The Expert Podcast

So you're probably thinking if you buy a car from a licensed dealership, you're in good shape, and you're safe as far as the title is concerned. Well, not so fast. Here's another example of where a dealership closed and went out of business. This is no small dealership mom and pop store; this is a large chain primarily out of Florida called Off Lease Only. Off Lease Only originally started out as purchasing lease BuyBacks and selling those to the public, but they branched out into other types of vehicles, filed for bankruptcy, and suddenly just fired all their employees, shut down all their locations.

So what does that mean for consumers well there could be a lot of repercussions that recent buyers may not be aware of that have to do with vehicle titles how does that work if a vehicle if a dealership goes out of business how do the titles work for the cars that were recently sold well first you have to look at what happens when you buy a car from a dealership three things happen first of all they take the title that they had for that vehicle and they sign the back of it over to you and a title as you know is a certificate that looks like this and that title is then assigned to the buyer the dealership then takes that title along with the title application that you signed as part of that transaction and they send it to your local titling Authority so in Most states that agency is called Department of Motor Vehicles and some states it's called Uh Bureau of Motor Vehicles a few States call it Department of Transportation in Illinois it's called secretary of state that government agency is who issues titles remember you can't buy a title from a company you can't download one from the internet it is a legal government document issued only by a government agency so once that dealership takes the title from the last owner signs it over to you they send it along to the titling Authority so a new title certificate is issued in your name along with that title they also submit the fees that went to uh getting that title transferred in some states you have to pay sales tax on the vehicle you have to pay the title fee the registration fee those are all collected by that dealership at the time that you purchased a vehicle as part of your sales contract they collected all of those fees so they have to send those along to the titling Authority the department of motor vehicles with all your paperwork.

So what happens if a dealership goes out of business? Well, first of all, they may not have had the title, yet many dealerships have purchased vehicles recently from places like auctions, or in the case of off-lease, some of their cars came from leasing companies. They may not have those titles in their office by the time they sell the vehicle, but they want to sell them as fast as they can, so instead of waiting for the title, which may take a month or two, they sell it right away, and when it comes in, they forward your application to the Department of Motor Vehicles.

What happens if they shut down remember the car dealership close its doors for good laying off hundreds of workers well what if your title hasn't been processed yet what if it hasn't been sent to Department of Motor Vehicles yet they don't have any employees they don't have any locations everything is shut down so that may impact you getting your title even if you finance the vehicle you wouldn't have received the title in the mail from the titling Authority directly that title would have been sent to your bank to finance your vehicle and that bank may have been one that the dealership set up it may have been Your Own Credit Union but they would have received the title well what happens after a few months when your bank doesn't get the title they're going to start bothering you and saying Hey where's the title for this vehicle we financed it we need the title if you do not get them the title they can actually convert your loan to a personal loan and increase your interest rate they can even call your loan to say look if we don't get the title you have to pay us all the money back that you paid for the vehicle so the bottom line is that you have to make sure that your title gets from the dealership to that lender if you didn't Finance it you wouldn't have the title in your hand so you're the legal owner well if they didn't actually get that title yet or if they didn't send it to the Department of Motor Vehicles that could be a problem there's other trouble that could come up what if when they went bankrupt they don't have any more money what if the money they collected from you for tax and registration and title fees is gone right this particular company literally went bankrupt filed for bankruptcy when a company files for bankruptcy that means their funds are frozen until the bankruptcy trustee releases them for whatever reason and they probably will if the money's there they will release it but that may take a few months in the meantime you're driving without a title and your registration May expire your Temp Tech here's the worst possible scenario what if they never paid for the vehicle in many cases when a dealership purchases a vehicle from an auction from a bank from some other source they put it on what's called a floor plan line of credit they have a line of credit just like everybody else does it's like a big credit card when they buy cars they put the car on that line of credit that lender holds the title for that vehicle so when the dealership calls up that lender and said hey we sold that 2024 our 2023 Honda Civic the lender says okay give us the money for that car and we'll give you the title and they pay them off one at a time as they sell them well what if they hadn't paid for the car yet now your car is owned by that lender floor plan lender so until they get paid they're not going to release the title your money for that car already went to the dealership and they went bankrupt so that lender is never going to get paid so that creates a problem in many cases those things work out through the courts but it's something you want to be aware of so what do you do if you've recently purchased a vehicle from a dealership that's gone out of business or you financed the vehicle and that dealership went out of business well first thing what you want to do is start the process early start making filings for getting your vehicle Most states have a victims restitution fund where if you're a victim of a scam from a dealership and dealership going out of business qualify since a scam you can file against that fund file a complaint with their Licensing Board second thing you might want to do is start filing for a court ordered title to have the court declare you to be the owner of the vehicle by court order so that you can get Justice and get your vehicle title in your hands with your name on it and you can look at our links below we have some more videos coming up about the court order title process you can visit our website car titles.com it's something you can do yourself for free we have all the instructions we even have a couple videos that will give you the details on how to do all that but you may want to start that process early because the faster you start it the faster you're going to get your title it's not going to be quick it's not going to be within a few days and you don't want to be the last one in line to get a title from that out of business dealer so be cautious what we recommend doing anytime you buy a car from a dealership even if it's a legitimate dealership or a larger dealership before you give them money before you sign on dotted line make them show you the title right they can't give you the title because you haven't purchased it yet but have them at least flash it have them show you the title make sure they have it in their hands they're not waiting for it to be paid off from a floor plan line of credit if they can show you the title at least now that's one possible risk that's been removed from your vehicle purchase decision do you have any questions reach us on our website car titles.com we even have a help desk email you can email help car titles.com as an email we'd be glad to be of assistance.