Titling A Kit Car With A New VIN – 50 States

So how do you title and register a vehicle that you basically made in your garage, or it’s a replica or some custom car without having a prior vehicle base underneath it? Like if you take an old ’69 Camaro and redo it and customize it, even if you make it into a hot rod or a retro mod, you have a car with a VIN number that it started with. What if you start from scratch and you have no VIN number, no chassis?

Kit Car or Assembled Vehicle Process
Well, in most states there’s a process called a kit car or an assembled vehicle, they call it in some states. California has a program called the SB100, and SB100 is a method for registering vehicles that are specially constructed cars. A lot of these are for the movie industry. We’ll talk about that momentarily, and some people make what they call a garage creation that now you want to bring on the road. It might be a replica of an old car, Shelby Cobras are very common, it might be like a Batmobile, something totally custom, or some other type of vehicle, maybe a race car.

SB100 Limitations and Application
The problem with California is they only give out 500 of these per year, that’s a limit. A lot of these are pre-allocated to the movie industry because they have to build cars to use in movies that are customized. So some of them go to the movie industry, and you’re not going to find this over the counter at the DMV. You have to do this through the main branch in Sacramento because some of the people at DMV have never heard of this. You can get these vouchers anytime during the year if they’re available.

Steps in the Registration Process
If they’re available, you have to go through a few step process. First, you have to get the paperwork from the DMV; they have all the paperwork. Make sure you keep all of your invoices so that they know how the car was built. They’re going to charge you tax on it. You’re going to have to have paperwork required throughout the build process. Then you’re going to have to get the California Highway Patrol to inspect the vehicle. They’re looking for stolen parts; they’re going to make sure there’s no parts on it that have VIN numbers from other vehicles that are stolen.

Vehicle Inspection and VIN Assignment
So if you buy a door from another car, make sure it’s not a stolen car because they’re going to check that vehicle out. They’re also going to create a new VIN number, and they are going to be the ones that put it on the car. They’re not just going to hand you a metal tag and say do whatever you want with it; they want to put it on the car with tamperproof rivets. They don’t want you switching it to another car.

Mechanical and Performance Inspections
Then you’re going to have to get a mechanical inspection for lights and brakes to make sure that it’s safe for the road. And then they do what’s called a bar exam. This is a performance examination. They put the car on a dyno, but they also check things like carbon monoxide isn’t leaking into the car, things like gasoline isn’t leaking out of the fuel system. It’s a safety thing.

Rules and Restrictions
California talks about some of the rules on this too, where it’s not for resale. You can’t be a company that’s building these to resell. Obviously, at some point, if you decide to sell it, you can, but if you’re reselling it as a manufacturer, that’s not what they want to do. It’s not constructed by a licensed manufacturer. So, you’re a private person, and it does not include a vehicle which has been repaired by replacing parts, meaning that if you buy a vehicle that’s a salvage or a junk or a car that’s damaged and you just replace it with the same parts, that’s not what they want to do.

Smog and Verification Requirements
You also have to go through smog, and you have to go through this vehicle verification process. You have to have a statement of construction that you complete, how you constructed the vehicle, primarily constructed by me, component part information, statement of facts. You have to go through this entire form and submit this properly to the DMV.

Conclusion
Now, if you’re not in California, it doesn’t matter. This process is an example of what most states have for an assembled vehicle, kit car, maybe a race car that you want to put on the road. Every state has something similar; they call it different things. So if you have a vehicle that’s been literally constructed from scratch in your backyard from multiple parts and it’s not really a car that existed before and you just modified it, building it from the ground up, the SB100 kit car assembled vehicle is a way to have it be designated as a vehicle, and then you can go about getting a title.

Watch our YouTube video: https://youtu.be/3mXOMZvBlkU?si=LTItki-Njw3-KYki

Are Carvana’s Title Problems Due To Lien Payoffs?

You’ve probably seen in the news where the automotive retailer Carvana is having all kinds of problems with its company. Their stock is down, there’s title problems, some states are canceling their dealer’s licenses, some states even the attorneys general are filing prosecutions for violations in those states. Today we’re going to talk about one specific problem that Carvana is having that affects consumers directly, and that is title problems. Why are they having title problems? What is behind it? Why does a licensed new car dealer have a problem with something as simple as a vehicle title? Don’t forget to put your comments below and questions that you have about this subject so we can interact with you and answer some of your questions and put them in future videos.

Carvana’s Title Problems
So here you have a large national automotive dealer chain, one of the largest in the country, selling cars to consumers and not giving them a legal title document. Why is that? Why would a legitimate large vehicle dealership not just give a title? How hard could it be? They paid the money, they signed all the paperwork, so why can’t the customer get their title for their car? They need the title. They have to present it to the DMV to get license plates to get ownership proof. What’s the problem with the title?

Reasons for Missing Titles
Well, there’s a couple reasons why a car dealership would not have a title. First of all, they’re not supposed to sell a car unless they have the title, but there’s a couple reasons why it might occur. First of all, worst-case scenario, the vehicle’s reported stolen. It’s a stolen car. Well, that’s not what’s going on with Carvana. It’s not stolen cars. Second reason is the title was somehow lost or damaged at the dealership after they bought it. Because you know, when the dealership buys a car, they normally get these cars from auctions. Auctions like Mannheim, Odessa, local auctions like Southern. They buy these vehicles and they get a title. Well, sometimes the dealership might lose it or it gets damaged. That’s a very rare event. It’s not something that would happen as frequently as what’s happening with Carvana. Even though they sell a lot of cars, they’re not going to lose that many title certificates. They’re not going to damage that many title certificates because a title is an actual paper document. It’s not electronic, it’s not online, it’s not crypto, it’s a paper form. They’re not losing the titles.

Administrative Issues
Another reason why customers aren’t getting titles is maybe Carvana has the title, but they’re just not getting around to doing the paperwork. Maybe they’re understaffed. Maybe their title department is not handling the transfers properly. From all reports from the company itself, from the investigations that have been done, it doesn’t seem like that’s the problem. It doesn’t seem like they don’t know what they’re doing because it’s not really that hard. You don’t have to know that much about processing a title to figure out how to do it. In fact, individual consumers do it all the time. When you buy a car on Facebook or Craigslist or OfferUp, you transfer a title, you sign the back, hand it to the buyer, it’s done. It’s not that hard to figure out. It’s not a complicated part of selling vehicles. In fact, there’s dozens of YouTube videos, even on our channel, on many other channels, that tell you how to transfer a title. So it’s not like they don’t know what they’re doing. The time it takes to transfer a title isn’t a lot of time. It’s way less time than it takes to do the paperwork for the loan, do the paperwork with the customer. Look, they have a process in place to transport vehicles to a customer’s front door with a tow truck you’ve seen on commercials. So if they have a way to figure that out, it’s not like they don’t have the ability to have a title transfer department. That’s not the problem either.

Financial Considerations
What could be happening has to do with loans. And again, we have no evidence of this. We’re not accusing anybody of this, but this is one possible reason why Carvana is not transferring titles. It could be that they physically don’t have the title in their possession for a vehicle they bought. Why would that be? Well, just like consumers, large automotive retailers, Carvana being one of them, but even any other large dealership you drive by every day, the Ford store on the corner, the big Toyota dealership in town, CarMax, AutoNation, all the big automotive companies, or even small dealerships, they get loans on their cars, on their inventory. They get a loan from either their corporate financing bank. So if you’re a large dealership, you have a commercial loan from some local bank or maybe Chase or Bank of America, and that commercial loan helps you grow your business, fund your operations, and give you an inventory line of credit. That inventory line of credit is called a floor plan line of credit. Floor plan comes from showroom floor, right? The floor of your dealership has all your cars on it. Even some furniture stores have floor plans to finance all their inventory. If you add up the inventory in large automotive or large retailing companies, electronics, automotive, furniture, there’s a lot of money sitting there. In a car lot, there could be five, ten, fifteen million dollars worth of cars. Most dealerships don’t have that cash laying around, so they get a line of credit to finance these cars. Well, when you get that line of credit, the banks hold the title. You get that fifteen million dollar line of credit, the cars are sitting on your front lot. They let you have the cars, but they hold on to the title certificates until you pay for them, until you pay off that loan. So when you sell a car to a consumer, you get the money from that sale, you give it to the bank, they give you the title, and you give it to the customer. Well, what if you sell the car to that consumer and you don’t have, you need money, you’re short on cash. Maybe you don’t pay the bank loan off right away. The bank’s gonna hold that title. Maybe that’s why you don’t have the title to give to the customer.

Possible Loan Issues
Do we know that to be true? No, but this has happened before. There’s been many new car dealerships, big, huge high-end dealerships that have gone out of business because they got behind on their floor plan line of credits, called being out of trust. It happens every month. You read about a dealership that happens to you. You wouldn’t think that it would happen to somebody like Carvana, but if you have money problems, if you’re a big company, your money problems are bigger. Bigger company, bigger problems. There’s another financing arm that dealerships take advantage of, and that’s the auction credit department. When you buy cars from an auction, a lot of times the auction will say, “Look, you bought all these cars, you don’t have to pass right away. You bought ten cars today, they’re twenty-five thousand a piece. That’s two hundred fifty thousand, quarter million dollars in one day. Don’t worry about it, just take the cars, put them on your lot. When you sell them, give us the money.” Because auctions know that most dealerships sell their cars within fifteen, twenty, thirty days. Most dealerships have a thirty-day turn. If you have an inventory vehicle that’s more than forty-five days old, you got to get rid of it. That’s old inventory. It’s stale. You got to get rid of it. So most auctions figure, “Look, they’re good for it. They’re going to sell it. They’re not going anywhere, and they don’t have the title until they pay us. So we’re safe.” So the auction could be holding the title. Now again, if the dealership, whether it’s Carvana or anybody else, sells that car for let’s say thirty thousand to make a five thousand profit and decide, “Look, we’re short on payroll, we’re short on taxes, we don’t have enough money to run our operations. Let’s keep that thirty thousand, use it for some other things, and we’ll catch up with that sale later at the auction.” Is that happening? We don’t know, but this is one reason why titles might not be in possession of a dealership.

Complex Financial Scenarios
What if it’s both? What if a dealership, generic dealership, and we won’t pick on Carvana, but what if a dealership buys a car from an auction and gets a float on their money? They finance it, they ship the car to the dealership. When it gets here, they call up their floor plan lender and says, “Hey, put this car in our credit line. Okay, we put it on for twenty-five thousand.” Now they have an extra twenty-five thousand plus a free car. Now they sell it to a customer for thirty thousand. They get that money. They have fifty-five thousand cash, and they haven’t come out of pocket yet for that vehicle. Could that happen? In theory, it could. It remains to be seen whether or not that’s what’s going on behind the scenes at a place like Carvana. It may not be. But for that many cars in many, many different states, for a large operator like Carvana to have title problems where there’s investigations and look, they’re willing to let their license be revoked by a state rather than fixing title problems. How bad does that have to be? If you’re a car dealership, your license is the only thing keeping you in business. If you don’t have a license, you’re out of business. And there are literally some locations for Carvana that have been revoked and yanked their licenses, and they’re shut down. So how bad does it have to be to let the licensing bureau yank your license? Wouldn’t you fix that unless you don’t have the money?

Permits and Compliance
There are even some new Carvana locations that are in the process of being built. They’ve done site work, they bought the real estate, they’re starting to build that big vending machine tower. And because of the fact they’re not in compliance, their permits are getting pulled for their new location. So again, how bad does it have to be? Look, every company can maybe do something a little bit wrong or do something procedural or paperwork and get a violation or get a fine or maybe get a reprimand. But in order for a license to be revoked, it’s pretty serious. Most state licensing bureaus don’t pull your license unless it’s very, very serious, right? They give you a fine, they give you a write-up. You see it all the time in the newspaper, you know, restaurant gets a fine for, you know, maybe having, you know, leaving dirty dishes out. You may see, you know, an employer get a fine for not having the right kind of, you know, cones blocking, you know, construction workers, whatever. But you almost never see licenses get revoked. Carvana licenses are getting revoked, so that’s a pretty extreme event to have happen. The question is why?

Conclusion and Speculation
We don’t know at this point. It’s not in the news yet. If there is a financing problem or a cash flow problem where these vehicles have loans on it, that will probably be the last thing anybody finds out about. That’ll be kind of like the, you know, the last piece of the onion that gets peeled back after everything else crashes. You know, as of today, their stock is down about thirty bucks. At one point it was three hundred fifty, three hundred sixty. It’s a ninety percent discount. There are the license revocations. That’s in the news. There are fines. That’s in the news. If it’s something as serious, if it’s something as serious, remember I said if, as this financing issue, that’s going to be the last thing that Carvana wants out there. Because that implies things like securities violations, stock manipulation, false reporting. And again, if that’s what they’re doing, which again, we have no reason to think that it is, that will be one of the last things that comes out. But at this point, we don’t know why there’s title problems. It’s just not it. This never happens. This kind of severe title problems at a legitimate new car or high-end used car type operation. You don’t see this. So we’re all very curious to see why. Purely speculation. This is one reason it could be. It could be unpaid financing, unpaid loans behind the scenes for the inventory.

Call to Action
If you are a buyer of a vehicle at Carvana and you have information, put in the comments or send us an email. If you have title problems, put in the comments or an email. We only hear more information from the front lines about what might be happening with this retailer. Been in the automotive and title business for over thirty years, and we have seen dealerships go out of trust, dealerships not pay off their floor plan, dealerships not pay off their credit lines, but it’s never been something this big. So if that is what’s happening, this would be a very unique and significant situation. Let us know what you think in the comments. Keep an eye out for future videos, and we’ll keep you up to date.

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Solving Vehicle Lien Release Problems

Today in our ongoing series about vehicle lien releases, we’re going to look at some documents and instructions on how to obtain a lien release for a motor vehicle, including some specific scenarios where the lien holder may be out of business, may not be able to be contacted, and what are your responsibilities as a vehicle owner.

Example Instructions from New York Department of Motor Vehicles
First, let’s take a look at an example of instructions for lien release. This happens to come from the New York Department of Motor Vehicles. How to obtain a lien release on a vehicle is pretty straightforward. That’s the question on everybody’s mind: how do you get a lien release? We know what a lien is, so we’re not going to get into the definition of a lien.

Satisfying Loan Terms
How to obtain the lien release? Well, first, you have to satisfy the terms of a loan by paying the balance of the loan back to the lender. Now, this is assuming the loan is paid off. If the loan is not paid off, there are still some methods that can be used to get a lien release, and we’ll talk about those a little bit later in this video. But the most common method is you have to pay back the balance.

Notifying the Titling Authority
However, if you notice, this is only step one. Just because you paid off the loan does not automatically make the lien go away from the title. Here’s why: when you pay your last payment to that lender, what they normally do is they mark your account paid, just like any other loan account. They stamp your title paid and they mail it to you, or maybe they’ll mail you a lien release document. They normally do not notify the titling authority like the Department of Motor Vehicles. So that lien is still in their records. The Department of Motor Vehicles or the title agency in your state, whatever it’s called, normally does not know your lien is paid off when you pay off the last payment. Only you know it and the bank knows it. So now you have to get that information to the DMV.

Receiving and Requesting a Lien Release Document
So normally what will happen is the lender will give you a lien release document, which is an official document. Here’s what one looks like, and it’s an application for removal of lien. This happens to come from North Carolina, and we’ll come back to this momentarily. The next thing you need to do is, if you don’t receive the lien release, submit a request to the lender. This is a very common scenario. A lot of times the lien holder will either not send it to you or it might get lost. If that’s the case, you want to get another one as soon as possible.

Proper Method of Requesting a Lien Release
Now, it’s important how you request that. You don’t want to do it by phone. You don’t want to call them up. You don’t want to do it by email. You don’t want to do it through their website. The only way you want to do it is in writing, and there’s a very specific way of doing it. Let’s jump to that right now before we get to the other steps.

Preparing the Lien Release Request
If you are needing a lien release, get the form that’s the official lien release form for your state. Here’s the one for North Carolina. It’s an application for removal of lien. What you do is you fill it out: year, make, body style, model, VIN number, owner, lien holder information, and prepare this on behalf of the lender and send it to the lender. Don’t trust that they’re going to do the work because here’s why: all the people working at that bank are doing other jobs. If you just call them and say, “Hey, get me a lien release,” first of all, they have to find this form. Did you know about this form? Well, they don’t either. So they’re going to maybe try to find it, and as soon as they run into difficulty, they’re going to go back to their other job. So do the work for them. You may not think you have to, it’s not fair to do it, but if you want your lien release, this is what we recommend doing.

Mailing the Request
Send it to them by mail. In addition to sending it to them, put a return envelope already filled out with your name and address and a stamp. You want to make it as easy as possible for that lien holder to send it back because if there’s any work involved where that person at the bank has to do any kind of work, they might just throw it in the trash and not deal with it.

Submitting the Lien Release to the DMV
So then what do you do once you get that lien release? You want to go to the DMV and submit it to them and verify that the lien is removed. Okay, you don’t want to take their word for it that you just mailed it to them and it’s done. You want to verify that it’s done because if you find out three or four years later the lien’s still on your car, it’s going to be harder to take it off then.

Copy of Title and Lien Release
Sometimes you might have to provide a copy of the title along with the lien release. However, most states, like New York, don’t give you a title if there’s a lien.

Responsibilities of the Lien Holder
Now, what are the responsibilities of the lien holder? This is where you might actually have some leverage. Upon satisfaction of a security interest, a lien, the lien holder shall immediately execute a release of security interest and mail the release to the owner. The Department of Motor Vehicles encourages lien holders to cooperate by mailing or delivering a lien release immediately to the lien holder, and if not, you might be subject to action. All regulated financial institutions shall release liens and deliver lien releases no later than three business days after clearance. Now, lien holders break this rule all the time, but in most states, there’s a requirement under the law that they deliver to you a lien release document within a certain period of time. Three days is kind of quick. Most states require 30 days or a month and a half, but they have requirements, and that’s leverage you can use to do that.

Obtaining a Lien Release from a Closed or Failed Bank
Here’s another question that comes up: obtaining a lien release from a closed or failed bank. This is where it gets tricky. If a bank has been closed or they’re not operating anymore, you still have to get a signed lien release. They’re not going to take your word for it at the DMV that this form is okay without their signature. So what do you do? You have to look up who’s authorized to sign on behalf of that closed lender. The FDIC might have information, National Credit Union, Secretary of State. When we do this, we do a full research on that lien holder. We find out who’s their registered agent, who is their admitted carrier, who maybe is the merged entity, and we will prepare this document and we’ll send it out to all the different potential authorized signers because all you need is one. But you’re going to have to do some research to find out who is the authorized party that can sign on behalf. Because if the DMV gets this form and it’s not signed or not signed by the right person, it has to be notarized too. They’re not going to accept it. They’re just going to kick it back. So you want to make sure that you do the research and find out where that lien holder’s authorized agent is.

Importance of Authorized Agents
Just because they shut down doesn’t mean that the lien goes away. And here’s the other thing: most financial institutions, when they stop operating as a lien holder, they don’t just disappear. They don’t just shut the door, turn off the lights, and walk away. Their assets go to some other entity, another bank, another lender because they’re worth money. Even the mailing list of that bank is worth money. So some other bank or institution has a right to the assets and activity of that lender, so they can sign that lien release. You have to find out who that is. That’s the tricky part, and that’s where the research comes in. And usually, we average about an hour or two worth of research to find out who those lien holders are. And you can do the same thing yourself if you need that lien release.

Alternative Document: Letter of Non-Interest
Now, one last thing about this document: make sure that you get the proper document. Every state has an official lien release form like this one. However, sometimes a bank or lien holder is not comfortable signing a lien release because they don’t know the lien is released. If it’s an older loan, it’s charged off, written off, they’re out of business, they might not know about that lien being released. They don’t see it in their system. So instead of a lien release, you might offer them the option of signing what’s called a letter of non-interest. It’s another official form that is an alternative document to a lien release where the lender can sign that instead to clear the lien off of the title.

Conclusion
Hopefully, that gives you information. You can reach our website car titles.com which has more information about how to get a lien release. We have all the forms, we have all the instructions, and there’s also title services available. The main thing is, though, if you have a lien on the vehicle that you want to title, you want to get it off as soon as possible so you don’t run into problems where the vehicle is not legally yours.

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Solving Vehicle Title Problems – Webinar

One of the most common types of issues we deal with clients involves difficult title problems for motor vehicles. The reason it’s difficult is the title is a legal government document that’s issued only by government agencies, and unless you have all your ducks in a row, they’re going to give you a hard time on issuing you a title. This is why a lot of people run into these types of problems getting a new title in their name for a motor vehicle.

Overview of the Presentation
We’re going to jump right in and talk about a few subjects. In the presentation, we will cover the requirements for getting a title, the difference between a duplicate title and a title recovery, abandoned vehicles and the misconceptions surrounding them, mechanics liens, the famous or infamous Vermont loophole, lien releases and lien holder issues, bonded titles, court order titles, and how all these relate to the new calendar year 2023. If you have questions during the presentation, type them into the chat. We’ll keep an eye on them, and if they’re things that will be covered in our regular content, we’ll address those when that subject comes up. We’ll also have some time at the end to answer other questions from the chat or from our live viewers that are emailing in. Expect about 25 minutes for the primary presentation and additional time for questions.

What is a Title and Why is it Needed?
The first topic to get into is what a title is and why it’s needed. A title is a legal government document, as you can see in the picture on the left. This is an example of a vehicle title. Notice it is a certificate, not just a blank piece of paper. It’s not something you can print off from the Internet; it’s an official form, kind of like money, with scroll work and watermarks on the back. It’s issued by an agency, usually the Department of Motor Vehicles, Secretary of State, or Bureau of Motor Vehicles, depending on the state. Remember, you can’t buy a title from a company or download one from the internet; it only comes from the government agency.

Getting a Title
If we look at an example from the state of Oregon, one of the requirements for getting a title is having the original title or ownership document from the last owner. In order to get a new title, you’re supposed to have the last title from the last owner signed over to you. But if you’re here watching this, it’s probably because you want to know how to get a title if you don’t have the old title. If you had the old title, you wouldn’t need much help; you could just bring it to the DMV, turn it in, and they would give you a new title.

Duplicate Title vs. Title Recovery
A duplicate title is a topic many people ask about. A lost title or duplicate title is when you had a title with your name on it printed from the DMV, and you just lost it and want to get a replacement. The only person who can apply for a replacement title certificate is the person whose name is on the title records. Nobody else can apply for a lost title duplicate replacement. If you try to get one as a replacement, they’re going to look it up and say, “No, this title is in the name of Joe Schmoe, and you’re not Joe Schmoe.” The alternative is to pursue other methods such as bonded titles, civil liens, or the Vermont loophole.

Bonded Titles and Alternatives
You could pursue a bonded title, a civil lien (court order title), the Vermont loophole, or a prior owner transfer. We will cover all these in more detail. It’s important to avoid mechanics liens or abandoned vehicles. Specifically, an abandoned vehicle is a status where everyone abandons it, and you have to surrender it to the state, which then auctions it off.

The Vermont Loophole
The Vermont loophole is infamous, often mentioned in various media. It involves applying by mail to the state of Vermont to get a registration ownership without a title. You only need a bill of sale. However, there are downsides, such as paying sales tax based on the vehicle’s full retail book value and the risk of your state not accepting the Vermont registration as a title.

Civil Lien (Court Order Title)
A civil lien or court order title is a powerful way to get a title. You file documents with the court in your county, including a petition, a letter of non-interest, and an affidavit. The court may require proof of possession and identity, and then they give you a judgment of ownership, which you can use to get your title from the DMV.

Bonded Titles
A bonded title involves getting a surety bond that backs up your ownership claims. It is like an insurance policy for the DMV, guaranteeing your statements. However, it’s a branded title, which can make it difficult to sell or finance. Some states don’t offer bonded titles, so you need to check if your state does.

Prior Owner Transfer
A prior owner transfer involves getting the last owner to get a duplicate title. You should send an official form by mail, filled out and typed up, to the last owner, making it easy for them to sign and return. Do not try contacting them by phone or email, as they might ignore you.

Lien Releases
If your vehicle has a lien on it, you need a lien release form signed to clear the title. Send the form to the lien holder, and if they don’t respond, you might need to get a court order title. Even if there’s money owed on the vehicle, many times the lien holder will release the lien if you contact them as an innocent third party.

Special Cases and Additional Resources
For vehicles with brands like salvage or rebuilt, you need to follow additional steps before getting a title. There are resources available on various websites, such as car titles, lien titles, auction titles, and more. For more complicated cases involving dealerships going out of business or needing investigative services, consult with a title agent or private investigator.

DMV Contact and Damaged Titles
Contacting the DMV can be challenging. If you need to get information, it’s best to go in person and get answers in writing. If you have a damaged title, get a new title with your name on it as soon as possible. Titles are very important documents, and getting them properly processed is crucial for ownership and future transactions.

Conclusion
In summary, dealing with title issues requires understanding the specific requirements and processes for obtaining a new title. Whether it’s through a duplicate title, bonded title, civil lien, or other methods, it’s important to follow the correct procedures and be aware of potential pitfalls. For further guidance, refer to the available resources and consult with experts if needed.

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Mechanics Liens For Vehicle Titles

So what happens with mechanics liens or storage liens? The question comes up quite a bit from our clients who are auctions, dealerships, repair shops that have vehicles that have been left there that they need to get off their lot or to get rid of or to get money to pay for the repairs that were done and never, um, paid for by the vehicle owner.

Mechanics Liens for Private Citizens
What about mechanics liens for private citizens? Can you do a mechanics lien to get a title for a car that maybe you purchased and didn’t get a title? Maybe you want to charge storage for a car that’s in your driveway. Can you do that? We’re going to take a look at mechanics liens in general and a few examples in some states to show what the rationale is behind these. What is the common logic behind it?

Federal and State Laws
Because in reality, even though mechanics liens for vehicles for cars and trucks are done differently in every state, the origin of the rules comes from federal law, so you have to kind of have the same process in most states even if it’s a little bit different for each jurisdiction.

Definition of Mechanics Liens
First of all, what is a mechanics lien? Well, technically a mechanics lien, sometimes called a garage holder’s lien or a repairman’s lien, is a process for a legitimate repair facility or automotive facility to get payment for a vehicle that was brought into their facility for repairs or service or storage and the person who owned the car never paid for it.

Practical Example
So somebody brings in a car, says, “Hey, fix my transmission.” You fix their transmission, and then they say, “I’m not paying for it,” and they leave the car there. This is a way for that repair facility to get compensated for their legitimate work on the vehicle and get the car off their lot so they don’t have to be stuck with a car and no money.

Authority and Misuse
Now, it gives some power and authority and privilege to a repair facility to get a title for a vehicle because, in fact, you’re taking away the ownership of that vehicle from the owner for your benefit. So you have some extra authority to do this. Because of that, sometimes this process is misused or abused by repair shops that say, “Hey, I’m going to use this to get titles for my buddy who bought a car on Craigslist that maybe didn’t get a title, right? I’m going to put in a fake mechanics lien.” We’ll talk about that later, but you have to be very careful using this because it’s very highly audited.

The Process: Example from Virginia
So what is the process? Well, here’s an example from Virginia. Mechanics lien storage application: You have to fill in this form. What else do you have to do? You have to attach an invoice that shows you have a mechanics lien under the code in the amount of whatever it is, and that invoice has to be a repair order from the owner of the vehicle authorizing you to do repairs, right? So if you don’t have authorization to do the repairs, you can’t just claim a lien on any vehicle.

Steps to Follow
First thing you have to do is send in a vehicle record request. You notice that’s the first thing. You have to put your name and address of your company and your FE number of your company, your tax ID number, your user agreement number, and street address where the vehicle is held. Then you have to put in a vehicle record request. Basically, you have to submit an inquiry to the Department of Motor Vehicles to get a printout of the ownership and lien holder of that vehicle. You have to do that first, and you’ll see all these other states have that as the first step.

Importance of Initial Steps
Why do you have to do that first? Because if you don’t do that first, the rest of your process will be voided by the government. If they don’t see that you ask the ownership records for that vehicle first thing before you send out certified letters or notices or auctions, they’re going to get your package, and they’re going to reject it because you didn’t ask for this first, right? And you have to have a reason for it. I understand it is unlawful to use this information for any other purpose. Ownership information is protected under federal law called the Driver’s Privacy Protection Act (DPPA), so if you ask for the government to give you the private name and address, of that vehicle owner, you have to have a good reason, and your reason of a mechanics lien is a good one. But if you use it for something else, you can get in trouble. I certify the information will be only used for the purpose.

Completing the Process
So you put in the VIN number, you put in the name of the person that’s asking for it, then the DMV will fill out this part. What do you have to do? Mechanic or storage lien requirements: What are the requirements? We’re going to take a look at this box right here. If the vehicle is worth between $12,000 and $25,000, first you have to ask for that vehicle transcript. That’s the first thing on the list, first bullet point. You have to notify all owners and lien holders by certified mail that you’re intending to sell the vehicle at least 10 days before the auction. Notice that that comes after the vehicle transcript. Here’s why: because if you send out that notice and it’s dated before you get the transcript, they’re going to say, “Where’d you get the information from?” Because it could be wrong. You have to have it dated afterwards.

Auction Requirements
You have to hold the vehicle for a minimum of 30 days. You have to advertise the date and time of the auction 10 days before the auction. So you have to offer this at auction. Now, you probably don’t have to sell it at auction. If somebody bids on the car $1,000, you can say, “I’ll bid $1,001,” and you can own the car. You have to petition the district court in the city or county to order the sale, so you have to get a court order for this. Then you have to be granted the petition, you have to hold the auction, and then you have to get an affidavit from the sheriff that said you complied with the auction and the other criteria. Sounds like a lot of hoops to jump through. You might think, “Well, this is Virginia. It’s a lot harder in Virginia.” Well, we’ll look at some other states.

Compliance and Qualifications
Affidavit of compliance must be completed by the lien holder and be submitted with the rest of it. Vehicle qualification: Does it qualify? Is it non-repairable? I have done all of these. I applied to the DMV to get the lien holder information. Well, guess what? That’s the first step. You have to hold the vehicle in possession for 30 days. I made notice of intent to sell the vehicle. I arranged for the vehicle to be sold. You have to check off you did these. I certify I have complied with these. I certify that all the information is true and correct. If it’s not, it’s under penalty of perjury. Make a false statement as criminal violation.

Audits and Fraud
This is because many times these are used for false purposes. Fake mechanics liens are ubiquitous, and they’ll check this out. They’re going to audit these and make sure that, first of all, you did it right. They’re also going to take a look at your mechanic shop to make sure you’re not doing too many. They’re going to compare the mechanics liens with your tax receipts to see how many dollars in taxes you’ve collected for all your customers that month, and if it’s x amount of dollars, they know there shouldn’t be 20 mechanics liens if you only collected $1,000 in taxes, right? Like, it just doesn’t add up. So they’re going to audit your individual mechanics lien packages and also audit you in general because they know there’s a lot of fraud going in.

Checklist
Here’s another checklist, right? Did you do these things? Did you get the transcript? Do you have the NADA screen value? Do you send the fees? Do you have a bill of sale? Do you have all these things? If you don’t have all these things, they’re just going to reject it. So there’s one example. Let’s look at another state here in a moment.

Example from Utah
All right, so here we are back again looking at another example of a repairman’s lien. You can see that’s what they call it here in Utah. Certificate of sale: What do you have to go through in Utah? You have to have your company name for your repairman information, right? Your business information. You also have to put a statement saying after lawfully advertising the lien, I certify the vehicle was sold to the highest bidder. So you can’t just take it to yourself. You have to take bids on it. Now, normally people don’t come bid on it, but you have to at least offer it.

Utah’s Filing Rules
Here are the rules instructions for filing it: At least 30 days before you sell it, you have to send certified letters to the registered owner. How do you know the registered owner? Well, you have to put an inquiry to the DMV to get that name. You can’t go by what you have from the customer’s note that they gave you or what you found in the vehicle. You have to get a registered or certified printout from the DMV. The customer responsible for the work order also has to be notified. So if the owner and the person who brought in the car are two different people, you have to send to both. The certified letter has to have in it the VIN number of the vehicle, the location, the name and address of the owner as indicated on the work order, and any person claiming an interest. So if there’s a lien holder, you got to send it to them too.

Sale and Notice Requirements
The name and address of your place, your garage, the total amount owing for the services, any interest and storage fees. Remember, you can’t just make that up out of thin air. The interest and storage has to conform to the law, and you have to have the date and time of the sale. No property can be sold earlier than 45 days after you complete the repair, so you have to wait at least a month and a half. Explanation of the right to claim lien: So you have to print out the law that shows how you can do this and also let the owner know that they have the right to recover by posting a bond or paying for it before the sale takes place. You have to also put an advertisement in a newspaper saying you’re going to offer it for sale. That way you get interest in it.

Final Steps in Utah
When the sale is done, you have to fill out all the forms: the TC 839 R, the receipts for certified letters, the copy of the certified letters, proof of publication, copy of the signed work order. If you don’t have a signed work order, you’re out of luck, and then you send it to the DMV, but you also have to satisfy any registered lien, right? So it doesn’t make liens go away in Utah. So that’s another difference you have to look at.

Example from Wisconsin
Last but not least, what about Wisconsin? Wisconsin also has involuntary transfer mechanics lien, right? And you have certain rules you have to go by there. The rules are you have to say, “I am a mechanic who has prepared a written repair order that clearly describes the repairs. The repair was given notice, and they didn’t abide by it,” and you have to sign it under penalty of perjury. And then you go through the same process. You have to verify ownership by getting a vehicle driver record request. You have to wait for that to come back. You have to send out a certified letter. Most of the rules are the same in different states because it goes by federal law.

Conclusion
So here’s the bottom line. If you’re thinking about doing a mechanics lien, first of all, make sure you’re an actual mechanic and you have the right to do this. If you’re not, you’re wasting your time. Now, you might say, “Well, I’m a private person, I’m just a civilian, but I’m going to get my buddy who’s a mechanic to put through a fake mechanics lien.” Be very careful because, like we talked about earlier, the government is going to audit these, and if they contact the prior owner and they say, “No, I never brought my car into that shop. I sold that car on eBay or Craigslist a couple weeks ago,” now they’re going to pull your mechanics lien and your buddy’s license will be at risk. Lots of people get in trouble for doing fake mechanics liens, so don’t do that.

Alternatives
There’s other ways to get a title. In fact, many of our clients who are mechanics that could do a mechanics lien, they would rather do a court order title because it’s easier, it’s less hassle, less headache. You don’t have to wait 30 days, 45 days. You don’t have to have all this documentation. So consider other methods. Court order title: You can see the link below for more information about that. But if you are set on doing a mechanics lien, this will give you a couple of examples. Every state’s a little different. Our website will give you instructions on how to do it if you want to do it yourself. We also have a title service if you want to have us do the work for you. Mechanics liens are a valuable way to recover money as a mechanic, but by itself, it shouldn’t be a way to try to get a title only in particular scenarios.

Watch our YouTube video: https://youtu.be/NpxDQqz9QP4?si=wggl9SRx862_JGRp