Important Developments for the Vermont LoopholeWell, for those of you who have been following our channel for many years, this will come as no surprise, but there’s some important developments for the Vermont loophole. The thing that’s been, you know, most interesting to people around the country for over a decade and this Vermont loophole is having some significant changes over the next couple of weeks. And like I said, for what viewers of the channel, you’ve seen us talk about this going back a couple of years, that this is something that’s going to happen where this loophole is effectively being closed. There may be some ways to use it, but you want to be aware of what’s required.
New Requirements from the Vermont DMVThis is the new current requirements from the Vermont DMV. They’ve issued a bulletin called the Vermont register. I’m sorry, the out-of-state registration certification. This is a form that is issued 6 of 23, so June of 2023. This is a new form in concert with other state jurisdictions. What does that mean? That means a Vermont DMV has been in contact with other DMVs. We’ve reported on this for several years that the DMVs across the country have been working with Vermont to try to consolidate these rules because they don’t want people just kind of using this loophole and getting titles for vehicles they’re not supposed to.
Evaluation of Out-of-State TransactionsThe Vermont Department of Motor Vehicles now evaluates all out-of-state transactions based on your own home state’s laws, regulations, and policies. And we’ve talked about this; every state has certain policies about where you can and cannot register your vehicle, right? So up until now, Vermont didn’t really care. To that end, the department will not process these transactions unless you can establish a legitimate connection. So what you have to do is you have to get this form that says by signing this form, I declare I’m the owner of the vehicle and apply for registration. I certify the statements contained in this application are true. I understand that the declaration is made under penalties to be completed by the Home State of Motor Vehicles or comparable agency.
Home State Approval RequiredWhat that means is when you send in an application to the state of Vermont for a registration for the loophole, you have to get your state to say that’s okay—not okay to transfer the registration from Vermont to your state, but it’s okay for Vermont to give you that license plate in the first place, right? So once this information is received, a Vermont DMV law enforcement division will review the request and ultimately grant or deny the application. During this review process, the staff may request additional information from the owner or his home state.
Alternative Methods and RecommendationsSo the long story short is they’re going to review these. If you’re trying to get a title for a vehicle that really you’re not supposed to, they’re not going to be part of that. We recommend, as we always have, looking at the other options: the bonded title, the court order title, prior owner contact, the other types of methods on our website. In fact, in most cases, the other methods are cheaper than Vermont because Vermont charges you big-time sales tax. They always have, and we’ve always advised people not to use Vermont as your first option because the taxes are high, and you have to wait for Vermont to process it and then switch it to your state.
Immediate Action RequiredWhether you do a bonded title, a magistrate title, court order title, you don’t have to pay tax to Vermont. You don’t have to wait for Vermont to process it. And now you don’t have to deal with this effective immediately complete this form required option, right? Um, the form has to be completed in the home state of the vehicle owner certifying that the home state laws do not require the vehicle to be registered there. Very few states are going to say this is okay.
Final Advice and AssistanceIf you want to go ahead and try for the Vermont loophole, go ahead. It’s, you know, your option to do, but we advise that you do another more appropriate process like we always have suggested: court order, bonded title, or other method you see on our website. Or you can consult with us to see what might be more appropriate in your scenario. But if you do decide to still persist with wanting to do this Vermont loophole, be aware that there’s a lot of possibility that it’s not going to work. And if you pay us to do it, then the cost is going to be spent. All we can do is switch it over to another process after the fact. So make sure that you pick a method that you want to abide by and not necessarily pick one just because you read it somewhere on the internet.
Our Commitment to HelpAs always, we’re glad to help. We’re glad to be assisting with the title process because we know how hard it is to get a title. Uh, we deal with DMVs all the time. We want to make it easy for you, but we want to help guide you into a process that is going to be more appropriate for a scenario. And for most people, Vermont is not the way to go. You want to use another process. And even though we’ve advised that for a long time, many people still gravitate to it because it sounds good, it sounds like you’re getting away with something or a loophole. We don’t advise it, and looking at the other methods is probably going to be better for you. And let us help. Let us be a good resource, a free consumer resource for you.
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Mixed Messages in Used Car PricesSo what is really going on with used car prices? Some mixed messages for the first few months in 2022. Wholesale vehicle prices kind of dropped a little bit, not much but a little bit, for three months straight. Well, here in June, the prices went up after three months of sequential declines. Wholesale prices edged higher in May and this is right in the middle of having higher gas prices, inflation, higher interest rates on homes, and home prices still being up.
Factors Influencing the Used Car MarketSo what gives? What’s going on with the used car market? Well, it could be that during the first few months of the year there was a little bit more new car inventory that kind of came out into the marketplace in, you know, February, March, April, and so used cars kind of slowed down a little bit. Maybe some dealerships got stacked up with vehicles in their used car department.
New Car Inventory ChallengesWell, now once we get into May and even June, new car inventory is even worse than it was. We’ve seen some data where some of the manufacturers have a 5 or 10-day supply of vehicles. Big manufacturers Mazda, Toyota, Honda, Subaru have a single digit or 10 or 15-day supply of vehicles. You can’t run a dealership with just that many cars.
Dealer Reactions and QuestionsSo maybe now dealerships are going back to the well to find some used cars to fund and supply their inventory. Let us know what you think. Are you a dealer? Why are you seeing used car prices go up? Are retail prices going up or are your margins getting thinner for your used car inventory?
Very often the subject comes up about an open title or a jumping title. What that means is if you have a title certificate like this one, it’ll have all the information on the front about the vehicle, and on the back it has a place where the owner can sign their name as the seller to the new buyer. If the owner just signs their name and leaves the buyer blank, that’s called title jumping or title skipping.
Scenario of Title JumpingWhat happens is many times a buyer will want the title to be open so they can flip the vehicle. So let’s say somebody’s selling a car on Craigslist or Facebook and the buyer comes to you and says, “Hey, I want to buy your car. Just sign the back of the title. I don’t know what name I’m going to put it in yet, so just leave it blank. I’ll fill it in later.” Well, if you do that, you may be guilty of title jumping.
Consequences for SellersTitle jumping: right on the back of the title, it says do not sign a blank title. There are many reasons why this can create problems. You might not think as a seller it’s any problem for you because you don’t care who buys the car, right, as long as you get your money. But what happens is if you sign an open title, you have no idea who you sold it to. You have no idea if they’re actually going to put it into their name right away, which means you’re liable for things that could happen with the vehicle.
Legal Implications for SellersYou also don’t know if they’re avoiding taxes and evading taxes, and if you help them do that, you could be liable as well. In most states, there’s fines, penalties, and imprisonment if you are caught jumping titles, and as the seller, you could be just as liable. On the back of that title, it has language that says violation could be a criminal offense.
Specific Risks and PenaltiesAnd what it spells out is if someone sells a car to another person, they only sign their name but not fill out any additional information about the sale, such as the price or mileage. That’s another problem that can come up. If you don’t fill in the back of the title, you don’t put in the mileage, somebody could roll back the odometer and have a vehicle with an illegal odometer reading. You could also change the price where if somebody gives you 3,000 for it and they say I only gave you a thousand, they pay less tax, right, and that could be title or tax fraud, tax evasion.
Legal Standing of Title JumpingAnd according to this article, and this is a little bit of exaggeration, title jumping is considered a felony and highly illegal in 50 states. It’s not a felony in all 50 states. It’s a crime in almost every state, but if you’re caught doing it intentionally, the penalties can be pretty severe.
Buyer Precautions and SolutionsAs a buyer, if you have purchased a vehicle with an open title, sometimes you walk into the DMV with that title not filled in, they’ll seize it from you. They will impound the title and sometimes the vehicle. If you have that happen to you, you may be able to do a bonded title, you may be able to do a court order title, and you may be able to do some type of magistrate title.
Title Bond Costs and State VariationsOne of the things to keep in mind is if you get a title bond, remember it only is going to cost you about a hundred dollars for the title bond. Many people think it’s going to cost you thousands of dollars for a title bond, but there are some states where you can’t get a bonded title. Here’s a list of those states. There’s about 10 states that you can’t, but you can do a court order title.
Conclusion and ResourcesAnd all the information on bonded titles, court order titles, jump titles are all available on our website at cartitles.com. Just make sure that you know when you’re buying a vehicle, get a good certified title transfer to your name. If for some reason the seller doesn’t have it, think twice about giving them your hard-earned money unless they’re going to give you a valid legal title.
Why VIN Verification is Required by DMVMany times a client asks us why does the Department of Motor Vehicles or the titling Authority require a VIN verification or VIN inspection on a vehicle when they’re transferring a title. Well, here’s a good reason why.
Fraud Investigation by FDLEThis is a case that was investigated for many months and there was fraud happening on titles in the State of Florida. The FDLE, which is the Florida Department of Law Enforcement, cracked down and arrested more than 20 people that were fraudulently titling cars. What were they doing? What they were doing is they were buying vehicles from dealerships on credit or with a bad check, and before the loan defaulted or before the check bounced, what they would do is they would change the VIN number on the vehicle and they would get a fraudulent VIN number (vehicle identification number). They used that to apply for a title and transfer it to somebody else so that unsuspecting buyer was actually buying a stolen car. This operation, Gone in 60 Days, netted all these people arrested.
Expansion of the ScamWhat happened was it was so popular as a scam that then they started renting vehicles from airports and other high-end areas and doing the same thing. They were changing the VIN numbers, putting a fake VIN number on, and then reselling the vehicle. Sometimes they would even sell it to an insurance company.
Purpose of VIN InspectionSo the reason for having a VIN inspection or VIN verification is to make sure that the VIN number that’s on your vehicle is actually the correct VIN number for the car. Now, you know it is—you know, are aware that it’s legitimate—but the Department of Motor Vehicles wants to make sure and protect you that you’re not actually titling an illegal vehicle or a stolen vehicle.
Protecting Innocent BuyersIf the VIN number has been tampered with, removed, altered, changed, sometimes people will buy these vehicles from Copart or IAA with junk titles or parts-only titles and slap another VIN number on from a salvage vehicle, and that’s a way to sell a car or truck to an unsuspecting innocent buyer. So they’re trying to protect the owner, meaning you, or even the next buyer from having a vehicle that’s ineligible.
Simple Process of VIN VerificationNow, it’s real simple. Usually, a notary or any local agent can inspect the VIN number. Really, all they have to do is look at the VIN number, make sure it’s the same as what’s on your title paperwork, and then also verify that that’s the actual identifier for that vehicle, that it hasn’t been tampered with, it hasn’t been altered in any kind of way.
Importance Despite InconvenienceA VIN inspection, VIN verification is inconvenient, it’s annoying, but there’s a reason that they do it. They’re not just trying to make your life miserable and make you jump through hoops or be inconvenient. They want to make sure that that vehicle is eligible, legitimate, because once they issue that title, that’s a legal government document. They’re putting their trust and faith behind it that you are now the owner, that’s a legitimate vehicle.
One-Time RequirementSo now when you go to sell it, you can represent to your buyer everything’s legit. So it is a one-time thing. You don’t have to do it every year; you don’t have to do it every month. It’s a one-time event that you have to get a VIN verification performed to make sure that that vehicle is legitimate.
Understanding Bonded TitlesSo how does a bonded title work and how can it help you get a title for a vehicle? Well, most states—42 to be, I’m sorry, 38 to be exact (there are 12 states where you can’t get a bonded title)—will allow you to get a legal title for a vehicle that you have no paperwork on using a surety bond process.
Importance of Bonded TitlesThe reason this can help you is you can see this picture here there’s a barn find, right? If you find an old car abandoned on the side of the road, you may be able to use the bonded title process. Even though you see in this article the word abandoned, do not use “abandoned vehicle” as an application for a title in almost every scenario. What’s going to happen is if you declare the vehicle to be abandoned, what’s going to happen is you’re not going to get to keep it because what happens if it’s declared abandoned? The police will ask an authorized towing company to remove it, take it to storage, and then they will sell it at a public auction. Abandoned vehicles are not “finders keepers.”
Applying for a Bonded TitleHowever, if you file for a bonded title, a surety bond title, it’s basically you going to the licensing title authority and saying, “Look, I legitimately am authorized to have this vehicle. I bought it, it was left on my property, I gave somebody money for it, I traded for it, but I don’t have the old title, I don’t have the transfer of ownership.” Obviously, if you have the title, it would be easy. You know, a title is a certificate that looks like this; it’s got all the official government printing on it. If you have that, you have no problem. But if you have purchased a vehicle, acquired a vehicle, traded a vehicle, or somebody left you a vehicle that has no legal title, now you have to do something different.
Misconceptions About Bonded TitlesOne of the things that many people are misinformed about on a bonded title is you have to pay thousands of dollars to get a surety bond. That’s actually not true. What you have to do is you have to purchase a surety bond in an amount that’s equal to the value of the vehicle, but that surety bond is probably only going to cost you a hundred dollars for the actual surety bond. And once you get that surety bond, you have to sign some affidavits, fill out some forms, make sure everything is all I’s dotted, T’s crossed. You submit it to the DMV, and as long as the vehicle is not stolen, doesn’t have any large open liens on it, and it’s not reported as parts only, they’ll give you a title, and you can own that vehicle.
Avoiding the Abandoned Vehicle DesignationNow remember, if you say “abandon” instead of “title” in an article, let’s say this right here: if you find an abandoned vehicle in your barn, that’s not yours to keep. You have to call the police, and the boys in blue will get that relic from you, right? So don’t say it’s abandoned because if it truly is abandoned, it’s probably not yours to keep unless you go through some other processes.
Mechanics Liens and AlternativesOne of the processes they talk about is you can put a lien on the car for a storage fee, but that’s actually not completely accurate. The reason why is, in order to do that, you have to be a licensed automotive shop, and you have to have signed repair orders saying somebody brought this car in for service. In fact, there’s so much attempted fraud with that process that the state of Oregon says you need a twenty thousand dollar bond before applying for a mechanics lien. Body shops and other auto repairs will have to obtain a twenty thousand dollar bond in order to be able to assert a lien on a vehicle for non-payment. So most states are going to this model or already have, for that matter. You have to be a licensed automotive facility, you have to have a signed repair order, and you have to post a twenty thousand dollar bond.
Avoiding Fraudulent Mechanics LiensThere’s many easier ways to do it. Even if you have a buddy of yours that has a repair shop that wants to put in a fake mechanics lien, don’t do it because they’re going to audit that lien. They’re going to audit all of these mechanics liens processes. If you don’t have all the documents from the owner and when the ownership is changed, they’re going to send a letter to that prior owner that says, “Look, somebody filed for a mechanics lien on your vehicle to change the ownership. Did you bring your car in for service somewhere?” And if that person says, “No, I sold it on Craigslist,” or “I traded it in,” or “I left it in some field,” they’re going to revoke that mechanics lien, and they’re going to probably seize the vehicle. So don’t put in a fake mechanics lien. What you want to do is do a bonded title.
Court Order Titles as an AlternativeAnother thing you can do is a court order title, and this article goes on to talk about it. There might be another way by getting a judgment of ownership. They might ask the applicant to make some efforts to contact the owner, and you have to file it with the court in the county where you reside. If you file a claim of ownership with the court and an affidavit, the court can give you a judgment. You bring that to the DMV to get a title. You can do that without getting a surety bond.
ConclusionSo get more information on both the surety bond and a court order title. Those are definitely good ways to go. They’re much better than even the Vermont loophole that people do all the time because Vermont’s going to charge you big-time sales tax. We’ll talk about that in another video. But check out bonded title and court order title as options to solve your problem.
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