The Expert Podcast

So what are the requirements to get a title for a vehicle? We'd like to do an update occasionally about titling a motor vehicle. Here's an excerpt from the state of Michigan, and even though it's only one of 50 states, it's very similar to the requirements in all of the other states.

For example, the question on their FAQs is: What do I need to title and register a vehicle? Present the original title—photocopies are not acceptable. Right, so you need the original title certificate from the last owner, from the seller, from the dealership. In addition, it can't be modified—crossing out, white out, or photocopy—it’s got to be the original certificate. Just like you can't go to the bank and deposit a photocopy of a hundred dollar bill, you can't get a title with a photocopy of a prior title. The title is just like money; it's a legal document.

In addition, you need your signature. All title owners must sign when a title is transferred. So this is something that a lot of times is overlooked. Most states don't allow you to do a title transfer online; they need an original ink signature on paper. You can do an appointment of agent, which means that if you want to give somebody power of attorney to sign your name, that's fine, but that's a separate issue.

Seller signature: the seller must complete and sign the seller's portion of the title unless they come to the state office with you. So if you're buying a car from somebody and they want to go to the title office with you and sign right in front of them, that's fine; otherwise, they need their signature.

You need an odometer statement showing what the odometer is showing on the vehicle. This is definitely required for all vehicles 2010 and newer. Some older vehicles might not need it depending on the state.

If there was a loan against the vehicle that's not been cleared, you need a lien release document. That's something that is required even if the loan is paid off—if it's still on the title record, you need to bring that.

Also, you need to bring ID. Any notice says in Michigan you need to bring your Michigan driver's license. Most states do not issue a vehicle title to non-residents—you have to be a resident of the state to get a title for a vehicle.

There are a few exceptions: some states allow you to put a vehicle in a corporation name if you're not a resident, or if you have a second home where you can verify a deed to a property or some other record that you have a residence there. That's allowable, but you have to jump through a lot of hoops basically. They don't want to be registering vehicles for out-of-state residents in their state because it's a way sometimes people evade taxes, evade inspections or emissions in their home state by putting it in another state.

You also have to have insurance on a vehicle to register it, but you don't have to have that for a title.

How much are the fees? Well, in most states, titles are pretty cheap. Title transfer fee is fifteen dollars. You do have to pay sales tax on vehicle transfers. In Michigan, it's six percent sales tax.

Now, it's not required if you sell it from an immediate family member, but they're going to require documentation. You have to pay tax. A tax on a vehicle can get expensive. They normally don't just go by whatever you put down on your receipt—that you paid a hundred dollars for it. They're going to make sure it's relevant to the value of the vehicle, and a lot of times, this is something that people will dispute because they'll say the vehicle is not worth that much or I didn't pay that much. They don't really care; they go by what the book value is.

And here you are with insurance: you must provide proof of valid insurance to register your vehicle. Normally, you don't need insurance to get a title, but you do need to have registered insurance for registration to drive it on the road.

So if you're not registering it, technically you don't need insurance, but you should get it because if the car's in your garage and it burns to the ground or it gets stolen and you don't have insurance, then you're going to be jammed up. So you probably want to get insurance anyways.

But that's a good example of what the requirements are. Again, this is one state, but you can look—all 50 states have something very, very similar, and you have to have the old title and proper signatures. Otherwise, you have to do a more complicated title recovery process.