Common Questions About Buying Vehicles Without TitlesONE 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 TitleHERE’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 VehiclesFOR example, an obvious situation is if the vehicle is reported stolen, can’t get a title.
Scenario 2: Junk or Parts-Only VehiclesWHAT 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 LiensANOTHER 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 RegistrationANOTHER 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 TitleSO, 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 ChecksAND 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 LimitationsAND 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 LimitationsSO, 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 WarningSO, 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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The VIN Number ObstacleMany 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 RequirementsBecause 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 ProcessWhat 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 RequirementsHave 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 ProcessNow, 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 RequirementsNow, 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 NumbersBut 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.
Montana LLC License Plate SchemeSo, 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 BuyersAnd 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 MethodSo, 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 SchemeA 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 AvoidanceBut 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 TechnologyHow 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 MethodsTalk 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 CollectionSo 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 PenaltiesAnd 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 ProblemsIn 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 EnforcementOur 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 ConsequencesAnd 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.
Why You Should Run the VINIf 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 RevealsThe 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 TitlesThere 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 DiligenceEither 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 BlindlyThey’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.
Understanding Vehicle Titles:Today we’re going to talk about a couple of types of titles that you may be running into if you’re buying cars at Copart or IAA or you have a car that came from there. Many times these are called junk or parts-only vehicle titles. In some states they’re called non-repairable. For example, in Florida they call them certificate of destruction. There’s a version in Kentucky called a Kentucky red title and that’s their version of what’s called the non-repairable certificate.
Impact on Different States:What does this all mean and how does it affect different states? Well, a vehicle that goes through an insurance claim process where the insurance company decides they do not want the vehicle back on the road can issue this designation called a junk or parts-only or non-repairable and they put it into a system that goes to all 50 states.
State Regulations and NMVTIS:Here’s what Tennessee says about it in their state. This is from the Tennessee Department of Revenue. They talk about the other states. Kentucky red titles are the equivalent of a Tennessee non-repairable title. They’re damaged beyond repair. Now, you may find vehicles that have no damage that have this, and we’ll talk about that.
National Motor Vehicle Title Information System:A vehicle that is not repairable may not be registered in Tennessee or really any other state. Why is that? Well, there’s such a thing as the National Motor Vehicle Title Information System, and that is a federal government record system that takes information from one state and transmits it to all the other states.
Purpose and Coverage of NMVTIS:Every time a vehicle is titled, changes ownership, or is registered, all states get that information from this National Motor Vehicle Title Information System. And it’s originally designed to prevent stolen cars and title fraud and different types of problems that somebody would want to know about.
Legal Implications and Enforcement:What happens is anytime there’s a title brand put on a car, it goes to all 50 states plus Guam, Puerto Rico, and Washington DC participate in this. And what does the law say? The law says that information within NMVTIS, the National Motor Vehicle Title Information System, shall be available to jurisdictions, states, federal and local law enforcement, insurance companies, and prospective purchasers.
Protection and Prevention Measures:So, it’s saying that this information is out there. It’s for people to see. It allows jurisdictions to verify the validity of titles prior to issuing new titles. It prevents title fraud and auto theft. So that’s the reason for having this. In addition, it tracks odometers to make sure nobody’s rolling back mileage on vehicles.
Minimum Capabilities and Functions:And the federal law that went into place has five capabilities at a minimum. Five minimum capabilities. First of all, validity of a title. Second, the title state for a vehicle. What state is a title in? Number three, whether an automobile is non-repairable or known as junk or salvaged vehicle. That’s the number three one. And it repeats it again.
Data Transmission and Record Management:Has it been reported as a non-repairable or junk? It’s so important they put it twice on the list. Now, it also does something else. When a vehicle moves to a new state, the NMVTIS notifies the old state, allowing the old state to inactivate the title record, which means you can’t get a duplicate title in the old state.
Vehicle Safety and Inspection:They can purge the record. So, if you move from one state to another, your old title becomes invalid. And why do they want to have this out there? Because it gives buyers the ability to check for vehicle safety and reduce unsafe vehicles on the road.
Florida’s Implementation:Things like salvage or crash vehicles might have safety issues that need to have inspections done or more thorough investigations into the repairs and they check this. This is the procedures manual that happens to be from Florida. All title transactions performed on Florida title vehicles will make an inquiry to NMVTIS.
Title Brands and State Regulations:This will ensure that the vehicle has not been titled in another state since being titled and brought back to Florida because people sometimes will do that to try to remove a title brand. They’ll flip it from one state to another. But NMVTIS prevents that from happening and this includes the title brands.
Brand Validation and DMV Process:When an application for title is being processed, emphasis must be placed on the brands reported by NMVTIS rather than the brand that’s on the title. This is important. Your title certificate, if you have one for the vehicle, might not have any brand on it. Might be clear, right? However, the DMV is going to go by what’s in the record, not by what is on the title.
Types of NMVTIS Brands:Brands reported by NMVTIS will be automatically carried forward to the title. There are two NMVTIS brands, which will result in no Florida title certificate being issued: dismantled or junk. And then junk has those different versions in different states: non-repairable, parts-only.
Recovering Title Status:So, how do you undo this? If it’s a junk title, how do you get a title for it? Well, there are two ways to get a junk, non-repairable certificate of destruction vehicle back on the road.
Options for Resolution:One is to get a new VIN number, and the other is to have the brand undone. Why would you need a new VIN number? Well, like the manual said, if you have a vehicle with a junk VIN number, they can’t give a title, but you could get a new VIN number.
Court Order Process:It says if a new VIN has been assigned to a vehicle, you can’t use the old VIN for a title. You can get a new VIN by calling it an assembled vehicle or a kit car, and that’s a process you can go through. Or you can do what’s called a court order reduction, meaning that you can file a petition with the court to have the court override that non-repairable junk title status.
Challenges and Legal Steps:You have to give the court evidence where they will override the reason that was done. And they don’t have to do it, but that’s the only way you can even try to get the non-repairable junk status removed from a vehicle because once it’s in that NMVTIS brand code, and you can see here, number eight is junk, number seven is dismantled, then you can’t get a title in almost every state.
State-Specific Regulations:Well, in every state, certainly in Florida, there are other types of junk or salvage title determinations that some states won’t accept on top of seven and eight. Some states won’t accept reconstructed or rebuilt, right? So, you have to be very careful.
Conclusion:But if you do have a seven or an eight dismantled or junk, you have to either get a new VIN number issued or have a court override that. And there’s a court order title application process you can attempt. Again, it doesn’t always work, but that’s the only chance you have. If you don’t do it, you have 0% chance of getting a title. At least with that, you may have some chance.
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