The Rising Enforcement of Cross-State Registration LawsHERE we go again with additional information about another instance where out-of-state titling and registration is becoming enforceable. Frequently, individuals believe that if they want to register their vehicle in a different state because it’s more convenient, less expensive, or to circumvent something in their home state, they can get away with it. One of the most prevalent methods currently is the entire Montana LLC loophole. Previously, it was Vermont, but states are becoming aware of this practice.
Connecticut’s Bridgeport Crackdown ResultsAND here’s an example where in one municipality in Connecticut, Bridgeport, which isn’t a large state but is one of the bigger cities in Connecticut, during one month of conducting a crackdown, they discovered 5,000 vehicles that were registered out-of-state. Those individuals received fines, penalties, and some vehicles were seized.
How Authorities Track Out-of-State VehiclesSO how do they accomplish this? Well, we’ve discussed this in previous videos. Currently, it’s simple for them to do it. In this situation, they’ve contracted a private investigative agency, a private company to perform what’s called ALPR, automated license plate readers, where they have cameras that are positioned throughout town on vehicles driving around, on stop signs, on street poles, in parking lots that are recording license plates thousands upon thousands upon thousands per minute. This information goes into a computer system and they determine if there’s an out-of-state plate, it flags it.
Distinguishing Residents from VisitorsNOW to be fair, if you’re on vacation visiting, they’re not going to flag you for being out-of-state. However, if they observe that same license plate repeatedly every day going to the same parking lot at 8:30 in the morning or every day driving down the same street, they know you’re not on vacation visiting your Aunt Sarah. They know that you’ve resided there and you’re evading the state regulations.
The Investigation ProcessTHEY’RE going to look up that plate, find out who the owner is, then they’re going to conduct research on whether that owner has connection to Connecticut, and they’re going to send you a summons. How do they accomplish all this? They start out with an ultimate goal to identify people who are failing to pay local car taxes because their wheels are not correctly registered in this city.
Connecticut’s Specific Tax RequirementsAND this is something in Connecticut that occurs frequently because of sales tax. People want to avoid sales tax. Per Connecticut law, anyone who moves from or purchases a car from another state has 90 days to register and they have to get their taxes paid. If you are already living in Connecticut, then 90 days started when you first move there. It doesn’t start when you buy your car. In most cases, there are lots of households that have not done so, and in some cases it might be less expensive to remain registered elsewhere.
Understanding Sales and Use TaxREMEMBER the tax is not just a sales tax. It’s called a sales and use tax. So if you use the vehicle in another state, then you have to register it there. That’s why you see on large 18-wheeler trucks what’s called apportionment plates where if the truck is used in many different states, they apportion the taxes among the different states. So if you use your vehicle primarily in the state where you reside, you have to pay taxes there, even if you bought it somewhere else, even if you registered it somewhere else.
Penalties and ConsequencesSO make sure that you’re not getting caught up in one of these situations because they’re going to penalize you. And if they find out that you did this for some other purpose, like to evade registration or inspection or title documents, they might even have additional penalties besides just the taxes and the interest and the fines that go on top of it.
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The Hidden Danger of Out-of-State Vehicle Registration SchemesIf you’re ever questioning whether it might be unwise to use some kind of workaround or out-of-state method to obtain a title for your vehicle simply because in your state it might be too difficult or might be too costly, here’s the reason. There are what’s called ALPRs. In this piece they call it license plate cameras. ALPR stands for automated license plate readers. It’s not just a camera that takes a picture. It reads the digits off the license plate and then runs a trace on that plate. And there are hundreds and thousands of them all over the place.
The Extensive Network of License Plate SurveillanceYou’ll never see them. They’re hidden in parking lots. They’re on taxi cabs. They’re on lift vehicles. They’re on police cars. They’re on the side of the road. And as you drive by, these ALPR readers will capture every plate that goes by. And some of them are on private property. If you’re a private property owner, you can actually put an ALPR on your property and get income because you’re generating data.
How Government Agencies Track Vehicle Movement PatternsAnd what happens is the government agencies, law enforcement, DMVs, tax authorities, revenue departments, they’re buying up this data to find out what cars are driving by their areas. And if they find that there are out-of-state vehicles that keep passing back and forth every day or every week for weeks and months at a time, they’re going to figure, well, that’s not just somebody on vacation visiting our town. That may be somebody who improperly registered a vehicle in another state because they wanted to avoid taxes, avoid inspection, avoid smog, whatever it is.
The Investigation and Enforcement ProcessAnd they’re going to look into it and they’re now they know where you go because you drive by there. They’re going to arrange to have you pulled over and they’re going to do an investigation. And already just in the state of Denver, they’ve arrested 300 people. And they’re going to do more. Now that they see it worked, they’re going to do more. And many times the vehicle may not be stolen, but it might be one that has some type of title problem that was glossed over or papered over with a fake title.
Common Scenarios Leading to Title ProblemsIt may be something where a person lives in the area but didn’t want to go through the title process in their state because it’s too hard or it’s too much bureaucracy or the DMV gave you the runaround so they said I’ll just go to an easier state or I’ll do some kind of fake title loophole. They’re catching up to these people.
Insurance Fraud Detection Through ALPR DataThey may also find that your insurance isn’t with the right address. For example, when you get insurance, you have to tell your insurance agent where you are garaging your vehicle. Now, it doesn’t mean you have to have a garage. It means where you’re domiciling your vehicle, where you park it. And if you say you’re parking it in one town, but really you live somewhere else, you might be able to get a cheaper price on your insurance premium because some places are more dangerous. They’re higher risk of crime, theft, accidents.
How Insurance Companies Use ALPR Data Against ClaimsSo, you might get cheaper insurance, but if you’re really not parking it there, then they can match up your insurance records. Or even worse, if you have a claim, if you get in an accident, the insurance company can look at this ALPR data and find out that no, you didn’t have your car parked over here in the safe place. You were using it in the dangerous place, and they can deny your claim.
The Accessibility of ALPR Technology to Private CitizensOne of the companies is called Flock Cameras. You can look them up. You can order one for your subdivision, for your neighborhood, for your HOA, and it doesn’t have to even control access through a gate. You can just collect the data. Look, when you’re driving in public, you are in the public realm. Your information is not necessarily private because you’re out in public. Your license plate number is out in public.
Government Enforcement Through Public Data CollectionAnd these agencies are using it to enforce making sure that people aren’t doing shady things with titles or registrations or trying to evade proper procedures for things like vehicle inspection, safety inspection, smog, sales tax. So, think twice before you use some type of shady or questionable loophole to get a title because at some point it may come back to haunt you and it’ll cost you way more money. In some cases, they’re impounding and seizing vehicles from people that did something improperly.
Understanding Vehicle Financing and Short SalesSo, what is a car short sale and how does it compare to a voluntary repossession, a loan modification, or lean release? Well, a vehicle loan is a financing instrument that’s used to get a vehicle purchase funded when you don’t have all the money. So, if you’re buying a $40,000 car and you only have $3,000 in cash, you would get a loan for the difference. If later on it’s determined that you may have trouble paying for that loan or if you have difficulty covering the payments or if you owe more than it’s worth, you can do several things.
Available Options When Facing Payment DifficultiesYou can do a loan modification with your lender and we have an example on the screen of that. You can do a voluntary repossession, which is terrible because it ruins your credit. And you’re still going to owe the difference. So, let’s say if you bought that car for 40,000, you finance 40,000 and then two years later you want to do a voluntary repo. It might only be worth 20. You’re still going to owe probably 35 and you’re going to do the repo. They’re going to sell it for 20 and they’re going to send you a bill for the other 15,000. So, it’s not going to save you that much. They’re just going to hit your credit and they’re going to garnish your bank accounts.
Loan Modification and Car Short Sale AlternativesYou could also do a loan modification where you can contact a lean holder and maybe get them to adjust the terms. You can also request what’s called a car short sale. What this does is it’s a package of paperwork you can put together that shows what your current value is if it’s only $20,000, you can ask the lender, “Let me sell it for $20,000. Let me out from under this out of equity, negative equity, upside down, whatever you want to call it.” Sometimes they call it being underwater in the vehicle.
Short Sale Process and RequirementsAnd the lender will let you sell it for a fair value. You’re not going to sell it cheap. You’re not going to sell it to your cousin for, you know, 15,000. You’re going to have to sell it in the open market and to show all kind of documentation that you don’t have, you know, a million dollars sitting in the bank. You don’t make $200,000 a year. You’re going to have to prove that it’s a hardship.
Lender Policies and Potential OutcomesAnd what they may do, it’s up to the lender, is let you sell it to get out from under it. And then that negative equity, that balance, they may either wave part of it. They may let you make payments on it. They may defer it, they may convert it to a personal loan, unsecured loan based on the lender’s policy, but also based on how good of a package you submit to them. And this is an example from Ally Bank, one of the largest lean holders of what they do for loan modifications.
Lender Program Variations and DocumentationYou have a lot of options. Different lenders have different programs. They don’t always make them public. They don’t always make them conspicuous because they really don’t want a lot of people doing them because it costs them money. So, you may have to just submit a standard package of documents. And the link below will give you examples of those to request that your lender allow you to sell the vehicle to get out from under that payment where if you have too much negative equity, you can’t even trade it in because the dealership can’t absorb or digest that much negative equity on a vehicle when even when they’re selling you a new vehicle.
Common Questions About Buying Vehicles Without TitlesONE of the most common questions we get is about buying a vehicle without a title. Obviously, if you already have a vehicle with no title, you want to proceed with title recovery and some of the methods that we talk about on our website in order to get a title for it. If you already have the vehicle, what about if you don’t have a vehicle and you’re looking to buy one and you’re not going to get a title when you buy it? Should you do that? Well, officially we don’t recommend purchasing a vehicle without a title.
Why We Don’t Recommend Buying Without a TitleHERE’S why. All of these methods for getting a title that you see on our website for title recovery, court order title, bonded title, VT transfer, prior and a contact, all the different methods that are available work most of the time. Sometimes though, there is something about the vehicle that would prevent you from ever getting a title.
Scenario 1: Stolen VehiclesFOR example, an obvious situation is if the vehicle is reported stolen, can’t get a title.
Scenario 2: Junk or Parts-Only VehiclesWHAT about other possible scenarios? What if the vehicle has been reported as a junk or parts only vehicle? Sometimes if a vehicle has been owned by an insurance company where they paid out a total loss claim, they have reported it to the federal government as a junk or a parts-only vehicle. Now, don’t think you can just look at the vehicle and see what kind of shape it’s in and know that it’s not a junk vehicle. Many times, these vehicles are completely in good condition, but the insurance company has reported as parts only because of liability purposes.
Scenario 3: Open LiensANOTHER scenario is if the vehicle has an open lean against it. Now, leans sometimes can be removed. There’s a process for doing that. You can see on our website at cartitles.com, there’s a lean release removal process. Usually that works. But if the person who borrowed the money for that vehicle has been actively deceiving the lender and it’s an active default, there may not be an easy way to remove the lean.
Scenario 4: Delinquent Taxes or RegistrationANOTHER scenario where a title could be impossible is if the vehicle has been delinquent on back taxes or on back registration. Some states, if their registration fees or taxes are not paid, paid on the vehicle will freeze that VIN number. they will freeze that title so that nobody can get a title for it.
The Risk of Buying Without a TitleSO, as you’re looking at buying a vehicle, you’re looking at buying something without a title, remember that there is some chance that you may never ever get a title.
Limitations of VIN ChecksAND you might say, “Well, gee, can I do a title search? Can I run a VIN check? Can I check the VIN?” Well, yes and no. All of these VIN checks that you see online, Carfax, VIN search, all these different online consumer searches don’t check for everything. Even if you look at their terms and conditions at the bottom of their site, it’ll tell you this isn’t a real 100% government VIN search. It’s a just a kind of a basic online database. Many times it doesn’t even show up if it’s stolen. It doesn’t show any leans. It might say it looked for leans, but most states don’t report leans outside of their DMV.
DMV LimitationsAND you might say, “Well, can I go to the DMV and check this?” Well, you might be able to go there, but you’d have to go in person with your photo ID. They won’t do it over the phone. They won’t do it by email. They don’t do it online, certainly. But here’s the other thing. The DMV probably only has records for their state. So, if there’s some record in another state which would prohibit you from getting a title, it’s not going to show up.
Due Diligence LimitationsSO, you can perform some due diligence in advance to try to see if maybe there’s something obvious that would prevent you from getting a title, but you’ll never be able to know 100% if the vehicle is eligible for a title before you buy it.
Official Recommendation and Risk WarningSO, officially, we don’t recommend purchasing a vehicle without a title. Obviously, if you have one already, you want to try to get a title. nothing you can do then. But if you want to go ahead with a purchase because you want to take the risk, remember that whatever you’re paying for the vehicle, even if it’s a great deal, is totally at risk until you get the title certificate from that government agency. And until that new title shows up in your name, you are at risk of losing all your money.
If you’ve delved into the intricacies of obtaining a title for your vehicle, you’ve likely come across the Vermont loophole, a method that involves registering your vehicle in Vermont and then transferring the registration to your home state. The allure of this approach lies in its perceived simplicity, but before you embark on this journey, it’s essential to understand the potential challenges and weigh the alternatives.
The Vermont loophole is no clandestine strategy; it has been widely discussed in articles, automotive publications, and even recognized by insurance companies like Hagerty. This popularity, however, comes with a caveat – all 50 states’ DMVs are well-aware of this loophole, and their responses can vary.
While many states have historically accepted Vermont registrations for title purposes, there’s no guarantee your state will do the same. DMV policies can change, and certain states may, at times, resist this approach. Instances of states temporarily rejecting Vermont registrations have occurred in the past, only to revert to acceptance after a period.
On any given day, your interaction with a DMV agent, the specific branch, or even the policies set by the state commissioner can influence the outcome of your attempt to use a Vermont registration. Some agents may accept it without issue, while others may scrutinize it more closely, potentially leading to rejection.
Utilizing the Vermont loophole comes with its costs. Vermont requires payment of sales tax based on the book value of your vehicle, not the purchase price. Additionally, you’ll need to pay their registration fees and wait for license plates and registration. Upon returning to your state, you’ll be required to pay your state’s fees, adding an extra layer of expenses.
Before opting for the Vermont loophole, it’s crucial to evaluate whether it’s truly the best route. Contrary to popular belief, the requirements for obtaining a title directly from your state may not be significantly more challenging. Often, the perception of one’s state DMV being difficult arises from unfamiliarity with other states’ procedures.
The Vermont loophole might seem like an ingenious workaround, but it’s not always the most practical choice. Exploring other options directly available in your state can often be faster, cheaper, and more straightforward. Don’t disregard these alternatives simply because they might appear more challenging initially.
An illustrative example involves a client attempting to title a kit car. The client considered the Vermont loophole to avoid inspection requirements in their state. However, the complexities of paying taxes in Vermont, potential requirements, and the ultimate need for inspection in their home state made the direct route a more viable option.
While the Vermont loophole remains a frequently used method, it’s not without its downsides. Before proceeding, consider other available options in your state and weigh the potential risks and costs associated with the Vermont approach. Ultimately, being well-informed and exploring all avenues will empower you to make the best decision for securing your vehicle’s title.
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