Can You Renew Your Vermont Loophole Plate?

Vermont Vehicle Registration Loophole Overview
So you have a vehicle that is registered in Vermont but you don’t live in Vermont. Maybe you used the Vermont loophole so-called loophole last year, the year before, or sometime in the past. You have your Vermont registration, you have your Vermont license plate, maybe you actually put it on the car and were driving around in your state. You weren’t supposed to, but some people do. Now what do you do? Well, you may have successfully renewed that registration a couple of times in the past. Well, now all that’s coming to an end.

New Changes in Vermont DMV Policy
You probably have seen the news if you’ve been watching our channel, watching our website. We’ve been talking about this for years that it’s going to happen, but now it did happen. Here’s the important things to remember. You see the document on the screen, out of State registration certification in concert with other jurisdictions, meaning that other states put pressure on them. The Vermont DMV now evaluates all out-of-state transactions based on your home state laws. To that end, the department will not process these transactions unless the owner of the vehicle can establish a connection to the state of Vermont. Effective immediately, you have to complete this form to process your transactions.

Home State DMV Certification Requirement
What is that transaction? You basically have to get the Department of Motor Vehicles in your home state to sign certifying that the home state laws do not require them to register the vehicle there. It says right here, “To be completed by the Home State Department of Motor Vehicles or a comparable agency.” Some states call it something else: PennDOT in Pennsylvania, the Bureau of Motor Vehicles. Either way, whatever government agency issues titles in your state has to sign this. By my signature below, I am certifying that the state of whatever your state is does not require residents to register vehicles in their state. Authorized representative name, email.

DMV Verification Process
So when you send this form in to renew your registration or get a new registration, the DMV is going to verify this with your state. So what states allow you to register out of state? Almost none. There’s a few states that allow dual registration, for example, if you were a snowbird and you go to Florida and you have a vehicle that you leave in Florida. You can register it there from another state. It’s not intended to be used in another state from Vermont. So what’s going to happen is when you go to renew your Vermont registration license plate, it’s going to get rejected.

Steps to Take with Current Vermont Registration
So what do you do? That’s the big question. What do you do about this? First of all, if you have a current Vermont registration that’s not expired and a license plate, what you can do, which you should have done when you first got it, is transfer it to your state to get a title in your state. How does that kind of work? Well, let’s go through the instructions, what the details are. We’ll also talk about what happens if maybe your registration is expired and what are you going to do if your state rejects Vermont registration.

State Rejections and Ban on Vermont Registrations
Many of the states that were behind this ban being enacted don’t take Vermont registrations anymore. I’m going to zoom in right, let me zoom out a little bit here. In concert with other state jurisdictions, that’s the key. For many years, other states hated the Vermont loophole because they were losing out on tax revenue, registration, all kinds of things. Nobody in other states liked this, but they had to do it because Vermont allowed it. So some states were rejecting it. Most recently, the state of Florida put a big note on the door: “Don’t come to us with your Vermont license plate.”

Grace Periods and Transition Instructions
So you may find that you take your Vermont registration, your Vermont license plate, you bring it to your state to exchange for a title, and they kick you out. Some states are giving you a little bit of a grace period right now because they know now that they’re going to get these vehicles. Some states are out of spite saying no way. But what you should do first, and I’ll give you the details and instructions, you can also check out our website, cartitles.com. We have a whole section on this. We give you instructions on how to do it yourself. We also have a service if you’d like assistance with this. We can help with that too.

Title Application Process
Okay, so first thing you want to do is get a title application for your state, an assignment form to assign that registration from Vermont to you and your state. You apply to your state to get a new title using your Vermont registration as proof of ownership. Switch it over and you’re good to go. One of the problems that may come up is if you have used your Vermont registration for more than one year. If the date on your Vermont registration is longer than 12 months from now, you might have to pay tax again. You paid sales tax in Vermont, you might have to pay it again to your state.

Potential Tax Implications
And it gets worse. Most states will charge you tax on your bill of sale, whatever you say you paid for. But see, here’s the problem. Now you’re bringing them a Vermont registration, which is your proof of ownership. That Vermont registration is now going to have a value on it because Vermont doesn’t use bill of sale; they use book value. So when your state sees that registration, you need to give it to them because that’s your proof of ownership. If you don’t give them that, you have no proof of ownership. We’ll talk about another way to do it that might not have the same problem.

Issues with Vermont Registration Value
But now you bring them the registration, and it says book value $10,000. You only paid $1,000 for it on your bill of sale, right? So if you had switched it over before, you can go by your bill of sale. But now it’s been more than a year, they’re going to reassess it. They’re going to go by the $10,000 on the Vermont thing. Boom, $600-$700 in taxes. You already paid that to Vermont. Now you got to pay it again, but that’s what you might have to do.

Alternative Title Options
What’s another option? Well, you can actually not use your Vermont registration as your proof of ownership, and you could just do a bonded title. Forty-two out of 50 states allow for a surety bond title, which means you don’t have to use your Vermont registration. You can just go straight to a bonded title in your state. That would be Plan B. If you don’t want to use your Vermont registration, or if it’s expired. If you let your Vermont registration expire, your state probably won’t accept it as ownership. They might, they might. Sometimes they still use expired documents. You can try, but if for some reason that fails, you can do a bonded title.

Misconceptions About Bonded Titles
And I know what you’re thinking. I don’t want to do a bonded title. Well, first of all, look at the reasons you don’t want to do a bonded title. If it’s because you think you have to pay 1.5 times the value of the vehicle, then think again. Because a lot of people have the misconception that when you get a bonded title, you have to pay one and a half times the value of the vehicle to the state. That’s not how it works. If you have a vehicle, let’s say, that’s $6,000, 1.5 times $6,000 is $9,000. People think, “I gotta pay $9,000.” That’s not how it works. You have to get a surety bond in the amount of $9,000, but that’s only going to probably cost you $100. Surety bonds for vehicles that are $10,000 or less usually cost $100. And you can check out our website probonds.com for some ideas on valuation. So that’s Plan B.

Magistrate or Court Order Title Option
Another option you can do is what’s called a magistrate title or a court order title. It’s not a big deal. Don’t get scared about court order. Don’t get scared about court process. It’s not like Law and Order. You don’t have to go for some big court case. All you’re doing is you’re presenting your story to have a magistrate clerk or a court clerk or a judge sign to say you are the owner. You file a petition with the county. You file an affidavit of how you got the car, just like you would tell anybody the story: “I got the car. I bought it on Craigslist. I paid $1,000 for it. The guy gave me a bill of sale.” You take that story, you put it on an affidavit, you attach it to a petition.

Filing a Court Petition
You also include what’s called a letter of not interest that says, “I don’t know of anybody else looking for this vehicle,” right? “No one’s trying to get it. No one claims it. I’m not aware of any other claims against it.” You put the right package together, you submit it to the court clerk. Normally, all they do is they look at it, they read it. They’ll probably do some background checking on the vehicle to make sure it’s not stolen, no liens, and they sign that petition. And now you take that petition that says legally you are the owner, slap it on the counter at DMV, and you get a title.

Assistance and Resources Available
Now remember, we’re not attorneys. We’re not giving you legal advice. There are 3,611 different counties in the country. They all operate a little different. Our website will give you instructions on how to do this. As always, we also have assistance. If you want us to help with this process, we can help with the paperwork. But either way, that’s Plan C. The first thing to remember is hope is not lost. Just because your Vermont registration is expiring and you cannot renew it, you have these options that you can do. Now, you may not want to do any of them. You may just want to sell the vehicle and dump it. That’s fine. You could do that too. But you have options.

Addressing the Expiring Vermont Registration
In hindsight, you might say, “Well, gee, I wish I switched it over sooner.” Water under the bridge. You already did what you did. It’s not the end of the world. You made a decision at the time. Maybe that was the best decision to make, but now that’s not available. Vermont will not renew registrations for out-of-state residents going forward. At some point, we’re still getting some feedback that maybe there’s some still slipping through. But you know, Vermont has been inundated with some flooding. A lot of their DMVs were shut down for a while, so maybe some things were held up and they went through.

Final Recommendations and Contact Information
So the bottom line is that if you get rejected for a renewal, which you probably will, those are your options. Just transfer it over to your state. Make sure you do it before it expires. So if you’re going to try to get the Vermont renewal, do that soon, like do that two or three months before it expires. Don’t wait till last minute because if it expires now, you bring it to your state, they might reject it. If that does not work, which it may or may not, you have bonded title, you have court order title, magistrate title. You can do those things.

Tax Considerations and Legal Compliance
Keep in mind that even if you could switch it over, you might not really like the tax implications. You don’t want to do tax evasion. You don’t want to try to scam out of taxes. But if you are presenting as your proof of ownership the Vermont registration, it now establishes the value at whatever Vermont said, which may not be required under the law of your state. Your state might say, “Bill of sale is allowable. You have a bill of sale for $1,000, that’s your value,” right? So if you try to use that Vermont registration as your proof of ownership, the Vermont registration might say $9,250 is the value because that’s what they put on it. Now they have to use that value. So be careful about what you’re using. You don’t want to overpay taxes. You want to pay the fair right amount of taxes. You don’t want to do tax evasion or get any kind of trouble for that.

Possible Penalties for Delayed Registration
But if you present something like the Vermont registration that you’ve been using for three years, first of all, you might have to pay the higher taxes. Second of all, your state might say, “You’re going to pay a fine because you used this vehicle in the state for three years. We see you got this registration in 2020, it’s 2023. We’re going to charge you three years’ worth of late fees for not switching it over right away.” See where that’s going? So be careful about doing that and find out the laws in your state. Every state’s different.

Conclusion and Further Assistance
Regardless, for any of those methods, if you do decide you want assistance, our website will give you free help for do-it-yourselfers. If you want to be a do-it-yourselfer, we have free instructions, we have videos, we have all kinds of details. If you want assistance, we have some very efficient ways to do that where we’ll prepare documents for you for multiple ways you can try to switch it over. If that doesn’t work, we’ll give you the documents for bonded. If that doesn’t work, we have an option for court order. So we’ll help you all the way through the process, whatever you want to do, because we know it’s bureaucratic. We know how hard it is to get titles. We know what kind of difficulty it is. We like to try to help people with the DMV, and we’d like to help the DMV. The DMV doesn’t want you coming in with all kinds of paper scattered, handwritten, they can’t read. They want more neat, clean, orderly processes. So we help you make it easier for you and we make it easier for the DMV.

Contact Information and Final Remarks
A lot of times we talk to DMV employees and executives, and they like the fact that somebody is helping make it more streamlined for the consumer. Not all of them, but we talk to some of them on a regular basis, working on files for our clients. So if you have other questions, feel free to email our help desk: [email protected] is the email. If you have comments, put them below. Let us know what’s happening with your Vermont registration. If you’re running into a roadblock, which you probably will, it’s the end of an era. Gravy train’s over. Party’s over for Vermont. So now you have to do something maybe a little different. We’ll make it easy for you.

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