Salvage Title Insurance, Inspection, & Financing Restrictions

So you’re looking at a vehicle that has a salvage title. Maybe you’re buying a car at Copart Auto Auction or IAA, and you are gonna maybe fix that car up, maybe repair it, and you want to put it on the road. What about insurance? Is that vehicle eligible for insurance? A salvaged vehicle, when it’s completed, becomes a rebuilt title, and there are some insurance considerations that you need to take a look at. So let’s see what that process is like.

Checklist for Getting a Rebuilt Title
Here is the checklist of what you need to do to get a rebuilt title for a salvaged car. First, you have to get the vehicle inspected by a private mechanic. You want to do that first because that won’t give you the authorization to get a title from the state. But before you go to this state government inspection, you want to have a private mechanic make sure that it’s ready to go because if you go to that inspection and it fails, your next inspection will be much more intensive, and you might have to wait another month or two. Sometimes they require you to wait 60 days for a second inspection, so you want to have the vehicle checked out outside of the government system first to make sure it’s good to go.

State Inspection Requirements
Then you’re going to have to bring it for that state inspection. Different states have different criteria. Many times, however, in addition to the physical condition of the vehicle being acceptable, you also have to have documentation of the repairs. Just because, let’s say, you fixed a fender and adjusted the suspension, and the car is good to go, you have to have receipts for all your major component parts and also proof that all of the items in the original salvage claim have been rectified. Many times the state inspector will go back to that original insurance claim, which they can access through their insurance database, and see what the original repairs of the vehicle were, and they’re going to make sure that it was done properly and that you have receipts for it. If you don’t see any repairs needed to get done, it may be that it was a flood car or recovered theft, and that makes it more complicated.

Obtaining the Rebuilt Title
Once you get that inspection passed, then you get a rebuilt title from the DMV or your state titling agency.

Insurance Challenges with Rebuilt Titles
Here’s the problem: when you go to buy insurance, some insurance companies do not insure vehicles that have rebuilt titles. Even the ones that do sometimes only give you minimum liability; they don’t give you comp insurance, right? So that may be a downside to having a rebuilt title or salvage title. Make sure you know in advance what insurance is available, and if your carrier doesn’t offer it, you may have to contact a different insurance carrier. They may put limitations on your coverage, so if the vehicle is subsequently damaged, you may not be able to recover all of your losses on a salvaged vehicle.

Impact on Resale Value and Financing
This can also hurt resale value because buyers in some cases can’t get insurance. If you have a later model vehicle that would need to be financed, some finance companies also don’t finance vehicles that have a prior salvage or rebuilt history.

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VIN Vehicle History Search Instructions – Full Access

So how can you run a VIN search or vehicle history on a motor vehicle in the United States? There are several different methods to do this, and each one of them has some pros and cons. You want to make sure that the type of search you’re doing matches the kind of records you need. For example, you may want to know about liens, salvage, back taxes, or stolen vehicles, and each one of these is going to be searched in a different way.

Legal Restrictions and Exemptions
First of all, be aware that some vehicle information is protected under federal law called the Driver’s Privacy Protection Act (DPPA), so some information you’re not going to get unless you run a certain type of search that bypasses the DPPA using an exemption that you can apply for. Depending upon if you’re looking to find out the history of the vehicle, the last owner’s name, things about liens, or things about salvage, there are a couple of ways to go about doing it, and we’ll look at both of them.

National Motor Vehicle Title Information System (NMVTIS)
First of all, there’s a federal database called the National Motor Vehicle Title Information System (NMVTIS). You can get a link to that from our website car-titles.com, where you can actually do a search directly through the NMVTIS through our website and get the results from that search. Those results come instantly when you perform that search; it’s online. You’ll get a printout of that vehicle history. It’ll have information about the last titled states, the dates, and the registration. Many times it’ll show where the vehicle was sold last if it was a retail transaction. It’ll, in many cases, have information about any claims against the vehicle like insurance claims or salvage prior repairs. It might even show things like lien holders. In some cases, you’re going to find recalls on the vehicle and repairs, which is important to know.

Limitations of NMVTIS
So NMVTIS (National Motor Vehicle Title Information System) is a good place to start. Now keep in mind that there are many online VIN checker, VIN report type services that might run some electronic search, but it might not be much more than just a Google search. You want to make sure that whatever search you’re doing uses the NMVTIS as the source because any other source of records is not going to necessarily have all the information you need. Now, remember that there’s some information that’s not allowed to be sent from the NMVTIS, like the name of the prior owner. In some states, liens aren’t even recorded on the NMVTIS, so if you want to know about liens, you have to run a different type of search, and we’ll look at that momentarily.

Checking for Liens
You’ll see that on the NMVTIS search report there will be a section that will say liens, and most of the time, it’ll say no liens. However, if you look at the bottom in the small print, it’ll tell you that liens aren’t always reported; it’s not 100%. So you could buy a vehicle and have an NMVTIS printout from the internet, from online, it’ll say no liens, and you can find out later that there’s a lien. So if you want to get 100%, now you’re going to use the DPPA driver’s request form.

DPPA Driver’s Request Form
Let’s take a look at that. This is a different process where you’re actually submitting a request directly to the titling authority in the state to get an actual vehicle history report. This is the actual records on that vehicle that are held by the government. It’s not an electronic database push-a-button Google search type thing. It’s done using actual paper documents. Every state has a different form to request this. The form you’re looking at happens to be from the state of Wisconsin. It really doesn’t matter which one we’re looking at because the information is going to be the same, and here’s why. The requirements for the DMV or titling authority or in this case Department of Transportation in Wisconsin to release that information all come from the federal law, the Driver’s Privacy Protection Act. So every state has to abide by that act, and we’ll take a look at what those requirements are.

Requesting Vehicle Records
Here’s the authorization section, section C. We’ll get to that in a minute, but the form itself is going to have some basic info. It’s going to have the name of the requester, that’s you, who’s requesting this information. Here’s why: you cannot do this anonymously. You can’t just do an anonymous search for the record. They have to know who’s receiving these records because they consider this to be very private and protected information, so they want to know who’s getting it. They’re going to keep a record of that. They’re going to get your driver’s license number; that’s how important this is, your address, mailing address, and then it’s going to ask you about what vehicle records you want.

Form Details and Costs
This form allows you to put in three vehicles: year, make, VIN number goes here in this section. If you know the plate number, you put it there. If you want to know about the current owner, you check this box. If you want to know about the history of owners, you check this other box. So look how powerful this is. Not only will it tell you about the current ownership records, it’ll give you a records history on the vehicle, very powerful. What does it cost? Well, you can get a non-certified copy for five dollars, pretty cheap. Most states have a fee of anywhere between five or ten or fifteen dollars depending on the state. If you want it certified, it’s only ten dollars, right, so it’s not that much more.

Authorization Process
But what is the process? Well, here is your authorization. Please check the statement below that allows you authorization to obtain personal information, and you’re going to notice there are 13 authorized uses or permissible uses. Some forms you’ll see seven, some you’ll see 12 or 13. The language for these authorized uses comes exactly from the federal law, the Driver’s Privacy Protection Act. So you can look at Wisconsin or Alaska or Alabama or Michigan, these wordings will all be the same, and they’ll even be in the same order usually. So you have to pick out what gives you the right to get this information. Now, your scenario may be different; there’s almost always going to be one on here that will give you the right to get this information, and we’ll look at each one individually and what they mean and why they might apply to you momentarily. But you want to make sure you’re picking the right one because if you pick the wrong one and you’re not authorized, you’re not going to get the records, okay, because they consider this private information.

Privacy Considerations
Car ownership is not public records. It’s not open records like even real estate or open records. They consider this to be just as private as things like your bank account or your credit report. Ownership records are very, very private. Why is that? Well, think about it. If you’re driving down the street and somebody doesn’t like the way you drive, and they follow you to a parking lot, they write down your license plate or your VIN number, which is right in the dashboard, and they want to find out where you live because they didn’t like the way you cut them off. They could just ask for the information, come knock on your door, and who knows what’s going to happen. So there were some very high-profile cases of stalking and other things where they passed this law back in the 90s, so it’s good that it’s private. So you have to jump through a few hoops to get it.

Authorized Uses for DPPA Information
So let’s look at the reasons that allow you to get this information and which ones apply to you. Authorized for use if they have demonstrated they have the written consent from the owner. So if you have written consent from the owner to get the information, then you can get the information. If you had that, they would probably just give it to you, so that may not apply to you, but it’s good if you are requesting your own record or a minor child and you’re the parent or another person, and you have their consent. Maybe you’re an insurance company or an employer that’s getting this, so that’s number one, that doesn’t apply to most people.

Specific Uses and Scenarios
For use in connection with matters of motor vehicle safety, emissions, and alterations. This is where the factory needs to contact owners because of a recall or because of some other purpose of vehicle ownership. So if, let’s say, some car manufacturer, let’s say Ford, finds out that, you know, a couple hundred thousand Ford F-150s are missing a bolt, they can contact those people by looking up the VIN numbers. Number three is if you’re a government agency, for the purpose of government agency to carry out its functions. Well, if you’re a government agency and you need the records for something, you can get it. A federal court for the purpose of the court to carry out its functions. Well, that’s probably not you either. A law enforcement agency for the purpose of law enforcement to carry out its functions. Well, you’re probably not police either, but look at what it says, for the purpose of carrying out its functions. What that means is if you’re a police officer, you can’t just pull up a VIN number for anybody on your own on a whim. You have to declare that you’re using it for law enforcement purposes, and FYI, there’s been many police officers that have used this power that they have improperly, gotten a record for some other reason, personal reason, dating, whatnot, and gotten in trouble, so that’s the thing to keep in mind.

Employment and Legal Uses
So let’s talk about number six, an authorized representative employed by a company that’s getting a driving record to verify the accuracy of information by a person, so to correct information. So if you are a company and you have drivers that are applying for a job or that are on the road, you can use this information to fix that. Now, number seven works in a lot of cases, authorized for use in connection with any civil, criminal, administrative, or arbitral, like arbitration, proceeding in any local court or before any self-regulatory body, including service of process, investigation in anticipation of litigation, in the execution of enforcement of judgment. So if you are anticipating litigation or doing investigation, this may apply to you, number seven. So read that carefully. Remember, we’re not attorneys, we’re not giving you legal advice, we’re just reading what’s on the form and how it might apply to different people.

Research and Insurance Uses
Number eight is authorized for use in research activities for statistics as long as the personal information is not published. So this is more for finding out how many red Honda Accords are in this ZIP code. This isn’t really what most people are looking for. If you’re an authorized representative by an insurer or an insurance company, so insurance companies many times need to look up driving records or accident records on a vehicle in order to give you an insurance policy, that makes sense. Authorized for use to provide notice for towed or impounded vehicles. Well, maybe that applies to you. Maybe you have an abandoned vehicle on your property or an impounded vehicle that you need to notify the owner or contact the owner.

Private Investigator and Employer Uses
Number 10 may apply in your case, authorized representative or owner of a licensed private investigative agency or security agency requested for the purpose permitted under the DPPA. So if you’re a licensed private investigator, you can look this up if you use it properly. Employer or agent to verify information of a commercial driver’s license. Again, if you’re a trucking company, you need to make sure your drivers are not sketchy, you can do that. Or private toll facility for operating the facility. You know, you’ve seen a lot of toll companies that charge you automatically if you go through a gate or parking or that kind of thing, and that allows them to look up the owner if you don’t pay your toll.

Legal Implications and Enforcement
So those are the reasons. If you do not meet one of those reasons, you cannot get the records. In fact, it says right here the Driver Privacy Protection Act (DPPA) is enforced by the U.S. Department of Justice (DOJ). It’s no joke. That’s a very serious organization which may seek civil and criminal penalties for improperly obtaining, disclosing, or using information from a motor vehicle record for purposes not permitted by the DPPA. In addition, private citizens may seek civil damages. So if you use the information improperly and you harass somebody, they can sue you. Please be specific in describing your request and attach additional pages if needed. So this is Wisconsin, but remember, every state is going to have almost exactly the same wording because this wording, one through seven or one through thirteen, comes directly from the DPPA, the federal law.

Comparing NMVTIS and DPPA Searches
So why would you want to do this instead of doing just an NMVTIS online database? Well, go ahead and do one of these online databases. Go to our website. You can order one of these NMVTIS reports, and what you’ll find is you’ll have some information, but it’s not going to have the name of the owner, it’s not going to have the name of the lien holder, or have their address. Some states don’t report everything to NMVTIS, so you might find that, you know, if the car was last in Alabama, it might not be there, or it might not go back far enough. It’s a basic electronic database report. This DPPA is a full documented report.

Summary and Final Recommendations
So the downside to this is it takes longer. This you can get instantly, push a button, pops up on your screen. This you have to sign this form with the fee and either mail it in or bring it to the DMV, and they normally don’t give it to you on the spot. They might have to mail it to you in a week, so it’s not instant, and it’s also not 100% that you’re going to get it. They might reject it. So how do you go about doing this? Well, run this first, run the NMVTIS first, and at the same time get this form. And for all of our clients, we provide this form for you to access this for any vehicle that if you order from us, we provide the form for you. If you fill out this form and send it in, if you bring it in person, you might be able to get it on the spot. If not, they may have to mail it to you. You’ll get the different additional information later. So use both of them for the purpose that you might need it: to contact prior owners, to clear liens, to find lien holders, to look for other records that may not be available. Maybe it was titled in one state and registered in another. Maybe there’s additional owners. You might want to run this in advance of buying a vehicle to make sure you know who you’re buying it from.

Conclusion
But the full vehicle title search process is sometimes hidden because you’ll see this online NMVTIS. There’s a million companies that say, “Hey, give us five bucks, we’ll give you a title report. Give us 15 bucks,” like Carfax or other ones, and it’s online, and the way they describe it makes it sound like you’re going to get the name of the prior owner, but you’re not. You’re only going to get maybe the state that it was from, basic information. It’s helpful, maybe worth it, but if you need more detailed information, do this NMVTIS. And again, this is just Wisconsin. Every state has a similar form. Now, if you have additional questions, you want to ask more questions, visit our website car-titles.com. You can even email our help desk at [email protected] is the email, and you can ask more questions. Hopefully, this clears up and goes into detail about what it is to run a VIN or VIN number title history report or title search on a motor vehicle in the U.S.

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Car Dealer Sales Tactic Under Review

So there’s a tactic that some car dealers use that has been going on for a long time. We’ve seen this back 30 years ago, 40 years ago, and it’s come up in the news quite a bit recently. It’s a way that dealers can do something kind of underhanded, almost invisible, that might put your purchase at risk and in jeopardy. It’s called a bailment agreement. Some people call it yo-yo or be-back or comeback. Basically, what happens is when you purchase a car and you drive off the lot, there may be an option where the dealer can call you back and leverage you or coerce you or blackmail you into giving them more money after you already bought the car. They can make you come back with more cash, they can make you come back and make your payments higher on the car, or even give you a different car.

How the Bailment Agreement Works
How can they do that if you already drove off? Well, it’s a very common practice and it’s invisible; you almost don’t even know what’s happening when it’s happening. The reason we’re bringing this up now is because Jalopnik had a really good article about this just today. Even Steve Lato, the high-profile YouTuber, and attorney, talks about it again. Dealers’ worst tactic under fire. In fact, in this video, he says his first video on his channel was about this tactic many, many years ago. So it’s coming up again because, for a while, it was kind of out of favor, but now it’s being used more.

The Financing and Spot Delivery Process
How does it work? When you go in to buy a car at a dealership, you have to sign a bunch of documents. You have to sign a buyer’s order, a bill of sale, an odometer statement, a car loan if you have that, and you sign this big stack of papers and you drive off the lot. Well, the way dealers do financing is they do what’s called a spot delivery or on-the-spot delivery. Meaning that when you come in and you want to buy a car, they want to get you out the door in that car right then. They don’t want you to go home and think about it and have them get all the paperwork ready and come back later because you might change your mind. So they want to do a spot delivery to get you over the curb with that car right then.

Dealer’s Financing Strategy
So how do they do the financing? Well, they’re going to take your application and submit it to their lender, or maybe more than one lender, and they’re going to try to find the lender that has the highest advantageous financing for you but even for them because they’ll get a kickback. They’ll get a commission on that financing and they may want to find the dealer that has the best kickback. But not everybody gets approved for financing, so they want to make sure that if they give you that car and let you drive home, if for some reason the financing does not get approved, you have to bring the car back. And that’s legitimate.

Legitimate Use of Bailment Agreements
So mixing that paperwork is what’s called a bailment agreement. And that bailment agreement basically says if my financing does not get approved, I will bring the car back immediately upon request, and they’ll give you your money back and your trade-in back, and they’ll basically undo what they did, right? That’s a legitimate, fair thing. Now we’ll talk later about whether or not you should even do that bailment agreement, but that’s what the dealership does and how to avoid this from happening.

Common Issues with Financing Approval
So what happens is that the dealer sends your application out to some lenders. They pretty much have a good idea of how you’re going to get approved. They see your credit score, they see your income, your pay stubs, whatever the case might be, and they know, okay, this person qualifies for this type of financing. But what if they guess wrong, or what if the lender doesn’t approve it the way they want to? Maybe you got approved but for a higher rate, maybe you got approved but for not as much money. They might have been trying to finance a higher amount of money than the bank’s willing to approve for you or for that car.

Consequences of Incorrect Financing Assumptions
Now they get the call back a couple of days later from the bank and your approval didn’t come in the way they thought it did. And they say, wait a minute, you have to come back in and put more money down. You have to come back in and sign up for a higher payment because your rate is higher. That’s not fair. Well, here’s your bailment agreement; you signed it, or you didn’t get approved at all, and you have to bring the car back or maybe switch to a lower-priced car. So this is something that dealers will put in every deal if you’re getting a spot delivery.

Avoiding Bailment Agreements
So how can you avoid this? Here’s what you do. First of all, do not sign a bailment agreement. If you’re buying a car at a dealership and you’re financing, wait until they have their financing done to pick up the car. If you’re in the dealership and they make an agreement on numbers and you’re financing through the dealership, unless they have the financing already approved and done the way that you have it structured, just tell them, hey, call me when you get it done. It’s not going to take them more than a day, maybe two. If you want to leave them a deposit to hold the car, that’s fine. That’s not much at risk.

Benefits of Avoiding Spot Delivery
Well, here’s what it’ll do, even if you’re not worried about getting declined for financing or rejected. It’s still a good idea. Here’s why: Let’s say, for example, you do your deal, and they put you in as like an a-tier financing or a very low rate or low monthly payments, and it doesn’t come in that way. Now they have to readjust it, and they have the option to do it. They have the leverage to do it. If they do something with a low price and then decide later, wait a minute, we made a mistake, they can bring you back in to fix that mistake.

Real-Life Example of Bailment Agreement Issues
We’ve seen this happen. We had an example where a customer went into a dealership to buy a car. It was late at night, finalizing the deal. They negotiated, and they got a really good deal on this car, and it was a lease deal. And the dealership figured the price of the car with incentives from the factory, like rebates. This was back in 2017 or 18 when there were incentives and rebates on the car. And they also did a lease deal which had incentives on the lease. They had a lower rate for the lease, and they figured the payment up. It was a really good deal. They delivered, they spotted the car, and the customer said, no, I don’t want to do this bailment agreement. Just call me when the deal is ready.

Customer Leverage and Dealer Mistakes
So they didn’t take the car that day, that night. They said, you know, if you have to wait for the financing to be approved, I don’t want to take a car that I’m not approved for yet. It’s not a done deal. So let’s wait till the next day. So the dealership called back, and they said, well, it might be a little different. So the customer said, forget it then. That’s the deal I thought I was getting. If you can’t do the deal, that’s fine, and they were going to go look somewhere else. Finally, the dealership said, okay, fine, we’ll do it. And they came back in, and it wasn’t that the customer wasn’t getting approved because they had very good credit. It was that they had miscalculated the numbers. The lease deal incentive and the rebate incentive, you couldn’t do them both. You could either do the incentive or do the lease deal. The dealership made a mistake, and they used them both when they figured out these numbers.

Importance of Not Taking the Car Immediately
If they had done a spot delivery, they could have called them back and said, hey, you gotta come back and pay a higher payment, especially since it’s been two or three days. You’re driving the car, you’re enjoying it, you’re not going to undo that deal. But since you didn’t take the car yet, you actually have more leverage now because you don’t have to go back to the dealership. You’re more likely to go back and redo that paperwork if you already have the car in your driveway, in your garage, driving it around, whatever you’re doing because you don’t want to give back a car you already have. But if you didn’t do the deal in the first place, now you have leverage.

Final Advice on Bailment Agreements
So what the dealership had to do was they actually had to sell the car for a lower price, probably than they even could have. It was probably a below-cost deal in order to make those numbers still happen because they didn’t want to lose the customer and also have a bad review for that transaction. To make a long story short, if you’re buying a car and the dealership has mixed in that paperwork a bailment agreement or some agreement where you have to bring the car back, call foul on that deal and tell them that you’re not going to do it. When you have the financing done and you know you can do this deal, call me and let me know, right? And I’ll do it then. I’m not going to do speculation with you as a dealership that you think you can do this, but maybe you can’t because I’m committed to it. You don’t have the option of bringing the car back, right? The dealership is doing an unfair advantage to you where they have the option of undoing the deal, but you don’t. So you want to level the playing field. If they can’t commit to the deal and know that it’s going to be completed and etched in stone, then you shouldn’t have to be locked into it either. So unless they’re willing to say, well, you know, you have the option of bringing it back too, then why would you do that? Because it’s not a level playing field.

Conclusion: Be Cautious with Bailment Agreements
So this has come up a couple of times. We saw these two on Jalopnik and Steve Lato. It was also in a Car and Driver article. It seems like dealerships are doing it again. Again, it was very, very popular in the 80s and 90s, but it appears that dealerships are starting to maybe mix this back into their playbook, and you want to avoid it so you don’t run into a problem where you’ve had the car for a few days or a week, and they tell you you have to bring it back, pay more money, or have a higher payment. Don’t worry; there’s plenty of cars to go around, so if for some reason you can’t get that one, somebody else will do that deal for you.

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Think Twice About The Vermont Title “Loophole”

So if you have a vehicle with a title problem you’ve probably heard a lot of information online about how you can get a title. You may have heard about the Vermont loophole, or abandoned vehicles, or mechanics liens. We’re going to talk about why there’s some serious problems with one information you may have heard online. Some of these are urban legends, some of them are people that talk on chat boards about things they know nothing about, and some of these things either don’t work, or some of them could get you into big trouble. So you want to make sure you’re actually getting correct information about how to get a title and you don’t fall for one of these tricks or loopholes that either doesn’t work or it’s going to get you in trouble.

Overview of Title Issues
We’re going to talk about mechanics liens, we’re going to talk about abandoned vehicles, and we’re going to talk about the Vermont loophole and what the problems with those are and why you want to be very, very careful before you jump into one of those or pay anybody to get you a title if they’re going to use one of these methods and you know what you’re getting into. At the end, we’re going to talk about what are the things you can do to get a title and that you can do yourself. You don’t have to pay anybody to do this if you don’t want to and what’s going to work and not get you into any kind of jeopardy.

The Vermont Loophole
First of all, let’s talk about Vermont. For 20 plus years, the Vermont loophole has been kind of an urban legend. People have talked about it on chat boards, on the internet, there’s been articles written about it. Even some very high profile automotive publications like Jalopnik and Hagerty have talked about this loophole, and it has some validity. Basically, what you do is you apply by mail to the state of Vermont to get a registration and then you take that and exchange it in your state for a title.

Issues with the Vermont Loophole
Why does that help you? Well, if you don’t have a title or a legal document in your state, this Vermont registration is a version of an ownership paper that you can use as a loophole to get a title in your state. What’s wrong with that? Well, what’s wrong with it is first of all you have to pay tax to the state of Vermont. The tax is always going to be more than you want to pay. It’s going to be more than you think it is because you might say, “Well, I have an old car, it’s not worth much because it’s in bad shape.” But Vermont is going to look it up in a very high book value and charge you a lot of tax based on that book value.

State Reactions to the Vermont Loophole
More about that in other videos, but even if you do pay that tax and even if you do get that Vermont registration, you still have to bring it to your state to exchange for a title. Look, this is not a big secret. You might have just found out about this Vermont loophole yesterday and you might think it’s a big revelation and you’re in on some big secret, but guess what? It’s been going on for 20 years. Every single state in the country knows about this. All the DMVs know about this. Some of them give you a hard time, some of them reject it, some of them tell you you’re doing something wrong, but they still have to accept it because it’s a legal document from Vermont. Some of them are a lot more aggressive than that.

Example: Florida DMV
Here’s an example. Florida has an official publication at their DMV on their website: information notice fraud alert Vermont registrations. They’re calling it a fraud. Now they’re not saying every one is a fraud, they’re getting your attention with the headline. What are they saying? The Florida DMV has been informed that in lieu of a title, the Vermont Department of Motor Vehicles will issue a registration form of ownership. That’s true. They are a non-titling jurisdiction. They don’t give titles on vehicles at all. They only give a registration. Now of course this only works if the vehicle is 15 years old or older. So right now it’s 2023, that means a 2008 and older this works on.

Florida DMV Requirements
So what happens is people are using this as a loophole. They’re saying, “Wait a minute, I have a car or truck or trailer, motorcycle, whatever, and I’m in Florida or Texas or anywhere and I don’t have a title. I bought it, I lost a title, I never got one from the seller. So instead of… I went to my DMV and they said forget it, you need to have a title. So what I’m going to do is I’m going to go to Vermont by mail. You don’t have to physically go there, but I’m going to apply by mail, get a registration and then sneak it in the back door of my DMV to get a title.” Well, your DMV knows about this, right? It says in many instances the registration ownership is being issued to persons who did not present a title to Vermont, who do not live in Vermont, nor were the vehicles ever located in Vermont. So this is the Florida DMV, right? They’re saying we know that the person who has this registration never had a title, they don’t live in Vermont, and they did not bring the car to Vermont. So they know this, they’re not stupid.

Florida DMV Additional Requirements
So what does that mean? Customers are appearing in Florida attempting to use the registration forms as a proof of ownership. This alternate proof does not offer the same safeguards as a traditional title, which it doesn’t. That’s why it’s easier to get because it doesn’t have the same demands that getting a title does. It’s easy to get this registration from Vermont, it’s hard to get a title. Due to the possibility of fraudulent transactions, they’re not saying it’s always fraud, but due to the possibility, effective immediately, additional documentation is now required when a Vermont registration is submitted to obtain a Florida title. So they’re going to make you jump through a bunch of hoops, right? Florida residents who purchase a vehicle must provide the following: title and sales tax. So you have to pay tax twice. You already paid it to Vermont. Most states let you not pay the tax again in their state if you show you paid it to Vermont. Florida says you have to pay the tax again in Florida. You have to have the original registration, no copies. You have to have a Vermont residence address, which you’re not going to have. You have to have a bill of sale with all the same information reflecting the seller. So they’re going to make you jump through a bunch of hoops because they know that there’s a possibility that some people are using this to get titles for vehicles they’re not supposed to get.

Conclusion on Vermont Loophole
So in conclusion, effective immediately, all transactions with the registration must follow these instructions, this fraud alert instructions. So this is just one state, this is Florida. Other states have sometimes similar procedures and sometimes it comes and goes. This just came out less than a year ago, right? There was a period of time where Indiana didn’t accept these at all. They had a big notice in their window of their DMV saying don’t bring us any Vermont registrations, we’ll throw you out. That went away, now they’re accepting them again. Florida at some point might change this. Different states at different times have gone through periods where they didn’t like this. What does that tell you? That tells you is there’s some resistance to it.

Bonded Title Process
So why not look at some other things? Well, what else does, let’s say Florida, offer? Really a lot of states offer what’s called a bonded title. This is a bonded title bulletin. We’re going to keep it consistent here, we’re going to look at Florida, but many states have a bonded title process. What does a bonded title mean? A bonded title means you don’t have the proper old title for the vehicle and in order to convince the Department of Motor Vehicles that they’re able to give you a title, you give them what’s called a surety bond affidavit. What that means is you sign an affidavit saying how you got the vehicle, right? You have to tell them, “I bought this car on Craigslist, I didn’t get a title, I got a bill of sale.” So you tell your story, you can hand write it on a piece of paper. And then what you have to do is you have to get a surety bond from a bonding agent that backs you up.

Details on Bonded Titles
So what you’re saying isn’t true, the Florida DMV is going to take your word for it, or any state that does bonded titles, but they have a backup meaning that if you’re telling us a lie, then this bonding company is going to fix the problem, right? It’s going to cost you some money for that bond, probably cost you a hundred dollars, maybe 200 for a bond. Now there are some other restrictions. Look at the first couple of segments: Vehicles eligible for a bonded title, vehicle is not eligible for bonded title, and what is required. Well, let’s take a look at vehicles eligible. Bonded titles may only be issued for vehicle truck wing less than eight thousand pounds, vehicle has a Florida current paper title, meaning that if the last title came from out of state, no good, and also model years. So the vehicle has to be more than 10 years old but not more than 30 years old. So in 2023 that means from 2010 to 1994, right? So if you have a vehicle that’s newer than 2010, no good. If you have a vehicle that’s older than 94, no good. It has to be in between those years. Every state has some different rules, but you have to realize that bonded title is going to have some restrictions.

Restrictions on Bonded Titles
What kind of things are not eligible? Well, let’s look at the first one. Bonded titles can’t be issued if it has the word replica or homemade in the title. Meaning that if you have a kit car or something you made from parts, you can’t get a bonded title. If it has a VIN plate removed or destroyed, can’t get it, right? You can’t have a salvage vehicle that you can’t get a bonded title for. Some states will let you, but if it’s a salvage vehicle, no good. If there’s an active lien, no good, right? Meaning that if somebody has a loan on it. And it cannot be declared by the DMV, which means that in some cases they’ll let you get one, in some cases they won’t.

What is Required for Bonded Titles
So what do you have to do to get one? We just mentioned the vehicle affidavit. We talked about the surety bond affidavit. You also have to get an HSMV 82042 form. You get this right online from the DMV website. It’s just a one page form you fill out. And you have to do an inspection. This is a document that gets filled out by a law enforcement officer or in some states the DMV does the inspection. They’ll come out, take a look at the car, and sign it off. Then you pay your money and you get a bonded title. So this is something that most states offer. This is an example from Florida, but you can get a bonded title in most states if you don’t have the proper paperwork for the vehicle.

Summary
So that talks about the Vermont loophole, it talks about the bonded title process, but there’s other ways you can get titles, you can talk to DMV if you have any other questions.

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Title Loophole Options Instead Of Vermont?

So if you’re a car collector or automotive enthusiast, you may actually purchase vehicles like on Craigslist or barn finds. Occasionally, you could come across vehicles that don’t have a title. For many years, there was a Vermont loophole that people used all the time to get titles. You’ve seen it featured on Hagerty Insurance, Car and Driver, Jalopnik, and even on our website. Car Titles has talked about this Vermont title loophole, and it was available for 15, almost 20 years as a way to get a title if you’re missing documents. However, in June of 20123, the state of Vermont, under pressure from many different states’ Department of Motor Vehicles, cancelled and closed that loophole. So, you can’t use it in order to get a title when you’re missing paperwork.

New Title Process
So what do you do now? What’s the new loophole? What’s the new process? Well, the method to get a title is not anything new. It’s not something that was created recently. In fact, it was always in existence, and in most cases, it was better as an option than the Vermont process. It had better results, it was cheaper, it was faster. So let’s take a look at what this alternative process is for those who have missing title paperwork that need to get a legal title certificate in your name. This is the end result you’re looking for: a title certificate. It’s a legal document issued by a government agency. It shows not only that the vehicle exists, but it proves that you are the legal owner of the vehicle. It’s a government document. You can’t buy one from a company, you can’t download one from the internet. It is a certificate issued by a state government agency, usually called the Department of Motor Vehicles. Although some states call it, um, Pennsylvania calls it PennDOT, Department of Transportation. Some states call it Secretary of State or Bureau of Motor Vehicles. They don’t give out titles just on a verbal request. They don’t give out titles with a bill of sale either. You have to have something proving that the legal owner currently has transferred it to you, and if you don’t have that, you’re pretty much out of luck.

Alternative Title Methods
In some states, you can do a bonded title, which is buying a surety bond from a bonding agency. There’s a lot of downsides involved with that, and we talk about that in other videos. You can get more information on our website at cartitles.com. But today, we’re going to talk about the alternative process to Vermont, which is a court-ordered title. The way this works, and you can see one example on this screen, we’ll go through this in detail, is you file four documents in the county court where you reside.

Court-Ordered Title Process
The first document is a petition. This is an example from Pennsylvania, a petition for involuntary transfer of a vehicle. Basically, you’re telling the court, “I want you, the court, to declare me to be the owner, to transfer it from the current owner to me based on the evidence I provide.” The evidence could be a bill of sale, it could be proof of payment. Sometimes people have text messages or emails from the seller. You first include the petition of what you want them to do. This petition could be for anything, but in this case, it’s for a transfer of ownership, a declaration of ownership in your name.

Affidavit of Facts and Additional Documentation
The other document you’re going to submit to the court is what’s called an affidavit of facts. That is a narrative of how you obtained the vehicle. It could be something as simple as, “I purchased it on Craigslist, the seller didn’t have a title, they had a bill of sale,” that kind of thing. You’re going to state the facts of how you came to be in possession of the vehicle and describe that vehicle: year, make, model, VIN number, that kind of thing. Every county has some different particulars on how they do this. Most counties don’t have a package like this. You see on this screen right here, you see Luzerne County in Pennsylvania has a pre-prepared form. It tells you where to fill in the blanks. There are 3,611 counties in the country. There’s only a handful that have forms you can just print out and fill in. Most counties, you have to start from scratch and type all this up, all these words on this one or on the example from the other county. You have to type up all these words yourself, and the court can’t help you.

Declaration of No Interest and Title Application
Most courts don’t have a thing called a court-ordered title. It’s kind of like walking in and saying, “I want to do a dog bite lawsuit,” right? They don’t care what the case is about; they just care that you’re meeting the standards of their court. So, you prepare the petition, the affidavit of facts. In some places, in most courts, you also need to prepare a declaration of no interest. That says, “I’m not aware of anybody else with an interest in the vehicle or a claim in the vehicle.” If you know someone’s looking for the car or that there’s a relative that wants it back or it’s out for repo, you have to tell the court that. If you don’t tell the court there are other parties that might have a claim, then you’re going to be providing false information. It doesn’t necessarily mean those people will get the vehicle. You just have to let the court know that somebody is making a claim to it, and it’s up to the court to decide who to give the vehicle to. Then the fourth item is a title application, so they can sign it, and you submit it to the DMV.

Administrative Process
It’s pretty straightforward. It’s not a situation where you’re going to have to go and do a big Jack McCoy “Law and Order” court case with a jury and spend three days doing testimony. Normally, it’s done administratively. If you file these with the court, and in Pennsylvania, it’s the prothonotary office, they will evaluate it. They might do some research on the vehicle. They might do a background check on the vehicle to make sure it’s not stolen, no liens, no salvage, no back taxes. If everything’s legit, they will sign the declaration of ownership, the petition. You bring that to the DMV or the titling division, and they give you a title. Sometimes, they might ask you to do something else, like take a photo of the VIN number to prove you’re in possession of the vehicle. Sometimes, they might want a copy of your license. Sometimes, you have to go to the clerk after it’s all done, raise your right hand, and swear under oath that everything is true just so that they know that you’re doing it under perjury.

Disclaimer and Resources
Remember, we’re not attorneys. We’re not giving you official legal advice. We’re just giving you some guidance on how this works. We have a whole section on our website at cartitles.com explaining exactly how this works. We have videos you can watch with instructions. We even have some examples of some of the forms. We have a title service if you want us to prepare these documents for you, based on your direction and your information. But the court-ordered title is the most powerful method because the DMV or the titling authority or PennDOT or Secretary of State, whoever does titles in your state, they’re not allowed to hand you a title to give you one of these golden ticket magic papers unless you can prove to them you’re the owner. A bill of sale, your verbal statement, nothing like that is allowable at the DMV.

Court vs. DMV
The court, though, can take that under advisement, and they can make decisions the DMV is not allowed to make, like really who’s the owner. All they can do is, if the legal owner signs a proper title, boom, they can give you a title. But if you don’t have that from the last owner, they can’t do anything. They’re not allowed to, nor do you want them to. Because if they could just do something verbally with a bill of sale, if you had a car that you owned and it was your pride and joy, anybody could walk into the DMV with some fake bill of sale and say, “Hey, I want a title for this vehicle,” and you’d be out of luck. So you don’t want the DMV to make decisions about ownership. You only want a government agency like a court, in this case, Court of Common Pleas, to do it.

Preparing Court Documents
You might have to fill out some cover sheets, like this is a civil cover sheet. This one is a request for scheduling on the docket. Another civil cover sheet. You’re probably going to want to review these and look at the instructions on our website if you’re going to do it yourself. We have great resources for do-it-yourselfers. We love to help do-it-yourselfers. In this case, right here on Section A, they have name of plaintiff. Check here if you have no attorney, self-represented. So you don’t have to have an attorney. This is not something that requires an attorney. It’s mostly administrative. You want to make sure you’re doing it correctly, and the forms are done right. If you are in a state or county where they don’t have pre-created forms like this example, then what you can do is you can use the wording from the generic ones we have on our website and find a court case in your county for something else, like a dog bite or some small claims suit, and look at the format. Is it double-spaced, triple-spaced? How wide are the margins? Do they list the plaintiff first, the defendant first? How do they do it? Then use that format in a Word document or Google Drive to make a form that matches how that looks and just put your own information on it.

Final Tips and Assistance
That’s a great way to be able to get the process started without having to either pay somebody or jump through a bunch of hoops. It’s the most powerful method. You’re going over the head of the DMV. The court trumps DMV. It’s like rock-paper-scissors. Court is better than DMV. And if the court says it, they have to do it. Even if the DMV wants to do something, they want to help you, you really can’t expect them to do something that’s against their rules. It sounds like they’re giving you the runaround. It sounds like they are making it difficult for you or it’s bureaucracy. But they have standards. They can’t just be switching titles around without proper documentation. It’s a nuisance for you, but it does protect people from losing their cars or their vehicles through some sketchy improper title transfers.

Seeking Professional Help
Which brings me to another method. If you are in a situation with a title problem, it’s okay to get help. There are title companies and assistance you can get. Just make sure that you know how the title is being obtained. You don’t want to just sign over your vehicle to somebody and let them do whatever, and then a title shows up in the mail because you don’t know how that title was obtained. You’re on the hook for any title that’s issued, especially if you sign a power of attorney or sign over your ownership to somebody. They can do whatever they want with that process, and if for some reason it’s discovered later that it was done improperly, you could lose your title. There’s lots of examples of titles being revoked, and you don’t want to be any part of that. So if you have questions, you can reach us on our website. We even have live consultations available if you want to get more questions answered without actually committing to purchasing services. We’re glad to be of assistance, and we’ll talk to you then.

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