Should You Even Buy A Vehicle Without A Legal Title Certificate?

Common Questions About Buying Vehicles Without Titles
ONE of the most common questions we get is about buying a vehicle without a title. Obviously, if you already have a vehicle with no title, you want to proceed with title recovery and some of the methods that we talk about on our website in order to get a title for it. If you already have the vehicle, what about if you don’t have a vehicle and you’re looking to buy one and you’re not going to get a title when you buy it? Should you do that? Well, officially we don’t recommend purchasing a vehicle without a title.

Why We Don’t Recommend Buying Without a Title
HERE’S why. All of these methods for getting a title that you see on our website for title recovery, court order title, bonded title, VT transfer, prior and a contact, all the different methods that are available work most of the time. Sometimes though, there is something about the vehicle that would prevent you from ever getting a title.

Scenario 1: Stolen Vehicles
FOR example, an obvious situation is if the vehicle is reported stolen, can’t get a title.

Scenario 2: Junk or Parts-Only Vehicles
WHAT about other possible scenarios? What if the vehicle has been reported as a junk or parts only vehicle? Sometimes if a vehicle has been owned by an insurance company where they paid out a total loss claim, they have reported it to the federal government as a junk or a parts-only vehicle. Now, don’t think you can just look at the vehicle and see what kind of shape it’s in and know that it’s not a junk vehicle. Many times, these vehicles are completely in good condition, but the insurance company has reported as parts only because of liability purposes.

Scenario 3: Open Liens
ANOTHER scenario is if the vehicle has an open lean against it. Now, leans sometimes can be removed. There’s a process for doing that. You can see on our website at cartitles.com, there’s a lean release removal process. Usually that works. But if the person who borrowed the money for that vehicle has been actively deceiving the lender and it’s an active default, there may not be an easy way to remove the lean.

Scenario 4: Delinquent Taxes or Registration
ANOTHER scenario where a title could be impossible is if the vehicle has been delinquent on back taxes or on back registration. Some states, if their registration fees or taxes are not paid, paid on the vehicle will freeze that VIN number. they will freeze that title so that nobody can get a title for it.

The Risk of Buying Without a Title
SO, as you’re looking at buying a vehicle, you’re looking at buying something without a title, remember that there is some chance that you may never ever get a title.

Limitations of VIN Checks
AND you might say, “Well, gee, can I do a title search? Can I run a VIN check? Can I check the VIN?” Well, yes and no. All of these VIN checks that you see online, Carfax, VIN search, all these different online consumer searches don’t check for everything. Even if you look at their terms and conditions at the bottom of their site, it’ll tell you this isn’t a real 100% government VIN search. It’s a just a kind of a basic online database. Many times it doesn’t even show up if it’s stolen. It doesn’t show any leans. It might say it looked for leans, but most states don’t report leans outside of their DMV.

DMV Limitations
AND you might say, “Well, can I go to the DMV and check this?” Well, you might be able to go there, but you’d have to go in person with your photo ID. They won’t do it over the phone. They won’t do it by email. They don’t do it online, certainly. But here’s the other thing. The DMV probably only has records for their state. So, if there’s some record in another state which would prohibit you from getting a title, it’s not going to show up.

Due Diligence Limitations
SO, you can perform some due diligence in advance to try to see if maybe there’s something obvious that would prevent you from getting a title, but you’ll never be able to know 100% if the vehicle is eligible for a title before you buy it.

Official Recommendation and Risk Warning
SO, officially, we don’t recommend purchasing a vehicle without a title. Obviously, if you have one already, you want to try to get a title. nothing you can do then. But if you want to go ahead with a purchase because you want to take the risk, remember that whatever you’re paying for the vehicle, even if it’s a great deal, is totally at risk until you get the title certificate from that government agency. And until that new title shows up in your name, you are at risk of losing all your money.

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How To Get A New VIN For A Vehicle

The VIN Number Obstacle
Many times in obtaining a new title for a vehicle, one of the obstacles that comes up for many clients is the fact that there’s no VIN number on the vehicle. So, if you have a vehicle that’s maybe an older car that the VIN number has been damaged or wasn’t part of the assemblage, or maybe you purchased a vehicle that you can’t find the VIN number. A lot of times, this happens on a trailer or maybe it was an import car that has no VIN number. What do you do? How do you get a title?

Vehicle Identification Requirements
Because in order to have a title for a vehicle, that vehicle has to be identified as a specific car. And that’s the word the letter I in VIN stands for identification. A vehicle identification number is the unique qualifier that makes that car unique to one particular identity and not comingled with something else. So, if you have a vehicle without a VIN, you can’t start working on getting a title until you get that VIN number. How do you do it? Well, you can’t just assign a VIN or you can’t buy a VIN from another car and slap it on your car. That’s actually VIN tampering and that’s a federal crime.

Government Application Process
What you have to do is you have to submit to the government an application to have the vehicle assigned a VIN number. And in most states, that’s called an assembled vehicle or a kit car or some type of constructed vehicle. Here’s an example of one of those forms. This happens to be from Nevada.

Certificate of Inspection Requirements
Have a certificate of inspection, affidavit of vehicle construction. And this is a way to have that vehicle be declared a legal vehicle and have a VIN number assigned.

Government VIN Assignment Process
Now, when that happens, the government is going to assign a VIN number. They’re going to create a VIN plate and they’re going to attach it to the vehicle and they’re going to use very special tamperproof rivets. So, you can’t just slap it on another car. It has to go on that car. The first thing they want to do is make sure the vehicle is safe for the road. And you see these check boxes down here. Has to have a windshield, glass, mirrors, steering, headlights, tail lights, the things that make it safe for the road. And some of these requirements vary by what year it is or what type of vehicle it is.

Legal Vehicle Requirements
Now, the one thing you can’t do is you can’t use this to make a vehicle to go on the road that’s not supposed to be on the road. And you can see they have a big red letters. A vehicle label for off-road use only may not be converted for on-road use with this form, right? You have to have a legal street vehicle. So, you have to make sure that your vehicle is eligible for a title in your state. Like sometimes these Japanese mini trucks or army surplus military surplus vehicles, they’re not allowed for the road and they’re going to look into that when you do this application.

Solution for Missing VIN Numbers
But if you have a vehicle you’ve purchased, maybe an older barn fine that the VIN is missing, this is a way to have a new VIN number issued to have that vehicle be legal, usable, and be able to put back on the road.

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What Is The Best State To Get A Car Title?

Montana LLC License Plate Scheme
So, let’s talk about the Montana LLC license plate scheme that’s out there. You probably heard about it, read about it, maybe you’ve seen it on different social media. And a lot of it has to do with highline. In this article from Jalopnik, it talks about exotic cars or maybe big RVs or motor coaches that have high values.

Why Montana Appeals to Out-of-State Vehicle Buyers
And that’s one of the reasons why this happens because Montana has no sales tax. When you purchase a vehicle in Montana, if you’re a resident, you don’t have to pay sales tax. So, if you buy a $50,000 vehicle and your sales tax in your state is 7%, that could be three or $4,000 in taxes. If you lived in Montana, you wouldn’t pay any taxes and that could be a lot of money.

The Corporate Workaround Method
So, what a lot of people try to do is say, “Well, I’ll just register title in Montana.” Well, the problem is states are not allowed to give out titles for people who are non-residents. You can’t just pick a state and title in that state. You have to get a title from the state where you live. So, what some people are doing is forming a corporation in Montana, putting in the name of the corporation, and then getting the title in that corporation name. So, that’s how the process works.

Legal Problems with the Montana Scheme
A few problems with that. First of all, it’s technically illegal because you have to get the title and registration from the state where you live. Well, how you going to get caught? We’ll talk about that in a minute. how the states are enforcing this and cracking down on it. The second thing is the states are losing a lot of money. As you could imagine, out of state license plates are costing towns big money. So if you lived in, let’s say in this case, Connecticut and you titled your car in Montana, Connecticut doesn’t get the sales tax and they get a lot of their corporate revenue, their state revenue from sales tax.

Other Motivations Beyond Tax Avoidance
But there’s other reasons why sometimes people would want to do the Montana registration besides tax. It could be that they don’t want to get their car inspected or they don’t have the right paperwork or they don’t have a title or they only have a bill of sale is evading something. Either evading taxes or evading the proper process. Now, the process to go through Montana to form a corporation and to do the transfer and to get a LLC and everything else, it’s actually harder than going through your own state. Every state has a process of getting a title when you don’t have the right paperwork. So, that problem can be solved. You’re going to have to pay the tax. So, if you just are fixated on doing tax evasion, then do the Montana thing and hope for the best.

Automated License Plate Recognition Technology
How are they catching people? Well, this may not seem like it directly relates to the Montana plates, but they’re finding stolen vehicles and they’re using the same technology to find Montana vehicles that are in the wrong state. It’s called ALPR, automated license plate recognition. So, as you’re driving around, and we’ve talked about this before, your license plate goes by probably a hundred cameras in a day. You probably don’t see most of them. They could be on Uber vehicles. They could be in parking lots. They could be on street signs, on police cars, on tow trucks. And as they’re driving, it’s collecting all this license plate information. Over time, they’re uploading this information to government agencies.

Government Investigation Methods
Talk about how they do this here in a minute. And the government agencies are going to make note of are there Montana plates or out of state plates that go by the same intersection every day on a regular basis. What that means is that person is not just a tourist on vacation from Montana visiting Connecticut. They’re there every day for six months. So now they’re going to do an investigation because what you have to remember is the tax on a vehicle is not just a sales tax. It’s a sales and use tax. Even if you have a legitimate corporation in another state, if your vehicle is regularly in Connecticut and you’re a resident there, you have to title it there.

Private Companies and Revenue Collection
So here’s what they do. The DMV can’t help much with these out of state plates. So the cities and states are using private companies that do ALPR. They scan license plates and in this one town of Danbury, Connecticut, it’s not a big town. They investigated 8,000 vehicles. And these outside companies get a kickback. They get 40% of the tax revenue with no upfront cost to the city. Waterberry, Connecticut caught 4,000 cars. Stanford, Connecticut caught 8,000 cars. They got $1.3 million in taxes from this investigation. So, it’s big money for them. So, it’s a big incentive to do this.

Legal Requirements and Penalties
And here’s what the law says. And this is Connecticut law, but most states is the same. If a vehicle is garageed in a municipality, meaning regularly parked overnight, even on the street, it must be taxed there regardless of where it’s officially registered. As an example, if you winter in Florida, but if you’re more than 90 days in Connecticut, you have to pay. And there’s penalties. There’s fines. There’s even criminal sanctions. There’s also programs for anonymous reporting. So, if you see somebody with a Montana plate, you can turn them into the government and you can get a commission on it.

Insurance and Logistical Problems
In addition, there’s some other logistical problems with having a Montana plate. You have to figure out where you’re going to get your insurance from. If you get it from Montana, it may not cover you in your state. So, if you get in an accident, it’s not covered. If you get it from your state, it may be reported to the DMV that your license plate is in Montana, which could be a problem.

Government Task Forces and Enforcement
Our meetings that we have every month with officials and representatives from government agencies and private companies. They all have a task force and their task force is trying to get this revenue gap fixed. Now whether you have an opinion about this tax or about taxes in general really doesn’t matter. The bottom line is that this outofstate scheme to avoid taxes or to avoid emissions or smog or registration fees or anything else is something that the states are taking very seriously.

Historical Context and Legal Consequences
And as you remember, the old Vermont loophole that used to exist for vehicle registrations was discovered and shut down because states were losing money and a lot of people had serious repercussions from that. Some people even had criminal prosecutions for that. Remember that if you’re signing a document for registration, it’s under the penalty of perjury. So, you want to make sure you’re not doing anything that could accidentally get you into trouble.

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How Do You Run A Vin Search On A Vehicle Title?

Why You Should Run the VIN
If you’re looking to purchase a motor vehicle or need to get information on a car or truck, you want to run the VIN. You want to check the background of that vehicle’s history to run a background check on that title. There are a couple of ways you can do it, but one of the best online ways is through this website: vinarching.com. It’s a website where you can just type in your VIN number, hit enter, and it’ll give you a printout of the vehicle history. It’ll tell you about things on the vehicle that may prevent you from getting a title.

What the Vehicle History Reveals
The report may tell you about the last title history and inform you about brands on the title. Is it a junk vehicle? Has it ever been in an accident? Is it parts only? Is it a salvage? This way, when you’re buying the vehicle, you’ll know about what happened to that vehicle in the past. The VIN number report will also help you determine if the seller is telling you the truth about their title history. Sometimes sellers will tell you, “Yeah, I had this car title in my name. I just lost the title.” When, in fact, they’re flipping it. They never had the title in their name. They just got it from somebody, never got a title, and they’re trying to pawn it off on you.

Hidden Truths About Car Titles
There are a lot of other things that a title history will tell you that you want to know before you buy. First of all, are there any back taxes? For instance, if the person who owned it didn’t pay their registration or fees, that debt is now attached to the vehicle, and you would have to pay for it. There’s also the possibility of liens, which, if there’s a lien on a vehicle, might block a title transfer.

Do Your Due Diligence
Either way, if you’re going to invest money in a vehicle, especially from a private sale, but even from a dealer, you want to make sure that you have full knowledge of the VIN history and vehicle history. You are performing your due diligence and not just taking the word of the seller. Look, the most clichéd liar in history is the used car salesman—not just at dealerships, but anybody selling a car on Craigslist is technically a used car seller.

Don’t Buy Blindly
They’re trying to sell you the car to get you to give them money for a piece of metal. Unless you know what that VIN search says and what that vehicle history says, you’re buying a pig in a poke and could get stuck with fees or not being able to get a title. If you like this video, be sure to click on a few others on our channel to see if there’s other information that might be helpful to you about this same subject or maybe even other related subjects that could assist you.

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Criminal Crackdown On Montana LLC Fraud – Breaking News

BREAKING NEWS ON MONTANA LLC TAX LOOPHOLE
Well, here it is. The big breaking news on the Montana LLC loophole kind of tax evasion. If you’ve been watching our channel for any length of time, you know we’ve been reporting on this Montana LLC title process that’s been used really going back five or six years now. And if you notice, we’ve mentioned that many DMV commissioners have been talking amongst themselves about doing a big crackdown, a big bust of the people that are using this process. And in the internal meetings, they’re mentioning putting together task force operations and starting to do monitoring and enforcement.

CRACKDOWN CONFIRMED BY MAJOR PUBLICATION
Well, big breaking news today out of Car and Driver Magazine, major publication, friends of the channel. We’ve actually been featured in their magazine before that there’s a crackdown on the tax dodging practice by citizens and it’s starting out with a few states. They mentioned Utah and California, although there are seven states right now that are starting to do enforcement and prosecutions and we’re going to get into that a little more in detail here in a minute.

WHAT IS THE MONTANA LLC LOOPHOLE?
But what is the Montana LLC loophole? This is a process where if a person has a vehicle that either has a title or doesn’t have a title that they don’t want to go through their state, they want to avoid their state for whatever reason. Maybe they’re trying to avoid taxes. They’re trying to avoid smog inspection emissions. They’re trying to avoid the title process. They’re going to do a Montana process.

WHY MONTANA? WHY LLC?
Now, why is it called LLC? Well, no state can give a title to a non-resident. You have to be a resident of a state to get a title from that state. That’s always been the case. You can’t just say, “Well, I live in New Jersey. I want to get a title from Colorado.” You have to get a title from the state where your driver’s license is located. So, what people do is they form a company, an LLC corporation in the state of Montana and then put the vehicle in the name of that corporation, right? And technically, that part’s legal. You can put a vehicle in the corporation name. Montana will let you do that.

NO SALES TAX AND MINIMAL REGULATION IN MONTANA
And the reason why people use Montana is Montana is a state that does not have sales tax. So when you register a vehicle, you don’t have to pay sales tax. And they don’t have a lot of inspections and emissions and a lot of the regulations that other states have. So many people will use that loophole for their vehicle.

SIDE NOTE: NOT AS EASY AS IT SEEMS
Now, just a little side note, the process isn’t any easier than just going through your own state. If you have a title problem, you only have a bill of sale, maybe you have missing documents, you’re not going to be able to magically get a title from Montana. You still have to do some process like a bonded title or a court order title in Montana. So that is not really any different from going through your state.

REAL MOTIVE: TAX AND INSPECTION AVOIDANCE
So really, the only difference is you don’t have to pay tax and you don’t have to do emissions. So people think, well, it’s legal, so I’ll do it. Ah, but it’s not really legal. The reason why is the tax is not a sales tax. Taxes for vehicles is a sales and use tax. That’s what the tax is called in the statute.

SALES AND USE TAX MEANS YOU OWE TAXES WHERE YOU LIVE
So if you title your vehicle in Montana and then use it in your state, you’re actually evading taxes. Even companies like FedEx or Amazon when they title vehicles in other states, if they use them primarily in a state where they deliver the packages, they have to pay taxes in that state.

ENFORCEMENT HAS BEGUN
So what is happening now? What’s happening now is the other states besides Montana that have been losing tax revenue are now rolling out the prosecutions doing sting operations. They’re doing all kinds of enforcement.

HOW THEY’RE CATCHING PEOPLE
How are they catching people? Well, one way to do it is if they see a Montana plate driving around, they can run the plate and if it’s LLC, they’ll pull it over and they’ll check who’s driving it, what the ownership is. But more importantly, they’re using, and we’ve talked about this on this channel many times, ALPR, automated license plate readers, where around town, they will have cameras that read license plates that will identify a Montana license plate, the same one, driving by over and over for weeks or months at a time. That’s obviously not somebody just on vacation. That’s somebody who is living there.

PURSUING $100 MILLION IN BACK TAXES
And that’s what they say in this article. The DMV is using plate readers to sniff out Montana plated cars and tracking registrations to catch tax evaders, going after what could be $100 million in back taxes and penalties. So, they’re not playing around.

GOING AFTER LLC MILLS
They’re also going after what they call LLC mills. These are companies that do this Montana process for you. They charge you a fee, and they’re starting to crack down on those. Remember back in the ’90s, there were a few kind of fly by night sketchy car title companies that were using illegal methods to get people titles like fraudulent mechanics liens and some other sketchy methods. And there was one in Nevada. There was one in Tennessee. They all got busted. There are people in prison over that.

NOW TARGETING SERVICE PROVIDERS
So now they’re starting to also crack down on the providers of these services knowing that they’re illegal. And many states have now passed laws closing the loophole.

MULTI-STATE ACTION AGAINST TAX DODGERS
Trickier to dodge the sales tax unless you live in Montana. So that’s obviously if you live there, you can register there, not a problem. And in reality, it’s not new. Back in 2019, a few years ago, Georgia did this. They cracked down, but they were a single state. This is a collection of states that’s doing this, and they’re working together to get the records. They can get the records directly from the Montana LLC Secretary of State to find out who the owners are, who the registered agents of that company are, and if they see you’re out of state, they’ll slap you with tax evasion.

MONTANA’S SKY-HIGH CAR OWNERSHIP RAISES FLAGS
Why is this happening? Well, Montana has the highest car ownership by population in the United States, more than double California. That’s because many people are putting cars in their name in Montana, even though they don’t live there. Again, they’re cracking down on using this to dodge paying taxes.

EVEN IF YOUR INTENT WASN’T TAX EVASION
Even if you did the process for some other reason besides just avoiding taxes, if you didn’t pay the taxes afterwards in your state, they’re still going to say, “Well, you did it for another reason, but since you didn’t pay the taxes, that’s tax evasion.” And they’ll come after you for taxes, penalties, interest. They could even seize your vehicle.

BREAKING STORY CONFIRMED APRIL 30TH
So, this is breaking news. This article came out April 30th. That was yesterday. We’re recording this on the 1st of May. And if you’ve been watching our channel, you’ve seen the prediction of this coming. And it’s not a prediction. We’ve heard from the DMV commissioners. We work with them all the time, the different states’ DMVs, and they’ve told us that it’s just a matter of time. They had to put together the task force, put together the investigative resources, put together the rules for their state, and now they’ve kind of dropped the hammer, and people are going to find their titles will be revoked.

EXPECT VEHICLE SEIZURES AND PROSECUTIONS
There will be penalties and interest. Some people will have their vehicles seized and there will be some people that will be criminally prosecuted. Probably a few people go to jail, especially the ring leaders, people organizing this and doing it on a large-scale basis.

THE REASON WE NEVER OFFERED THIS SERVICE
So, it’s happening now. Now again, once you see it in Car and Driver, that means it’s making the mainstream news. And like I said, we’ve seen it for over a year now where the states have been telling us this is what’s going to happen. And that’s the reason why as a professional certified title company, we never got involved with this. We never did this Montana process.

OUR LONG-TIME CLIENTS ASKED—WE SAID NO
We’ve had clients that we’ve been doing business with for 20 years that said, “Hey, you know, why don’t you do this Montana thing? It seems like a big deal.” We’ve told them this is not going to end well for people who are doing it. Consumers maybe who did it years ago, you might be able to get away with it. But recent registrations will probably get revoked.

DIFFERENCE BETWEEN MONTANA AND VERMONT LOOPHOLE
And a lot of people ask, well, what’s different between this and the Vermont loophole, the Vermont registration loophole? Because we did those. The difference is this. There was no tax evasion. People who did the Vermont loophole paid taxes and it wasn’t designed to leave the Vermont plate on the vehicle and drive around with, right?

VERMONT LOOPHOLE WASN’T TAX EVASION
You would actually use the process to get something with your name on it as an owner and then transfer to your state. That’s different. That’s not evading anything. You’re still going through the process of your state. You’re still paying your tax. You’re still abiding by all the rules of your state. It’s just that it’s one step to help you get some documents that’ll allow you to be eligible to register in your state. So, that’s a whole different thing.

MONTANA CASE WILL BE MUCH WORSE
That one still got shut down eventually because some states didn’t like the fact that people weren’t primarily using like a bonded title or a court ordered title. But even something as innocent as that got shut down. This Montana thing is really going to be bad. Mark my words.

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