Repo Vehicles Are Backing Up With No Titles

Suspicious Activity in the Towing Business
If you are in the towing or vehicle recovery business, you may be noticing something going on with lien holders and lenders that might be suspicious. What’s happening is you may be getting contracts to repo vehicles from borrowers that are delinquent or to store vehicles for vehicles that have been recovered. Then the lien holder either doesn’t pay for the tow or recovery or even really want you to send the vehicle to them or to an auction.

The Real Motive of Lenders
The reason why is because there are some vehicle lenders who are only looking to get the asset out of the hands of the borrower. They don’t necessarily want the asset back; they don’t necessarily want to have the car in their possession. And you might think, well, if they’re repossessing the vehicle, why don’t they want it back? Well, let’s look a little bit farther backwards at some history. There are many vehicle borrowers who have stopped paying for a vehicle, delinquent on their loan, who have contacted the lender and have told them, “Look, just come get the vehicle. I don’t want it taking up space in my driveway. I don’t want to have anything to do with it.” And the lien holder or the lender tells them, “We don’t want it. We don’t want the car, but we’re not giving you a title. We’re not clearing the loan. We just don’t want the car.”

Borrower’s Dilemma and the Impact on Recovery Firms
Well, now the borrower’s in a bad spot because they have a car that maybe is not running, maybe it’s inoperable, maybe it’s damaged, or maybe it’s just not really that desirable to have as a vehicle, and it’s taking up space. If you are an automotive recovery firm, a towing firm, a repossession company, you may be thinking, “Well, this sounds very familiar. I’ve repossessed ten vehicles for this bank, and they’re sitting on my lawn. I’ve asked the bank, where do you want me to bring them? Do you want me to bring them to an auction? Do you want me to send them to you? Do you want me to bring them back to the borrower?” No. “Okay, well then send me my fee for towing the vehicle while it’s still in repossession.” They’ll give you excuses. Maybe the company that actually brokered the recovery is out of business. Sometimes it wasn’t directly from the lender; it was from a freight brokerage company.

Lenders’ Business Strategy
Maybe you’re a storage location for automobiles that have had vehicles delivered to you by a towing company for a bank, and it’s taking up space, and you’ve got to make that space available for further vehicles. Well, here’s what’s going on behind the scenes, possibly, not every case, but possibly. The lien holder is not in the car business. They’re not looking to buy and sell cars; they don’t want cars back. They’re in the money business. They want to collect payments and money from the borrower. If the borrower has the vehicle taken away from them, there’s a very short window of time—15 to 20 days, sometimes 30 days—where that repossession is an incentive for the borrower to make good on the payments, to get caught up on the payments.

Economic Realities of Repossession
If the borrower doesn’t make good within 30 days, the lender knows from experience that the borrower doesn’t care about the car. The leverage of yanking the car away from the borrower is not going to make them pay more. Sometimes the borrower just doesn’t care about the car. They figure, “Well, once it’s gone, I’ll get something else,” or they just don’t want to deal with it. Lenders have learned over the years that a high percentage of vehicles that are repossessed are not worth in value the dollar amount it will take to process the recovery.

Costs Involved in Repossession
Meaning, pay the repo company their fee, pay the storage, pay the shipping to the auction, pay the fees for refurbishing the vehicle for the auction, cleaning it up, detailing it, making it run right, paying the auction fees, and then selling it at a discounted rate because auctions are wholesale transactions. So, for example, it may be a vehicle that has a book value of three thousand dollars, but at wholesale auction, it’s gonna sell for a thousand. Well, you might have a two hundred dollar fee for the repo company, a two hundred dollar fee for storage, 200 for shipping to the auction, 200 in auction fees, and 100 reconditioning. Well, now you have 11-1200 worth of fees, and you’re only going to get a thousand for the car. So, why not just pay no fees and let the car be somebody else’s problem? That’s the mentality of the lender.

The Condition of Repossessed Vehicles
Now, that’s assuming the car is even running or driving. Many of the vehicles that are delinquent on payments with a borrower, the reason for the payment being delinquent is because the vehicle is inoperable. It has a blown transmission, the engine’s no good, it was involved in an accident, and it’s crashed; it can’t be driven. Now, that’s not the case all of the time, but it might be 20-30 percent of the time the vehicle is inoperable. Well, how will the lender know? The lender doesn’t know that, but if you factor that into the percentages, they say, “Well, if thirty percent of the cars are going to be worth zero and seventy percent of the cars are going to be worth a thousand and it’s going to cost us a thousand dollars a car to pay the fees, then let’s not bother getting the cars back. Let’s just use the repossession as a lever, as a threat, to try to get money. If it doesn’t work, then we just won’t pay anything. The repo company, they’re out of luck. The towing company, they’re out of luck. We’ll just let them deal with it.”

Financial Impact on Recovery Companies
Now, where does that put you as a repossession company, a towing company, as far as your finances? Well, you’re not getting paid by the repo by the lending company. The borrower really has no obligation to pay you anything. If they’re not going to pay the payments on the car loan, they’re not going to pay you any fees. Well, what about you getting a title? Well, that’s tricky. In every state, there are certain requirements or certain procedures for automotive businesses to do a mechanics lien or a towing lien or other types of processes to get a title for the vehicle to sell it to recover your losses. The problem is that the towing lien process or mechanics lien process has a lot of hoops to jump through, and more importantly, it doesn’t work every time.

Challenges with Lien Processes
Even if you do all the paperwork right and you do all the processes as described by the state statutes, they can get rejected for many reasons. So you might be in the same boat as a lender. You try to do a towing lien and you spend all the time and effort and labor and cost to do that and then find out half of them don’t get approved because of a procedural error, timing error. Sometimes if it’s not done within 30 days of when the loan was delinquent, it doesn’t qualify. So they’re going to look at when the original repossession was issued. It might have been a year ago. Too bad, you’re out of luck. And every state’s different. There are some states that have actually eliminated towing liens from being qualified to get titles because of a high fraud rate of using these liens.

Possible Solutions
So, to make a long story short, if you are a towing company or a recovery company and you have vehicles that are backed up on your lot that the lien holder is saying, “We don’t want them back,” and you want to try to dispose of them, you have three options. One option is you can make the lender, they’re not going to pay you, they’ve already said they’re not paying you, don’t try to beat that dead horse. You can make the lender give you the proper repossession delinquent title transfer forms. It’s unlikely they’re going to do it voluntarily, but what you might be able to do is if you prepare all the forms that the lender would have to submit to the DMV to process a repossession title and just have them sign them, right? The lender is probably not going to go through the trouble to process all those forms, but if you prepare all the forms, you get all the documents’ i’s dotted and t’s crossed and just provide them to the lender just for one thing, their signature. That’s it. You might be able to do that.

Mechanics Lien and Towing Lien Processes
Number two is you could process a mechanics lien or a towing lien. Same thing, fill out a bunch of forms, go through all the steps. It takes about 90 days to six months, depending on your state, to do all the notices, all the newspaper publication requirements, the auction requirements, and 50 percent of the time you’ll end up with a title. Fifty percent of the time you will end up with nothing, but you could try and see, maybe you get half of them, that could be worth it.

Disposal Option
The third option is to simply dispose of the vehicle, to have a salvage yard, junkyard, towing company just come get the car and get rid of it. You’re not going to get any money, but you also are not going to be out any money for filing mechanics lien or your labor for trying to get a repossession title. Now, option number one might sound like a good option. Well, just have the lender give me paperwork, a lien release, or a foreclosure repossession notice.

Legal Implications for Lenders
The problem is some lenders are very hesitant to do that because repossessing a vehicle is one legal threshold. It’s, well, you didn’t pay your bills, we are taking your vehicle. Okay, fair enough. Changing the ownership of that vehicle is a whole different story. Once you change the title from your borrower to somebody else, now you’re doing something that might have a higher legal threshold, and if a lender does that without the proper authorization or if it could be contested by the borrower, they can get sued. So sometimes they’re just as comfortable repossessing the vehicle, getting it out of the hands of the borrower, but not actually following through on the formal title transfer because that could put them in hot water. And letting it sit like that, they’re not letting the borrower get away with a free car, but they’re also not taking the car ownership away from the borrower, kind of like a legal limbo of a vehicle.

Towing Company’s Predicament
If you are a towing company or storage company with ten cars on your lot, the legal limbo is creating a problem for you because it’s taking up space, and more likely you are out money because you performed a service for the lender that’s not paid for and is never going to get paid for. You can try to do mechanics lien and towing lien, there’s no harm in trying, just understanding that they don’t all work. You would think that, well, it should work because I towed the vehicle and I have rights. Well, guess what, the statutes of your state may be a little bit more restrictive than that. Most states have statutes that protect the borrower and the owner from just having a vehicle title snatched away from them without proper paperwork and without the loan paperwork being certified as delinquent and going through the legal channels. Simply just towing it might not be sufficient. There may be a way to do it, but there’s also, like we said, many protections in the law about how long you have to do it. You can’t wait too long, but you can’t do it too soon. If you don’t send out the right notices, it’s void.

Legal Advice and Risks
If you are a towing company also, if you’re going to do a mechanics lien, get good legal advice. Because if you do a mechanics lien or a towing lien on a vehicle that is a repossession and you end up getting a title switched to you or your buyer, the borrower is going to get a notice of that title transfer, and they can contest it. They could say, “No, I never authorized a tow, I never brought it in for service or repairs.” And if you checked off the wrong box on that application for a mechanics lien and said, “We’re a mechanic and we fixed the vehicle,” or “We towed the vehicle on behalf of the owner,” technically that may not be the correct statement of facts. Your facts are you were hired by a repo company to repossess a vehicle. That may not fit under the standards of a mechanic’s lien. It might in your state, but make sure you get good legal advice because what you don’t want to do is take an old sled 500 dollar car you’re just trying to get your money back for and turn it into a 10,000 dollar lawsuit against your business and have the consumer protection agency or the attorney general of your state clamping down on you because you just checked off the wrong box trying to recover three or four hundred dollars for a towing fee.

Regulatory Complexities
There are many, many federal statutes for fair credit reporting and consumer protection on auto loans to protect people from losing their rights in a vehicle just because they didn’t pay a loan payment. You might be accidentally stepping your foot into the middle of a hornet’s nest of huge consumer protection lending laws just because you towed a vehicle and are trying to get a title. So before you get into all this, make sure you get good legal advice from an attorney that knows what they’re talking about. If you want to file paperwork and do mechanics liens, that’s great, that may be a good option to go. But also remember, mechanics lien isn’t as simple as just filing one form. It’s a process over the course of two to three months of notifications, publications, auctions. It’s very tricky. We do them all the time. We know how hard they are. So you want to make sure you know what you’re getting into also with the mechanics lien so that you know, first of all, how hard it is, but also if it is a repossession that you might be unintentionally wrapping yourself up into a large-scale federal consumer protection finance industry regulations, and there’s a lot of regulations that go into that. That’s why the bank may not want to be getting the car back and getting a title because they don’t really care about repossessing the car, taking it from somebody. But once they start messing around with title, now you might be opening up a can of worms for regulation, oversight, and enforcement.

Practical Recommendations
So think about if the bank is hesitant on getting the car back and doing a title, the bank might know something you don’t as a towing company. So be very careful about that. In the meantime, what do you do as a towing company? What we recommend if you are a towing company that’s doing recovery or repossession for a lender or for a broker of a lender, that you get paid in advance or get a retainer for your work. Because we talk to hundreds of automotive industries every week, and they’re telling us all the time that the lenders aren’t paying. And the way they’re hiding behind it is they’re hiring a third-party brokerage company or a management company or a recovery efficiency company who hires you. You’re not hired directly by the lender. You’re hired by some broker or middleman, and they make a fee no matter what, and then they leave you holding the bag with the vehicle without a title and without payment because they don’t pay you. That’s the way they make money.

Financial Health of Towing Companies
So just be aware of what’s going on in the recovery industry and how that might affect your profit, loss statement, your balance sheet, your bottom line. And if you’re a towing company, it might be, you know, might be scary to say, “Well, either pay in advance or we’re not towing anymore for you,” because a lot of lenders are just going to say, “Fine, we won’t send any more business.” But if you’re not getting paid anyway, you’re better off not doing free work than just doing no work. What’s cheaper, having your tow truck sit there and do nothing and get paid nothing or have it spend six gallons worth of diesel fuel and four hours of labor for your employee and get paid nothing, right? How many paid recoveries does it take to make up for one non-paid recovery? A lot. It probably takes five or six or eight paid recoveries to make up for one defaulted payment from one client. By the time you look at how much profit you actually make off of one paid recovery, it might take seven or eight of those to come up with the losses you take on one person that stiffs you on the payment. And that goes for every industry. Make sure you’re not doing business for people that are likely going to stick you on payment or default on their contract.

Conclusion
The recovery and towing industry has this going on with lenders. Be aware of it as an automotive recovery expert, towing expert, so that you don’t end up with 15 cars clogging up your lot, thousands of dollars in unpaid invoices, and nowhere to go to try to solve it other than the temptation to do something that might get you into legal hot water.

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Transfer Car Title With No Signature Of Seller On Title

So, when are there allowances to not have a requirement for a signature on a previous title in order to get a new title? Most of the time, when you go to the DMV to get a new title for a vehicle, you will be required to have the signatures on that title from the prior owners. We’re going to look at a couple of exceptions where there are loopholes that you can use to get a new title without having the signature of the prior owner. In this instance, we’re going to look at the state of California.

Basic Title Transfer Requirements
Basic title transfer requirements and what the loopholes are where you don’t have to have the signatures on the title. For example, California title properly endorsed for transfer must have the following: if it’s co-owners with “and” the signature of each owner, meaning both; if the co-owners have the word “or” or “and/or” next to it, you can have either one sign it; if it’s joint tenants, that’s each; also, business entity have the business entity and the authorized signature on it; DBA, same thing; sole owners, trustees. So, this talks about who has to sign it and they have to sign the transfer form and the title.

Exception: Form 262
But if you notice, there’s an exception: a vehicle/vessel transfer and reassignment is acceptable in lieu of a signature line on the title. So, if you don’t have the signature or can’t get the signature on the title, this reassignment form, REG 262, is acceptable in lieu of a signature on the title. So, what does that mean? Well, here is form 262. It’s a vehicle/vessel transfer and reassignment form. Now, it has to be original, original signatures; you can’t do a photocopy. It tells you this form is not the ownership certificate, is not a title. It must accompany the titling document or application. So, if you have this in an application, then you can get a new title.

Using Form 262
So, how do you do this? VIN number, year, make, model, if it has a license plate, bill of sales included, who’s selling it to, odometer statement. Now, buyer and seller must handprint his or her name, date, and sign. What does that mean? You can’t do it electronically; handprint means exactly what it sounds like: hand with a pen. Okay, I acknowledge your dominant reading and the facts of the transfer. I certify under penalty of perjury this is correct. So, even though it’s a loophole and it’s an allowance, they’re telling you you don’t have to have it on a title. They’re taking it pretty seriously. This is a very important form. Seller section: I declare that the foregoing is true and correct, seller’s name, signature, date, and an ID number, driver’s license ID number, or for your dealer, you put the dealer number, and you print the name, put the address. It’s a one-page form, right? So, there is an allowance for not having the signature on a title.

Power of Attorney
Let’s take a look at some other possible exceptions. Here’s another method: using a power of attorney. So, it says the undersigned, and you put the name of the owner, county, year, make, model, hereby make and appoint another person to be the true attorney in fact to sign the name in any documents, title application, and transfer ownership. So, if you have authority from the owner under this power of attorney and specific to a vehicle, the reason why this is important is if you are contacting or approaching a third party to have them give you a power of attorney, you want to make sure that they’re understanding it doesn’t give you the right to sign over their house or open a bank account. It’s specifically for a motor vehicle and it has the year, make, model, and VIN number of that vehicle. That way, it also limits you from transferring other vehicles the person may own, which probably is not what they want. And you have to have your full legal name, driver’s license number, physical address, mailing address, and it has to have a notary because they want to make sure that the person is actually doing this voluntarily and it’s not a forged signature, it’s not some type of scam or a fraud. So, that’s another method of not having to have a signature on the title.

Duplicate Title Application with Ownership Transfer
And here’s a third method, which is available in most states, more states than you might imagine. It’s a duplicate title application with ownership transfer. So, let’s suppose that the owner of the vehicle is not going to sign that prior title because they don’t have the title or they can’t find the title or the title is not available for them to sign. Maybe the title is in another location. What the owner can do is simultaneously get a duplicate with ownership transfer. The net effect of this form is to get a new title issued with your name on it as the buyer, as a new owner, without having the old title present. So, it’s not really even a duplicate title; it’s just a new title with your name on it. In reality, behind the scenes, it’s a duplicate title, but then right away getting a new title with your name. But the net effect is it’s just “get me a new title with my name on it.” Now, it’s pretty complicated, pretty important. In fact, the most important thing on it is a warning to the buyer. They’re warning the buyer that you have to do these things. Signature has to be notarized. You can’t have any liens on it, so you can’t use this to try to sneak a title out from a lien holder. It’s only for free and clear legit vehicles.

Filling Out the Form
So, what do you do to fill out this form? Well, first you put in the VIN number. We see hundreds and hundreds of DMV forms every day that we work on. We love forms like this where the VIN number is right at the top because in reality, the most important detail of a vehicle is the VIN number. Everything else is secondary. When we see the VIN number first, we know that that titling agency, titling authority is really paying attention and efficient about what’s important on a vehicle. Then, year, make, model, VIN number, most important. Okay, so now next is the owner of record, the seller. So, this is who’s on the title right now, whose name is on the title record in the DMV database; that goes here. Then, the purchaser. So, that would be you, Joe Schmoe, 12 Main Street, address, whatever it is. Now, the purchaser has to sign this too. You might think, well, the seller has to sign it; who cares if the purchaser signs it? They want to make sure they’re identifying the person who is the new owner properly because they don’t want somebody to put a vehicle in somebody else’s name arbitrarily when it’s not really what’s supposed to happen. So, that’s section number two. If there’s a lien holder, they would sign here to take off the lien. If you’re putting a new lien, that would go here. Dealers would put information on this section.

Notarization
Here’s the most important part: the owner has to be notarized. I hereby make an application for duplicate title and bold letters. I also transfer to the party listed in that section. And the reason they put it in bold is because there were a few instances where people were just saying, well, I just want you to get a duplicate. You’re not transferring it over. And they didn’t know that they’re actually getting rid of their vehicle. They’re waiving their ownership. This does both. This transfers all interest in the vehicle to a third party, and it has to be notarized. And it gives you the instructions. Mostly, most of it’s what we already talked about. Fax copy is not acceptable. It’s got to be the original ink signature with a notary. You can bring it in person. We recommend mailing it because when you mail it, it goes to the headquarters rather than a branch office, and they know how to handle it better. No big capital letters, bold. In all cases, failure to complete any of the sections will result in the application being rejected. So, you can’t leave anything blank that’s required. You have to have the whole thing filled out. Enter the complete vehicle information. Enter the owner information. We already went through this. Fax copy is not acceptable.

Costs and Fees
Well, how much does this cost? Not that much. The duplicate title fee in this state is $14. Most states are $5, $10, $15, $20. There’s a few states that are $40 or $50. There’s only two states that are much higher than that. The state of Florida is $79.50. The state of Illinois is $95. Those are the two most expensive. Pennsylvania is $53, which is in the middle of the high range. But most states are $5, $10, $15. Texas is $2 for a duplicate title. Now, if there’s a transfer of the vehicle, if there’s a transfer of the vehicle, then you may have to pay sales tax. Most states have sales tax on a purchase, just like if you buy something at Walmart, you pay sales tax. Many states have sales tax on a vehicle. Now, some states do not require sales tax on a private seller transaction, only on a dealer transaction. Some states have no sales tax at all. Washington State, Florida are examples of non-sales tax states. Actually, that’s not true. Those are non-income tax states. Oregon has no sales tax. Wyoming has no sales tax. Other states have sales tax. You may have to pay a title search fee of $7 if you don’t have all the title information. You may be exempt from taxes. Certain instances let you not pay tax depending on what that state allows for exemptions. But the most important thing is here’s another option of not having a signature on the title.

Notice of Transfer of Ownership
And here’s one other trick or loophole that sometimes will help transfer a title. This is a notice of transfer of ownership of a motor vehicle. So, this is mostly designed, and many states have this, to remove liability from the old owner to the new owner. Meaning that, let’s say if you sell a car to somebody in a Walmart parking lot and you give them the keys, you give them the car, give them a bill of sale, even if you give them a title, what happens if before they put it into their name, they go out and rob a bank or do a drive-by or get in an accident and they just run away from the car? Well, I guarantee you the cops are going to look up who that car is owned by and they’re going to come knocking on your door. And if the vehicle caused damage or racked up towing fees or parking tickets or went through toll booths and didn’t pay the fee, you might be liable for that. So, most states have a form that you as a seller can report a sale so that you’re not liable if the person doesn’t put it in their name fast enough. What a lot of people don’t know is, in many states, if you report that sale and the buyer never applies for a new title, in the system they’re going to put a memo of ownership for that person. Once that memo of ownership is recorded, the buyer can then go apply for a new title even if they don’t have the old title.

Alternative Method
It doesn’t always work, but here’s what you can try to do if you are a buyer of a vehicle and the seller didn’t give you a title for whatever reason and they lost it, they’re not willing to help you out. If you can ask them to sign a form like this notice of transfer, a lot of times a seller will be willing to sign this but not be willing to go through the hassle of getting a duplicate title. They’ll sign this one form but they’re not going to jump through hoops to get you your title. So, you get them to sign this form and you mail it in to the Department of Motor Vehicle Title Division, wait a couple of weeks for them to put it in their system with you as the buyer, then go down to that Department of Motor Vehicles with a new title application to apply for a title. Once the DMV looks up and sees that this seller put in a notice that you’re the new owner, they sometimes will accept your title application. It doesn’t always work, but sometimes if that memo name is already in their system, your name, they’ll let it slide. So, if all else fails, try that method of getting a title with your name on it without having the prior title signed by the last owner. It’s a little bit of a trick and it’s always much easier to get the last owner to sign something like this than to sign an actual title. If they don’t have it, they’re not going to wait in line at DMV, they’re not going to pay the fees for a duplicate title, but they might just sign this one form for you because it kind of looks like a bill of sale. And every state has a version of it. So, have them sign it, submit it to the DMV. Technically, it’s for making them not liable for damages after transfer, but in many cases, the DMV will enter your name as a memo owner or a subsequent owner or a contingent owner. Some states call it different things. And once that memo name is put into the system, you might be able to use that record to have your application for a new title be approved without having the prior title attached to it.

Conclusion
Those are four methods that very commonly will work without having to do a court order title or a bonded title or anything much more complicated to get a new legal vehicle title issued with your name on it in the absence of the prior title with the last owner’s signature.

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Why Are Vehicle Title Export Documents So Difficult?

Have you ever tried to export a vehicle and wondered why the Customs and Border Protection (CBP) needs all of those documents and forms? Did it seem like a very complex and bureaucratic process? Well, in the moment of trying to export a vehicle, you may not have thought that that process was beneficial to you, thought it was just a pain in the neck or something that really didn’t have any purpose. However, after seeing this article and seeing this reason for having these documents, you’ll probably see that it’s a good thing to have this customs process be as complicated as it is. Leave your comments below and let us know what experience you’ve had with exporting a vehicle and what questions you have about the process.

The HS7 Form
Well, here’s one of the forms: the HS7 form. It’s the infamous document that all exporters hate to see, hate to have to face. It’s one of many that are needed to export a motor vehicle, and motor vehicles are defined very clearly by CBP. You know what all the definitions are. Exporting a motor vehicle: the 19 CFR is the section that’s jurisdiction over all of this. Basic requirements of pursing and attempting to export a used self-propelled vehicle shall present to customs at the port of exportation both the vehicle and required documentation describing the vehicle to include the VIN. The required documentation normally is going to be the title, and it must be presented 72 hours prior to export because they’re going to do a background check on the vehicle, and that’s going to be important here in a minute. You’ll see why that’s an important part of it.

Documentation Requirements
And as you can see in the second section, the owner must provide to customs the original certificate of title or certified copy and two complete copies of the original. So, you need the original title and two photocopies. If there are any third-party ownership claims, like a lien or another second owner, you have to have it in writing the description of the vehicle and a release of that lien holder or leased vehicle. So, it’s pretty clear what you need. You need the HS7 form and a couple of other documents.

Importance of Proper Documentation
The reason why is, and a lot of times exporters or clients will say, “Well, look, this vehicle has no title. It’s never been titled, hasn’t been titled in a long time.” Well, that’s the trick. Here’s the reason why this is important: a stolen 1968 Chevrolet Corvette was found 37 years later, right before being shipped to Sweden. So this 1968 C3, they used to call it a Stingray, had the little four louvers in the front quarter or the front fender. It says here nearly everyone wants to get their hands on one of these. It was a great car. 1968 was one of the probably the pinnacle of the Corvette model line.

Case Study: 1968 Chevrolet Corvette
So, here’s the car. In 1969, the owner had their worst nightmare. He lived in New York. The car was stolen. He had just gone through a divorce and paid $6,000 to keep the car in his name. He went years without knowing what happened to the car. After years of unknowns, luck finally turned up. The Corvette had been stolen, and the owner tried to ship the vehicle from California to Sweden. U.S. Customs had to complete a routine car check for the car to be shipped to Sweden. As it turns out, the 1968 Chevrolet Corvette had never been retitled. This is important. A lot of times, if you say, “Well, this car has been off the road, it hasn’t been titled, it’s a barn find, it’s in a field,” it doesn’t mean that it’s a legitimate vehicle. That’s the reason you want to get a title.

Importance of a Title
This owner who’s trying to export it, who knows what their knowledge is. They may have just bought it off of Craigslist or eBay or Facebook. Maybe they didn’t know the car was stolen. It doesn’t matter that it was stolen 37 years ago. These records persist for these vehicles. So the fact that this is a very difficult process is actually to your benefit because if it was easy just to ship or next board a vehicle or to get a title, then your vehicle wouldn’t be protected. Think about this guy who had his car stolen in 1969. It was only a year-old vehicle, barely, and now he has the car back. Think how much more that car’s worth. He may have paid $6,000 for it in 1968. Those cars are worth tens of thousands, sometimes six figures, and this paperwork protects you. So, if you’re purchasing a vehicle without a title, just remember that until you have a legal title document printed by the government with your name imprinted on the certificate, you’re at risk because you don’t know what other claims are going to pop up out of the woodwork. So, you want to make sure that you perform your proper due diligence on any vehicle before you take any action.

Due Diligence and Legal Protection
Look, this exporter may have been an innocent bystander. Who knows if he had any awareness that the vehicle was stolen? Probably didn’t. If he’s trying to export it, he knows the government’s involved. If he knew it was stolen, he probably wouldn’t be presenting it to the government to check out 72 hours in advance. The 37 years it was missing, who knows where it was? Maybe it was in a garage. Maybe the person who stole it figured, well, if I hide it for 10, 15 years, it’ll be forgotten about. Maybe it went through two or three owners. Maybe it was never put on the road. I’m sure they’ll be doing an investigation now to see how far removed the current owner is or the exporter is from the thief. Did they live near New York when that happened? It’s being exported from California. But if they can do a background check on that person and find out, well, they lived in New York near where it was stolen, that guy’s probably got some problems. But if there’s a lot of owners in between and kind of a murky history, then it may not come to that.

The Importance of Stories and Procedures
Think about your story as a vehicle buyer. Well, I bought it from a guy. He didn’t have a title. He got it from a guy. It was in a barn. Think about all the stories that you hear from sellers. The old man had it, and he died, and his kids didn’t want it. He sold it to me. That’s the reason for having all these forms and having to follow all these procedures from Customs and Border Protection. So, vehicles issued an original certificate of title, you have to have the title. If there is no title, you have to have a full background check, authentication of documentation. And as you can see, the USCBP is going to do all this. They did it for this guy’s car, and he got it back.

Conclusion
So, consider this due diligence performed by the government, whether it’s a VIN inspection by your police, whether it’s a customs background check, protecting your interest on a vehicle so you don’t end up with something that’s stolen. Or if you do have something stolen, it gets returned to you, the rightful owner. And if you’re a lien holder and you lent money on a vehicle, you also don’t have somebody who’s selling it or shipping it, because as it says right here, if there are third parties, they have to sign off. So, if you lent somebody money on a vehicle, we had a case a couple of years ago where an owner sold a motorcycle to somebody, and they let him pay half of it up front and then $100 a month to pay off the rest. And they rode it for a couple of months and stopped paying. Well, that evidence, that ownership was reflected on the title, and they were able to retrieve it before it was sold or dismantled or taken apart. So these title documents are very important to protect your ownership on a vehicle. Make sure that you get originals, not photocopies, and you verify the originals. We’ve had cases of forgeries of these documents. If you’re going to export the vehicle, you probably want to check it out before you bring it to CBP. Have your state patrol, state police, whoever it is in your jurisdiction double-check the documents to make sure your VIN number is clear. Just because the seller told you it’s clear or you ran a Carfax, which is a worthless consumer-grade background check, you’re not going to know if there’s liens, claims, back taxes, past due registrations, prior owners, or even stolen, for that matter. Sometimes these vehicles are registered as parts only or junk. Can’t do anything with them. So, you want to do a full background check on your own before you start submitting it to DMVs or even selling it to a third party, because if you do, now you’re passing along an ineligible vehicle. In some states, it’s actually a crime to sell a vehicle without a clean legal title. Check out our website for more. You can get all these documents for free to download. And let us know in the comments what your thoughts are on exporting a vehicle and these document requirements.

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Do Vehicle Titles Expire?

Today we’re going to answer five common questions about vehicle titles. The questions are: Do car titles expire? Second question is: What is an MSO or CO on a car title? Third question is: Should you carry your vehicle title in your car with you? And the last two will keep a secret.

Do Car Titles Expire?
So first, does a car title expire? Well, a vehicle title is a legal certificate, a government document issued by a department in a state. For example, the Department of Motor Vehicles is the name of that agency in most states. Some states call it Department of Transportation or Secretary of State; different states have different phrases for it. They issue a title proving the ownership. It’s not like a registration which is renewed every year; it’s a one-time issuance. Now, if the title is lost, damaged, or stolen, you can have a duplicate title reissued, but the original title has no expiration date on the actual title. However, if there is no activity on a title for a certain period of time, meaning that the registration is lapsed and doesn’t renew itself, or there’s no transfer, or just no activity on that title record for either five, seven, or ten years (depends on the state; some states do it in different intervals, usually seven years), the title record will be purged from the system at the titling division. Now, that doesn’t mean that the title is expired; it just means that the record is no longer active. Sometimes that record can be reactivated or re-established, but the record usually goes into archives. The title itself does not have an expiration date.

What is an MSO or CO?
Second question is: What is an MSO or CO on a vehicle? An MSO stands for Manufacturer’s Statement of Origin, or a CO is Certificate of Origin. Those are documents which look exactly like a title issued by the manufacturer. Guess what the word is? Writing the name when they first build a vehicle. So, when Ford builds a brand new Ford Mustang at the factory and they ship it to the dealer, there is no title for that vehicle yet. They will issue a Manufacturer Statement of Origin or Certificate of Origin that says Ford Motors built this vehicle, here’s the VIN number, here’s a description. It was sold to XYZ Ford dealership. Ford dealership now has that MSO or CO, called different things by different manufacturers. And when they sell the vehicle to a consumer, that MSO is given to the Department of Motor Vehicles along with a new title application in the name of the buyer, and that’s what creates the first title. So, MSO, the easy answer is, it’s like the birth certificate for vehicles before the title is issued.

Should You Carry Your Title in Your Vehicle?
Third question is: Should you carry your title in your vehicle? The answer is no. There’s no reason to carry the title in the car. You don’t need it to prove ownership. Your registration is what you need if you’re stopped by law enforcement, or you have a speeding ticket, or you have an accident (God forbid). That’s what you need. Your title is needed to transfer ownership. If you sell the vehicle, if you trade it in, the title is what transfers ownership. So, you don’t want to have it in the vehicle because if somebody steals your vehicle, now they have the title too. If it’s in the glove compartment, they stole your car, now they not only have your car, but they have your title, which means they could forge your signature and transfer it, which is probably not what you want to have happen. So, where should you keep your title? Well, you want to keep it in a safe place. If you have a secure document location, like a safe or file cabinet, hopefully it’s fireproof and waterproof because if it gets damaged, the title’s no good. Put it in your house where you keep a lot of cash equal to the value of your car. If your car’s worth ten thousand, think, “Where would I put ten thousand dollars worth of cash?” Because that’s really what your title is worth—the value of the vehicle. Now, the difference with cash is you can replace your title, you can get a duplicate title, but it’s a pain in the neck to do so. You don’t want to lose it if possible. Also, a title, since it’s not used every year to renew like your registration, a lot of times it gets lost. So put it in a place where it’s less likely to get lost. If you have a file in your file cabinet for important documents, like your birth certificate, your insurance policy, your passport, put your vehicle title in that same area. Maybe put a different file folder with a different tab on it, but keep it where you keep your safe documents so it doesn’t get lost. A lot of times people will just throw it in a pile in their junk drawer with stuff, and then when they go to sell their car, they can’t find it. And there are reasons and circumstances where getting a duplicate might be difficult or impossible, so you don’t want to lose it if you can avoid it at all costs.

Can You Have a Car Loan in a Different Name Than the Title?
Next question has to do with car loans. This question comes up a lot in our vehicle title division: Can you have a car loan in a different name than the title? And the short answer is no. The car loan is given to you using the vehicle as collateral. Usually, the car loan is to give you money to buy the car. So the bank is going to put a lien on the car title, guaranteeing they’re getting their money back. So if Joe Schmo’s name is on the title but Sally Smith wants to get a loan, the bank is going to have a hard time getting collateral of an asset in somebody else’s name. There may be some documents, power of attorney, some subrogation agreements that you could do to make that happen. Most banks don’t want to deal with the trouble. Most of the time, what you’re going to need to do is put both names on the title and have the loan in one of the names. So it’s very difficult, if not impossible, to have a name on a loan that’s not on the title, or at least one of the owners on the title. There are a few exceptions to that, but it’s not really what banks want to do, so you’re not going to find anybody that’s going to want to do that.

Can You File for a Lost Title If the Vehicle Is Not in Your Name?
And the last question is: Can you file for a lost title if the vehicle is not in your name? And the short answer is no. When you file for a replacement duplicate title, only the person listed on the title record can sign and file for a lost title. And think about it—you don’t want anybody to file for a lost title unless they’re the owner, because otherwise anybody could file for a title for your vehicle and take the car away from you. So for your protection, and really, it’s the law, only the person listed on the actual title record can apply for a duplicate title, and that’s good practice for vehicle ownership security.

Conclusion
So those are a couple of common questions about vehicle titles. In the comments, leave examples of questions you have so we can put those on future videos, and put your comments or reaction to these questions so we get a sense for what type of things you deal with regarding vehicle titles.

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Motor Vehicle Title Application Process – Consumer and Dealer

Today we’re going to look at the process, paperwork, and documents for applying for a motor vehicle title. We’re going to use an example from the state of New Jersey. In addition to looking at the process, we’re also going to compare that process from a consumer or civilian to a licensed dealership. And just give you a little sneak peek, advance notice. Here’s the document for a consumer, and here’s a document for a dealer. Look how much simpler the dealer application for title is, and the reason why is because dealers have some additional privileges and authority for titling that an individual may not have. But it’s important to know what the requirements are for obtaining a motor vehicle title and what can make the process easier. This little barcode in the lower right-hand corner gives you a hint of how you might be able to do some things with this form to make your process easier. So let’s take a look and see what methods or what suggestions you can use to make the process easier.

What is a Vehicle Title?
First of all, what are we talking about with a vehicle title? Well, a vehicle title is a legal government document. It’s a certificate that declares the ownership of a motor vehicle. Here’s physically what one looks like. It’s a certificate with scroll work. It has watermarks. It’s got a lot of legal aspects and features, just like you might find on currency, driver’s license, or birth certificate, to prevent tampering, to prevent forgery, to prevent false documents being prepared. Because the existence of that title and the name of the person on that title is evidence of the ownership of the vehicle. So if you imagine the vehicle having a certain value, let’s say even a modest vehicle that’s worth eight thousand dollars, that title represents the ownership of that eight thousand dollar value. So in effect, a vehicle title is kind of like an eight thousand dollar bill. It’s a currency because it proves the ownership. Whoever has that title with their name on it is in effect benefited from the asset of the value of the vehicle. That being said, it gives you some insight into why the titling process is as formal and specific as it is. They don’t just hand out titles to somebody upon request. You have to have the right documentation.

The Title Application Process
So now that we understand what goes into a vehicle title, let’s take a look at what the process is for obtaining one. Here is the title application for the state of New Jersey, and it says very simply at the top, “Use this form to apply for a New Jersey title. The applicant, the person signing it, must be the owner, lienholder, and authorized representative. You submit this application and all supporting documents.” And that’s going to be important because just filling out this application by itself isn’t enough. You have to have supporting documents, and we’ll talk about that. And you can submit it in person or you can mail it in. All applicants and this documents must provide proper identification. So they need to know that the name of the person and that the identity is correct. They don’t want to be giving a title to somebody who doesn’t exist as a person or maybe is not eligible to have a title. In addition, the supporting documents must be original unless they are court documents. They can be certified copies.

Types of Title Applications
Step one, what type of title are we doing? Is it a first-time title, initial? Is it a duplicate, meaning that you had a title document and it was lost? Maybe it’s a replacement or corrected title, meaning there was some error or something wrong with the last title that you need to correct. And then if it’s a vessel, meaning a boat, you click this box. If you’re adding or removing a lien, there are designations for those actions too. So this first tells the DMV what you’re trying to do. Are you trying to get a new title, a replacement, duplicate, corrected, that kind of thing?

Vehicle Identification
First section that is important is the identification of the vehicle. What car are we talking about, or boat in this side section. The most important thing is the VIN or vehicle identification number. That is the ultimate identity of a vehicle. It differentiates one 2018 Toyota Camry from another 2018 Toyota Camry. They will have different serial numbers or VIN numbers, and that’s the first thing. If you notice, the first piece of information that’s asked for is the VIN number. They don’t care about your name; the make, model, VIN number is the first thing they want to know, and that’s important. Now, every vehicle has a VIN or vehicle identification number. If it’s older than a 1981 vehicle, that VIN number could have any one of a number of different formats. However, in 1981 and newer, all vehicles were issued a standard 17-digit VIN. And that VIN not only had 17 digits but it was in a certain format. The first letter or character designated the country of origin: 1 for the U.S., 2 for Canada, 3 for Mexico, J for Japan, W for Germany, etc. The second digit is the manufacturer: G for General Motors, F for Ford, T for Toyota, H for Honda, etc. So by looking at a vehicle identification number, you can tell a lot about what vehicle it is just from the first one or two digits. So that number goes here. Below that, there’s a place for a license plate number if it has one. Then you’re going to have the year, make, model, color, weight if it’s a truck. We’ll zoom in a little bit on this. If it’s a correction, the correction needed goes here. Odometer information, this is important. Vehicle history is monitored in terms of the reading of the odometer. How many miles has that vehicle traveled? So at any transfer and other events as well, the odometer reading is captured, and that reading will go in this box.

Owner Information
Step three is, who’s the owner? Who do you want listed as the owner of the title? Could be you, could be a company. Put your name here, put your phone number there. If you have a driver’s license or a business number, that goes in the next box. You have address, city, state, and zip. If there are two owners, the co-owner will go here and their driver’s license number. The next two sections are for if you’re adding or removing a lien, and if you are adding a lien, you put the lienholder’s name, business address, phone number, city, state, zip. If the person who is preparing this is a representative of the owner, like the CEO of a company, an accountant, a bookkeeper, maybe an attorney, they will put their information here as a representative.

Duplicate Titles
Okay, the next section is for duplicate titles. This lists the required documentation you need. If it’s an individual, you will need a valid photo ID. You will need the New Jersey registration card and a lien release if there was a lien. It’s very important you have those things. In addition, if you’re mailing in this document, you have to put the address where you want the document mailed when it’s done. If you go in person, it’s not a problem; they can hand it to you. But if you’re mailing it in, you have to put the address where you want that title sent, and also the format: U.S. Mail, FedEx, UPS, how you want it sent.

Signing the Application
Once you have all of this information filled into this form, you have to sign it. And if you notice, right above the signature, it says, “I certify the above statements are true,” and if they’re false, it’s a crime because they don’t want you putting false information on a legal title application. Now, if you remember, we’re talking about one particular state of New Jersey. Every state has a different titling division. In New Jersey, it’s called the Motor Vehicle Commission. Some states call it the Department of Motor Vehicles. Some states call it the Department of Transportation. The form and the document is going to be very, very similar from one state to another. It’ll have the same boxes; it might be jumbled around in a different order. And once you sign it and submit it, the titling division will process it, and they’re going to look at all the requirements to make sure they’re met. They have a section here where they’re going to put their own notes: NMVTIS checked, if you notice, is right here. That stands for National Motor Vehicle Title Information System, and that’s a federal database where the government can look up vehicles to make sure they’re not stolen, they don’t have any liens, they’re not a salvage, they don’t have parts only or junk designation, and they can put their other notes for the transaction here.

Instructions and Fees
The good thing about New Jersey, many states have this, is they have an attached page which has instructions. Step one, it tells you, this whole box are the instructions for that one little section. Step one, what you have to have. Duplicate titles are issued if the current New Jersey title has been lost or stolen. What that tells you is, if the last title was not from New Jersey, you cannot apply for a New Jersey title. Same thing in any state. If the last title came from elsewhere, you have to apply for a duplicate in that other state. Now, for a new state title, different story. In-state title transfers require only submission of the previous New Jersey title. But if you have an out-of-state title, there’s going to be more requirements, probably an inspection, maybe some other verifications. What’s the fee? In New Jersey, the title fee is $60. That’s at the high end of the range. Many states have title fees that are $5, $10, $15, $20, $25, not that much. New Jersey is at the higher end of the range. I think there’s only four states that have title fees above $50. They also have a fee of $25 if you’re adding a lien. What else do they tell you? The vehicle information must match your signed and executed title documents. Well, what does that mean? Well, if you’re applying for a new title on a vehicle, you can’t just use this form. You have to bring them the old title from the last owner that they signed on the back. If you don’t have that last owner title, you can’t apply for a new title because they don’t know that you are the proper owner. The rest of the information is instructions about the form. You must sign this application and provide proof of ownership. You have to have photo ID. Mail-in applications, it tells you where to send it. And for signatures, it says blue or black ink only. Can’t sign it in a red pen or magic marker. You have to use certain types of ink. So if you follow their instructions, you’ll get a title.

Dealer Applications
Now, at the beginning of the video, you remembered that we also compared it with a dealer application. Well, look what dealers have. There’s hardly anywhere near the number of blank spaces. They put the name of the dealership, an address, their motor vehicle dealer identification number. This is what makes it possible for a dealer to have a simpler form. They have a dealer number that they can enter into the form, which gives them some privilege and authority to do more of the titling process. The vehicle information, you still need make and model and VIN number. But compare that with on the other form: make, model, VIN number. For vehicle information, we’ll look at this form: VIN number, license plate, year, make, model, color, weight, body, axles, many more pieces of information because on a new vehicle that information can be determined from the VIN number. You notice they ask a lot of questions about EPA because many states have requirements for managing environmental and mileage ratings on vehicles. If it’s a luxury vehicle over a certain dollar amount, some states have a luxury tax that you have to pay, and that has to be determined. Other than that, you answer those questions yes or no. You put the sales price, you sign it, date it, they’re done. So as you can see, for a dealer, a licensed automotive retailer, the process is much simpler than it is for a civilian trying to get a title because the dealer has more licensed authority. They have bonds, they have training requirements to make sure that they’re doing the title the right way. If you’re an individual consumer, they have to double, triple check everything to make sure that it’s done properly because you may only do this once or twice in your life. The dealer probably does a hundred of these a month. So there’s some simplicity offered for the dealership that’s not afforded to an ordinary consumer.

Conclusion
This is a good example of one state’s title process. Your state will probably have a different form number than this. This form has a number; it’s R621. Every state has a different form number. Believe it or not, about half the states, their form is called MV1. It’s different for all the states, but it’s called MV1, Motor Vehicle 1, because the primary thing you do at the DMV is get a title. That’s what they’re there for. So hopefully, this overview gives you some insight into what goes into getting a title for a motor vehicle. We have additional videos on other documents for other states, but at least you have an understanding of what you’re up against when it comes time to deal with the DMV to get a vehicle title in your name.

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