stolen, and the owner tried to ship the vehicle from California to Sweden. U.S. Customs had to complete a routine car check for the car to be shipped to Sweden. As it turns out, the 1968 Chevrolet Corvette had never been retitled. This is important. A lot of times, if you say, “Well, this car has been off the road, it hasn’t been titled, it’s a barn find, it’s in a field,” it doesn’t mean that it’s a legitimate vehicle. That’s the reason you want to get a title.
Importance of a TitleThis owner who’s trying to export it, who knows what their knowledge is. They may have just bought it off of Craigslist or eBay or Facebook. Maybe they didn’t know the car was stolen. It doesn’t matter that it was stolen 37 years ago. These records persist for these vehicles. So the fact that this is a very difficult process is actually to your benefit because if it was easy just to ship or next board a vehicle or to get a title, then your vehicle wouldn’t be protected. Think about this guy who had his car stolen in 1969. It was only a year-old vehicle, barely, and now he has the car back. Think how much more that car’s worth. He may have paid $6,000 for it in 1968. Those cars are worth tens of thousands, sometimes six figures, and this paperwork protects you. So, if you’re purchasing a vehicle without a title, just remember that until you have a legal title document printed by the government with your name imprinted on the certificate, you’re at risk because you don’t know what other claims are going to pop up out of the woodwork. So, you want to make sure that you perform your proper due diligence on any vehicle before you take any action.
Due Diligence and Legal ProtectionLook, this exporter may have been an innocent bystander. Who knows if he had any awareness that the vehicle was stolen? Probably didn’t. If he’s trying to export it, he knows the government’s involved. If he knew it was stolen, he probably wouldn’t be presenting it to the government to check out 72 hours in advance. The 37 years it was missing, who knows where it was? Maybe it was in a garage. Maybe the person who stole it figured, well, if I hide it for 10, 15 years, it’ll be forgotten about. Maybe it went through two or three owners. Maybe it was never put on the road. I’m sure they’ll be doing an investigation now to see how far removed the current owner is or the exporter is from the thief. Did they live near New York when that happened? It’s being exported from California. But if they can do a background check on that person and find out, well, they lived in New York near where it was stolen, that guy’s probably got some problems. But if there’s a lot of owners in between and kind of a murky history, then it may not come to that.
The Importance of Stories and ProceduresThink about your story as a vehicle buyer. Well, I bought it from a guy. He didn’t have a title. He got it from a guy. It was in a barn. Think about all the stories that you hear from sellers. The old man had it, and he died, and his kids didn’t want it. He sold it to me. That’s the reason for having all these forms and having to follow all these procedures from Customs and Border Protection. So, vehicles issued an original certificate of title, you have to have the title. If there is no title, you have to have a full background check, authentication of documentation. And as you can see, the USCBP is going to do all this. They did it for this guy’s car, and he got it back.
ConclusionSo, consider this due diligence performed by the government, whether it’s a VIN inspection by your police, whether it’s a customs background check, protecting your interest on a vehicle so you don’t end up with something that’s stolen. Or if you do have something stolen, it gets returned to you, the rightful owner. And if you’re a lien holder and you lent money on a vehicle, you also don’t have somebody who’s selling it or shipping it, because as it says right here, if there are third parties, they have to sign off. So, if you lent somebody money on a vehicle, we had a case a couple of years ago where an owner sold a motorcycle to somebody, and they let him pay half of it up front and then $100 a month to pay off the rest. And they rode it for a couple of months and stopped paying. Well, that evidence, that ownership was reflected on the title, and they were able to retrieve it before it was sold or dismantled or taken apart. So these title documents are very important to protect your ownership on a vehicle. Make sure that you get originals, not photocopies, and you verify the originals. We’ve had cases of forgeries of these documents. If you’re going to export the vehicle, you probably want to check it out before you bring it to CBP. Have your state patrol, state police, whoever it is in your jurisdiction double-check the documents to make sure your VIN number is clear. Just because the seller told you it’s clear or you ran a Carfax, which is a worthless consumer-grade background check, you’re not going to know if there’s liens, claims, back taxes, past due registrations, prior owners, or even stolen, for that matter. Sometimes these vehicles are registered as parts only or junk. Can’t do anything with them. So, you want to do a full background check on your own before you start submitting it to DMVs or even selling it to a third party, because if you do, now you’re passing along an ineligible vehicle. In some states, it’s actually a crime to sell a vehicle without a clean legal title. Check out our website for more. You can get all these documents for free to download. And let us know in the comments what your thoughts are on exporting a vehicle and these document requirements.
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Today we’re going to answer five common questions about vehicle titles. The questions are: Do car titles expire? Second question is: What is an MSO or CO on a car title? Third question is: Should you carry your vehicle title in your car with you? And the last two will keep a secret.
Do Car Titles Expire?So first, does a car title expire? Well, a vehicle title is a legal certificate, a government document issued by a department in a state. For example, the Department of Motor Vehicles is the name of that agency in most states. Some states call it Department of Transportation or Secretary of State; different states have different phrases for it. They issue a title proving the ownership. It’s not like a registration which is renewed every year; it’s a one-time issuance. Now, if the title is lost, damaged, or stolen, you can have a duplicate title reissued, but the original title has no expiration date on the actual title. However, if there is no activity on a title for a certain period of time, meaning that the registration is lapsed and doesn’t renew itself, or there’s no transfer, or just no activity on that title record for either five, seven, or ten years (depends on the state; some states do it in different intervals, usually seven years), the title record will be purged from the system at the titling division. Now, that doesn’t mean that the title is expired; it just means that the record is no longer active. Sometimes that record can be reactivated or re-established, but the record usually goes into archives. The title itself does not have an expiration date.
What is an MSO or CO?Second question is: What is an MSO or CO on a vehicle? An MSO stands for Manufacturer’s Statement of Origin, or a CO is Certificate of Origin. Those are documents which look exactly like a title issued by the manufacturer. Guess what the word is? Writing the name when they first build a vehicle. So, when Ford builds a brand new Ford Mustang at the factory and they ship it to the dealer, there is no title for that vehicle yet. They will issue a Manufacturer Statement of Origin or Certificate of Origin that says Ford Motors built this vehicle, here’s the VIN number, here’s a description. It was sold to XYZ Ford dealership. Ford dealership now has that MSO or CO, called different things by different manufacturers. And when they sell the vehicle to a consumer, that MSO is given to the Department of Motor Vehicles along with a new title application in the name of the buyer, and that’s what creates the first title. So, MSO, the easy answer is, it’s like the birth certificate for vehicles before the title is issued.
Should You Carry Your Title in Your Vehicle?Third question is: Should you carry your title in your vehicle? The answer is no. There’s no reason to carry the title in the car. You don’t need it to prove ownership. Your registration is what you need if you’re stopped by law enforcement, or you have a speeding ticket, or you have an accident (God forbid). That’s what you need. Your title is needed to transfer ownership. If you sell the vehicle, if you trade it in, the title is what transfers ownership. So, you don’t want to have it in the vehicle because if somebody steals your vehicle, now they have the title too. If it’s in the glove compartment, they stole your car, now they not only have your car, but they have your title, which means they could forge your signature and transfer it, which is probably not what you want to have happen. So, where should you keep your title? Well, you want to keep it in a safe place. If you have a secure document location, like a safe or file cabinet, hopefully it’s fireproof and waterproof because if it gets damaged, the title’s no good. Put it in your house where you keep a lot of cash equal to the value of your car. If your car’s worth ten thousand, think, “Where would I put ten thousand dollars worth of cash?” Because that’s really what your title is worth—the value of the vehicle. Now, the difference with cash is you can replace your title, you can get a duplicate title, but it’s a pain in the neck to do so. You don’t want to lose it if possible. Also, a title, since it’s not used every year to renew like your registration, a lot of times it gets lost. So put it in a place where it’s less likely to get lost. If you have a file in your file cabinet for important documents, like your birth certificate, your insurance policy, your passport, put your vehicle title in that same area. Maybe put a different file folder with a different tab on it, but keep it where you keep your safe documents so it doesn’t get lost. A lot of times people will just throw it in a pile in their junk drawer with stuff, and then when they go to sell their car, they can’t find it. And there are reasons and circumstances where getting a duplicate might be difficult or impossible, so you don’t want to lose it if you can avoid it at all costs.
Can You Have a Car Loan in a Different Name Than the Title?Next question has to do with car loans. This question comes up a lot in our vehicle title division: Can you have a car loan in a different name than the title? And the short answer is no. The car loan is given to you using the vehicle as collateral. Usually, the car loan is to give you money to buy the car. So the bank is going to put a lien on the car title, guaranteeing they’re getting their money back. So if Joe Schmo’s name is on the title but Sally Smith wants to get a loan, the bank is going to have a hard time getting collateral of an asset in somebody else’s name. There may be some documents, power of attorney, some subrogation agreements that you could do to make that happen. Most banks don’t want to deal with the trouble. Most of the time, what you’re going to need to do is put both names on the title and have the loan in one of the names. So it’s very difficult, if not impossible, to have a name on a loan that’s not on the title, or at least one of the owners on the title. There are a few exceptions to that, but it’s not really what banks want to do, so you’re not going to find anybody that’s going to want to do that.
Can You File for a Lost Title If the Vehicle Is Not in Your Name?And the last question is: Can you file for a lost title if the vehicle is not in your name? And the short answer is no. When you file for a replacement duplicate title, only the person listed on the title record can sign and file for a lost title. And think about it—you don’t want anybody to file for a lost title unless they’re the owner, because otherwise anybody could file for a title for your vehicle and take the car away from you. So for your protection, and really, it’s the law, only the person listed on the actual title record can apply for a duplicate title, and that’s good practice for vehicle ownership security.
ConclusionSo those are a couple of common questions about vehicle titles. In the comments, leave examples of questions you have so we can put those on future videos, and put your comments or reaction to these questions so we get a sense for what type of things you deal with regarding vehicle titles.
Today we’re going to look at the process, paperwork, and documents for applying for a motor vehicle title. We’re going to use an example from the state of New Jersey. In addition to looking at the process, we’re also going to compare that process from a consumer or civilian to a licensed dealership. And just give you a little sneak peek, advance notice. Here’s the document for a consumer, and here’s a document for a dealer. Look how much simpler the dealer application for title is, and the reason why is because dealers have some additional privileges and authority for titling that an individual may not have. But it’s important to know what the requirements are for obtaining a motor vehicle title and what can make the process easier. This little barcode in the lower right-hand corner gives you a hint of how you might be able to do some things with this form to make your process easier. So let’s take a look and see what methods or what suggestions you can use to make the process easier.
What is a Vehicle Title?First of all, what are we talking about with a vehicle title? Well, a vehicle title is a legal government document. It’s a certificate that declares the ownership of a motor vehicle. Here’s physically what one looks like. It’s a certificate with scroll work. It has watermarks. It’s got a lot of legal aspects and features, just like you might find on currency, driver’s license, or birth certificate, to prevent tampering, to prevent forgery, to prevent false documents being prepared. Because the existence of that title and the name of the person on that title is evidence of the ownership of the vehicle. So if you imagine the vehicle having a certain value, let’s say even a modest vehicle that’s worth eight thousand dollars, that title represents the ownership of that eight thousand dollar value. So in effect, a vehicle title is kind of like an eight thousand dollar bill. It’s a currency because it proves the ownership. Whoever has that title with their name on it is in effect benefited from the asset of the value of the vehicle. That being said, it gives you some insight into why the titling process is as formal and specific as it is. They don’t just hand out titles to somebody upon request. You have to have the right documentation.
The Title Application ProcessSo now that we understand what goes into a vehicle title, let’s take a look at what the process is for obtaining one. Here is the title application for the state of New Jersey, and it says very simply at the top, “Use this form to apply for a New Jersey title. The applicant, the person signing it, must be the owner, lienholder, and authorized representative. You submit this application and all supporting documents.” And that’s going to be important because just filling out this application by itself isn’t enough. You have to have supporting documents, and we’ll talk about that. And you can submit it in person or you can mail it in. All applicants and this documents must provide proper identification. So they need to know that the name of the person and that the identity is correct. They don’t want to be giving a title to somebody who doesn’t exist as a person or maybe is not eligible to have a title. In addition, the supporting documents must be original unless they are court documents. They can be certified copies.
Types of Title ApplicationsStep one, what type of title are we doing? Is it a first-time title, initial? Is it a duplicate, meaning that you had a title document and it was lost? Maybe it’s a replacement or corrected title, meaning there was some error or something wrong with the last title that you need to correct. And then if it’s a vessel, meaning a boat, you click this box. If you’re adding or removing a lien, there are designations for those actions too. So this first tells the DMV what you’re trying to do. Are you trying to get a new title, a replacement, duplicate, corrected, that kind of thing?
Vehicle IdentificationFirst section that is important is the identification of the vehicle. What car are we talking about, or boat in this side section. The most important thing is the VIN or vehicle identification number. That is the ultimate identity of a vehicle. It differentiates one 2018 Toyota Camry from another 2018 Toyota Camry. They will have different serial numbers or VIN numbers, and that’s the first thing. If you notice, the first piece of information that’s asked for is the VIN number. They don’t care about your name; the make, model, VIN number is the first thing they want to know, and that’s important. Now, every vehicle has a VIN or vehicle identification number. If it’s older than a 1981 vehicle, that VIN number could have any one of a number of different formats. However, in 1981 and newer, all vehicles were issued a standard 17-digit VIN. And that VIN not only had 17 digits but it was in a certain format. The first letter or character designated the country of origin: 1 for the U.S., 2 for Canada, 3 for Mexico, J for Japan, W for Germany, etc. The second digit is the manufacturer: G for General Motors, F for Ford, T for Toyota, H for Honda, etc. So by looking at a vehicle identification number, you can tell a lot about what vehicle it is just from the first one or two digits. So that number goes here. Below that, there’s a place for a license plate number if it has one. Then you’re going to have the year, make, model, color, weight if it’s a truck. We’ll zoom in a little bit on this. If it’s a correction, the correction needed goes here. Odometer information, this is important. Vehicle history is monitored in terms of the reading of the odometer. How many miles has that vehicle traveled? So at any transfer and other events as well, the odometer reading is captured, and that reading will go in this box.
Owner InformationStep three is, who’s the owner? Who do you want listed as the owner of the title? Could be you, could be a company. Put your name here, put your phone number there. If you have a driver’s license or a business number, that goes in the next box. You have address, city, state, and zip. If there are two owners, the co-owner will go here and their driver’s license number. The next two sections are for if you’re adding or removing a lien, and if you are adding a lien, you put the lienholder’s name, business address, phone number, city, state, zip. If the person who is preparing this is a representative of the owner, like the CEO of a company, an accountant, a bookkeeper, maybe an attorney, they will put their information here as a representative.
Duplicate TitlesOkay, the next section is for duplicate titles. This lists the required documentation you need. If it’s an individual, you will need a valid photo ID. You will need the New Jersey registration card and a lien release if there was a lien. It’s very important you have those things. In addition, if you’re mailing in this document, you have to put the address where you want the document mailed when it’s done. If you go in person, it’s not a problem; they can hand it to you. But if you’re mailing it in, you have to put the address where you want that title sent, and also the format: U.S. Mail, FedEx, UPS, how you want it sent.
Signing the ApplicationOnce you have all of this information filled into this form, you have to sign it. And if you notice, right above the signature, it says, “I certify the above statements are true,” and if they’re false, it’s a crime because they don’t want you putting false information on a legal title application. Now, if you remember, we’re talking about one particular state of New Jersey. Every state has a different titling division. In New Jersey, it’s called the Motor Vehicle Commission. Some states call it the Department of Motor Vehicles. Some states call it the Department of Transportation. The form and the document is going to be very, very similar from one state to another. It’ll have the same boxes; it might be jumbled around in a different order. And once you sign it and submit it, the titling division will process it, and they’re going to look at all the requirements to make sure they’re met. They have a section here where they’re going to put their own notes: NMVTIS checked, if you notice, is right here. That stands for National Motor Vehicle Title Information System, and that’s a federal database where the government can look up vehicles to make sure they’re not stolen, they don’t have any liens, they’re not a salvage, they don’t have parts only or junk designation, and they can put their other notes for the transaction here.
Instructions and FeesThe good thing about New Jersey, many states have this, is they have an attached page which has instructions. Step one, it tells you, this whole box are the instructions for that one little section. Step one, what you have to have. Duplicate titles are issued if the current New Jersey title has been lost or stolen. What that tells you is, if the last title was not from New Jersey, you cannot apply for a New Jersey title. Same thing in any state. If the last title came from elsewhere, you have to apply for a duplicate in that other state. Now, for a new state title, different story. In-state title transfers require only submission of the previous New Jersey title. But if you have an out-of-state title, there’s going to be more requirements, probably an inspection, maybe some other verifications. What’s the fee? In New Jersey, the title fee is $60. That’s at the high end of the range. Many states have title fees that are $5, $10, $15, $20, $25, not that much. New Jersey is at the higher end of the range. I think there’s only four states that have title fees above $50. They also have a fee of $25 if you’re adding a lien. What else do they tell you? The vehicle information must match your signed and executed title documents. Well, what does that mean? Well, if you’re applying for a new title on a vehicle, you can’t just use this form. You have to bring them the old title from the last owner that they signed on the back. If you don’t have that last owner title, you can’t apply for a new title because they don’t know that you are the proper owner. The rest of the information is instructions about the form. You must sign this application and provide proof of ownership. You have to have photo ID. Mail-in applications, it tells you where to send it. And for signatures, it says blue or black ink only. Can’t sign it in a red pen or magic marker. You have to use certain types of ink. So if you follow their instructions, you’ll get a title.
Dealer ApplicationsNow, at the beginning of the video, you remembered that we also compared it with a dealer application. Well, look what dealers have. There’s hardly anywhere near the number of blank spaces. They put the name of the dealership, an address, their motor vehicle dealer identification number. This is what makes it possible for a dealer to have a simpler form. They have a dealer number that they can enter into the form, which gives them some privilege and authority to do more of the titling process. The vehicle information, you still need make and model and VIN number. But compare that with on the other form: make, model, VIN number. For vehicle information, we’ll look at this form: VIN number, license plate, year, make, model, color, weight, body, axles, many more pieces of information because on a new vehicle that information can be determined from the VIN number. You notice they ask a lot of questions about EPA because many states have requirements for managing environmental and mileage ratings on vehicles. If it’s a luxury vehicle over a certain dollar amount, some states have a luxury tax that you have to pay, and that has to be determined. Other than that, you answer those questions yes or no. You put the sales price, you sign it, date it, they’re done. So as you can see, for a dealer, a licensed automotive retailer, the process is much simpler than it is for a civilian trying to get a title because the dealer has more licensed authority. They have bonds, they have training requirements to make sure that they’re doing the title the right way. If you’re an individual consumer, they have to double, triple check everything to make sure that it’s done properly because you may only do this once or twice in your life. The dealer probably does a hundred of these a month. So there’s some simplicity offered for the dealership that’s not afforded to an ordinary consumer.
ConclusionThis is a good example of one state’s title process. Your state will probably have a different form number than this. This form has a number; it’s R621. Every state has a different form number. Believe it or not, about half the states, their form is called MV1. It’s different for all the states, but it’s called MV1, Motor Vehicle 1, because the primary thing you do at the DMV is get a title. That’s what they’re there for. So hopefully, this overview gives you some insight into what goes into getting a title for a motor vehicle. We have additional videos on other documents for other states, but at least you have an understanding of what you’re up against when it comes time to deal with the DMV to get a vehicle title in your name.
So how can you get rid of your car if you don’t have a title? Many times a person is looking to sell their vehicle, trade it in, maybe put it on Craigslist or Facebook, and they don’t have their title document.
Title Document ExplanationThe title document is a paper certificate that goes along with the vehicle that shows the vehicle identity: the VIN number, year, make, model. But also, it lists who the owner is, and when you sell a vehicle, you’re supposed to give that title to the next owner, and you sign it to show that you actually transferred it. If you don’t have the title, it’s going to be very difficult to sell that vehicle. It’ll be impossible to trade it in because dealerships don’t take vehicles without a title.
Verifying OwnershipSo what do you do? Well, first you need to determine if that vehicle title record is already in your name. If this is a vehicle that is titled in your name, registered in your name, and you simply lost your title certificate, it’s a simple process of requesting a duplicate title certificate or lost title certificate from the governing body. Titles are issued by a state-level agency. It’s not a federal government document like a passport or, you know, some other federal level document.
State AgenciesMost states issue titles from an agency called the Department of Motor Vehicles, Department of Licensing, Department of Transportation. Every state has a different name, and you all know what it is. It’s the place you get your driver’s license, the place you get your license plates. So, if you had a title or that at least the record is listed with your name on it, you can simply apply to that agency to get a replacement title certificate, and they’ll print out a paper document. It’s a legal certificate, and then you can use that to transfer the vehicle.
Out-of-State TitlesNow, what happens if it’s more complicated than that? What if the last title was not in your name? What if it was in your name but maybe in a different state? Maybe you’ve moved, and the state where you live now is not where that title record is. So, suppose you lived in, let’s say, California, and you had a title to your vehicle in your name, and then you moved, let’s say, to Montana, and you never switched it over to Montana, and you lost that title. Well, you can’t go to the Montana Department of Motor Vehicles and ask them to give you a title because they have no record of you owning that vehicle. What you’re going to have to do is go back to the California DMV, and you can do it by mail. You don’t have to drive back to California to have them issue a replacement and mail it to you in Montana. And there’s forms for all these things. You have to fill out some forms, get it notarized, and send it in. Every state has a fee for doing this. Most states are between $5 and $10 and $15. Some states are a little more. And you also have to plan for the amount of time. If you’re looking to urgently sell your vehicle, this may take a few weeks depending on the backlog of the Department of Motor Vehicles.
Vehicle Not in Your NameNow, what if the vehicle is not in your name? Let’s say you bought the vehicle and never transferred the old title into your name. That’s a little more tricky because you’re not eligible to apply for a duplicate replacement title because you’re not the legal owner as far as the computers are concerned. So, what you have to do is you have to find a way to generate new ownership proof in your name.
Surety Bond TitlesMost states you can do it using what’s called a surety bond or a bonded title, where you provide evidence of why you think you’re the owner. If the name in the title record is John Smith and you’re not John Smith, how is the DMV going to know you own the vehicle? You’re asking them not only to give you a title, but when they give you a title, by definition, they also take away the title ownership from the last owner. That’s the bigger problem. That’s why it’s so hard to do. Giving you a title might be easy, but you’re asking them to take it away from somebody else in the process. Now, you know you’re the rightful owner, but the DMV doesn’t. They have to take your word for it, so you have to come up with some paperwork. That’s where that surety bond process comes in.
Alternative SolutionsAnd you can put some comments below about questions on how to do this. What about if it’s more complicated than that, or if your state doesn’t do surety bonds? Thirty-two of the 50 U.S. states do a version of a surety bond title, but the other states don’t. And even the states that do, sometimes you run into a problem with a surety bond. In that case, you can do what’s called a court-ordered title, and you basically use the court system to declare you to be the owner of the vehicle by court order, and then that court order is delivered to the DMV to issue a title.
ConclusionSo, hopefully, the reason you’re watching this video is because you’re asking the question, “How do I sell my car if I don’t have a title?” Hopefully, the answer is you just lost it and it was in your name, because if that’s the case, it’s easy. Well, let’s say it’s easier. You still have to deal with the DMV and wait a few weeks to get paperwork done, but it’s easier than the other options. If you could do a bonded title, that’s not quite too bad. But if you have to do a court order title, we’ve seen those cases take eight, nine, ten months for the court to process the paperwork. So, try to find that title if you had it and you lost it. I would recommend going back and tracing your steps to see where it went. If you purchased it from another person and it was in their name, maybe see if you can get them to get a duplicate title because that would be easier than you having to jump through hoops. Now, sometimes it’s hard to get somebody else to do something like this because they already sold the vehicle, they have your money, and they’re not going to want to drop everything to deal with the DMV. But it’s worth trying, it’s worth asking. Leave us your comments below, let us know what you think, and that’s the answer to the question: Can you sell a car without a title?
So when a vehicle is financed, where is the title? Who’s holding the title? This question comes up very frequently from clients in our car title division. What happens when a vehicle is financed is the owner of the vehicle, the driver, the borrower, they are listed as the owner on the physical title. The owner’s name is showing as the owner of the vehicle. However, there is a section on the title certificate that references the lien holder. So if you borrowed money, let’s say from Chase Bank to buy your vehicle, or Ford Motor Credit, the lien holder section will say the name of that lien holder printed on the title.
Role of the DMV in Title IssuanceSo when the DMV or titling division in your state prints that title, they’re going to put that name in the title record and print it on the title certificate. Now, in most states, when that title certificate is printed by the DMV, it’s mailed to the lien holder. The bank actually gets that physical paper document, that certificate, and they hold it in their files while the loan is being paid. The name of the owner will still show as the owner. Technically, if you are, you know, the owner of the car, driving the car, you are the vehicle owner. You have insurance on it, you have it registered in your name, it’s owned by you. But the lien holder has what’s called a security interest or a chattel interest in that vehicle, and that chattel interest is what is their collateral to make sure you pay the mortgage or the car loan. If you don’t pay it, they can come get the car. Now they own it.
Selling a Financed VehicleBut the record of that lien holder on the title also prevents you from doing something else, and that means selling it. You can’t sell the vehicle to another person with a lien on it because they are holding the title certificate with their name on it. Once you have paid the final payment on that loan, they then take that title from their records, sign it, stamp it paid, and they mail it to you. Now you’re holding it.
Owner Holding Title in Certain StatesNow, there are a few states which allow the driver, the owner, to hold on to that title certificate even so. It still has the name of the lien holder imprinted on the title, so you still can’t sell it because it shows that there’s a lien against that vehicle ownership. So the title in most cases is held by the actual financial institution.
Paperless TitlesThere’s a third scenario. Some states on later model vehicles, newer vehicles, are going to paperless titles. And what that means is there is no physical paper document issued and printed by the title division. There’s just an electronic record of that title. If you go to sell the vehicle, you can have a paper document printed if you want, but initially, they do not create that paper document. When that happens, then nobody’s holding the title. The lien is still recorded on the title record, the owner is still showing as you on the title record, but the paper document is not actually created.
Example of Electronic TitlesThis is an example of a title. This is how a title looks for a vehicle when a vehicle is held under a non-paper title, electronic title state. That record is simply held by the DMV. Nobody gets a title. Once the lien is paid off, the financial institution will electronically clear that record from the title records at the DMV. At that point, you as the owner can print a paper title if you want. You can continue just to own it with a registration or transfer it to somebody else, or even if you trade it into a dealership, the dealership can look up that electronic title record and know that you’re the owner with no lien.
Leasing a VehicleThere’s actually another scenario for the title of a vehicle if it’s leased. If you lease a vehicle, there’s another option. Now, we’re going to get back in a minute to lien holders and charge-offs and write-offs, how that works if the lien goes into default and if the lender doesn’t pick up the vehicle, what happens. But first, on a lease, you’ll find that on a vehicle that’s not financed by a bank but leased to you, now it’s going to be different. The owner is going to show the lease company as the owner. You’re not listed as the owner. You’ll be listed as a registrant. The license plate and registration will be in your name, but the title owner is the name of the leasing company, Taylor Motor Credit, whoever. In that case, the lease company will hold the title, or if it’s electronic, it won’t be issued at all. And once you pay the end of the lease, the car goes back to the leaseholder and you will never see the title. If you decide at the end of the lease to exercise your purchase option to buy the vehicle at the end of the lease, now the title is transferred from the lease company to you as the owner, and it will be like any other title transfer. Just like you bought a car from Facebook, it’ll have a signed transfer from the lease company to you.
Charge-Offs and Write-OffsWell, if any type of loan goes into default and it’s not paid, many times the lien holder, the financial institution, the bank, whoever it is, will put it into collections. And after some period of time, they’ll stop really trying to collect it. They won’t spend any money trying to chase you around anymore, and they’ll do what’s called a charge-off or write-off. A charge-off of a loan, an auto loan, or any other type of loan is simply a designation from the lender financial institution that they no longer expect to get any money from this loan. It’s strictly a financial record, has nothing to do with the title. It’s a charge-off. And what that means is that when they do their balance sheet and asset disclosures to the federal government or for the taxes, they have to say that this loan is no longer an asset. We can’t count this loan on our books as something valuable to us. It doesn’t mean anything. Somebody owes us $7,500 on this car loan. We used to be able to put that $7,500 as an asset on our books like this money’s coming to us. As soon as it’s a charge-off, they have to say, no, we’re never going to get this money. So they can’t use it as an asset for financing, for their balance sheet, for any other purpose.
Impact of Charge-Off on TitleHowever, that charge-off event does not remove the loan record from the title. It does not take the lien out of the DMV records. If there’s a lien on the title document, if there’s a lien in the DMV records, it’s still going to be there after a charge-off. Now, if a vehicle is charged off, there may be an easier way to have it removed by requesting a lien release from the lender. That’s a different story. But up until that point, the lender or lien holder is still holding the title and have possession of that title certificate. Even if somehow you got your hands on it, it would still show that lien holder as having a beneficial interest or a security interest in that vehicle, which means you can’t sell it. Sometimes you can’t even renew the registration if you don’t have the title. So the lien and the title are two different things. The lien being charged off or write off does not remove it from the title record. In the meantime, the title certificate, that paper document, will be held by the financial institution until such time as that last payment is made.
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