The Expert Podcast

Several times per year we take a look at the changing laws for vehicle titles so that we can advise our consumer clients what is the changing landscape for titles. From time to time, the laws change and the requirements change. For example, here's an article about how Minnesota is closing some loopholes and some other title requirements, and we'll take a look at all those so you'll know what is the best way for you to get a title for your vehicle in 2023. We'll update it several times throughout the year, but the beginning of the year is as good a time as any to look at what the requirements are for getting a title for your motor vehicle.

First, let's take a look at in general what's required. Here's the example from the state of Michigan: how can I title and register a vehicle? What do I need to title? Present the original title. Photocopies or modifications are not accepted, so it has to be the original title along with your signature, seller signature, odometer, and if there's a lien, you need to get a lien release. That's normal—that's all the states. However, many times a client or a visitor or consumer will not have the original title. That's the whole reason for looking at other methods.

So, if you purchased a vehicle and didn't get a title when you bought it—maybe you only got a bill of sale, maybe you had the title and it got lost—what do you do? Well, one of the most common methods that people have been using for years is what's called the Vermont loophole. So the question is, is that going to work for you? Does that loophole still apply?

Well, for many years we've always advised that you look at other options because the Vermont registration process in theory technically is something that can be done. It's used by people all over the country. You've seen it featured in Road & Track, Jalopnik—even Hagerty Insurance had an article from one of their producers that used this process. So, the way it works is Vermont is a non-titling jurisdiction. They issue a registration version of ownership, and you can be a non-resident of the state in order to get this document. Once you get it, then you present it to your state to exchange for a title because Vermont is a non-titling jurisdiction. So their registration, in effect, can be presented as a version of ownership proof.

So, why is this not the best way to do it? Well, first of all, if you go through Vermont, you're going to have to pay sales tax to the state of Vermont on the value of the vehicle. And it's not going to be the value on your bill of sale or the value you think it's worth—it's going to be what the book value says. In many cases, that's going to be many hundreds of dollars, and a lot of people just don't want to pay that.

So, trying to use Vermont as a method of getting a title—first of all, you have to pay their fees to Vermont, the sales tax plus the registration fee, and you have to wait for that to come from Vermont. Then you bring it to your state and you have to pay all the fees for your state. So in effect, there's probably better ways to do it. You could apply for a bonded title in your state, and that involves getting a surety bond, signing an affidavit, submitting it to your DMV, and you get a title.

Many times a customer feels like they don't want to do that because they think you have to pay one and a half times the value of the vehicle to get a bond, and that's not true. A bond for most vehicles costs about a hundred bucks, right? So it's not really that big a deal. The customer a lot of times reads the rules or the statutes wrong, and it says you have to get a bond one and a half times the value of the vehicle. But that doesn’t mean if the vehicle is $5,000 that you have to pay $7,500. It means you have to get a bond for $7,500, but in most cases that only costs about a hundred bucks.

The other reason that people think they don’t want to do a bonded title is because they think it takes two or three years to get the title. That’s not true. You’ll get a title—it’ll be a bonded title—but it’ll say "bonded" on it for two or three years. After two or three years, that reflection falls off the title. Now, that may be a problem for some people who want to sell it or finance it, but by itself, it is not a problem with the title.

The other reason that you may not want to do a bonded title is because it is only available in certain states. There are about 12 states that don’t do bonded titles at all. In fact, one of them is the state of Florida. Technically, you can do a bonded title in Florida, but if the vehicle was not last titled in Florida, you can’t do a bonded title. And there are some years of vehicles that they don’t use in Florida either.

So, what is the best method to get a title? Well, before we do that, let’s talk about Florida. If you try to do the Vermont loophole in Florida, you’re going to run into this. Here’s an official Florida Department of Motor Vehicles notice: Fraud Alert—Vermont registrations issued in 2022. The Florida Department of Highway Safety, their DMV, has been informed that in lieu of a title, the Vermont DMV will issue a registration form of ownership. And customers that use that alternate proof—it does not offer the same safeguards of traditional title-based transactions.

So, they’re going to make you jump through a bunch of hoops. You’re going to need certain forms: Vermont registration, bill of sale, you’re going to need a lot more documentation to make that work in Florida. And they’re going to give you a hard time. They're not the only state. This Vermont registration thing that people do has been going around for 10–20 years—it’s not brand new. And all the states know about it. Some states don’t care—they just take it and it’s not a problem. Some states will give you a hard time but eventually let it go through. Some states will try to block it, and there are some states that have tried to block it and then after a few months decided that, well, they can’t do that.

So, you have to check with your state to make sure. At the very worst-case scenario, they’re not going to reject it. Best-case scenario, they’ll let it go through even if they make you jump through a few hoops. So, make sure you understand that before you try to do this Vermont loophole.

Look, every single time we talk to a customer, we tell them there’s other options to use, but a lot of times customers say, “I just want to do Vermont,” because they feel like it’s something they’re getting over. But you’re really not. You’re paying more, it’s taking longer, and there’s more direct ways to do it.

What is another direct way? Well, it’s court order title. What is that? Here’s an example from an Ohio jurisdiction that does this. Court order titles—it’s issued when the original title has been lost, destroyed, or stolen, or when you have purchased a vehicle and the previous owner has failed or refused to furnish you with a properly assigned certificate of title. I’ll bet that’s what you’re going through. I’ll bet that’s your scenario—that the previous owner did not give you a title. That’s exactly what this is for.

And it’s like going over the head of the DMV. The DMV is not allowed to issue you a title without having the old title certificate. And if you don’t have it because the prior owner didn’t give it to you or you lost it, it got destroyed, you’re out of luck. You can’t just go into DMV and say, “Give me a title with a bill of sale.” They won’t do that. A bill of sale doesn’t prove you’re the owner—it proves you gave somebody money, but it doesn’t prove that you’re the owner.

This court order goes over the head of DMV. It bypasses them. Now, you’re going to have to take one extra step, and you’re going to have to submit some paper to the court clerk in your county. But it’s a lot better than sending tax money to Vermont or doing other things. It’s a more direct route and it’s a more proper route. It’s the route that the government dictates that you’re supposed to do.

In reality, it’s easier. Because think about the bureaucracy you face when you go to the Department of Motor Vehicles—it’s like a joke. You see it on TV shows and movies all the time. The DMV is like a punchline to a joke where it’s always hard to deal with. So, bypass them. Go right to the court. The court clerk—they want to help you. The DMV doesn’t necessarily want to help you with your title.

In fact, one of the things we get when our sales department talks to customers is the first thing they say is, “My DMV is so hard to deal with. My state is the hardest to deal with. My DMV’s giving me the runaround.” I’m sure you’re thinking that. Well, they give you the runaround because they have certain rules that they have to abide by. They have to follow the DMV requirements, which is you have to have the old title—just like it said on the Michigan DMV: what do I need to get a title? Present the original title. You’re not going to have that, so they can’t do anything even if they wanted to.

To try to keep banging away at DMV is like an exercise in futility because they can’t give you a title even if they wanted to. But the court can. The court is there to help you. People think they don’t want to go to court because they think it’s too hard. What do you think is harder—court or DMV? Most of the time, at the court, if you have all your ducks in a row, you have a legitimate vehicle, no liens, not stolen, no salvage, they’re there to help you out. Even if there is a lien on it, a lot of times the court can bypass that too.

So check out that process. We have a whole section on our website—court order title—gives you all the instructions, all the forms, all the details. You can do it all yourself for free. We have, of course, title services where we can help with it for a court order title. And it could bypass any scenario except if the vehicle’s stolen. If you have a stolen vehicle, court is not going to help you. If you have a legitimate vehicle that just has some problems, don’t try to bang your head against the wall with the DMV. It’s not that they don’t want to help you or they can’t—their hands are tied.

Use the proper court process to get a title. That way, you won’t have to worry about closed loopholes. You won’t have to worry about having the original title. You won’t have to worry about running into problems with a state giving you a hard time with the Vermont registration. And you can just bypass all that noise and have the court—and this happens to be in Ohio, right—but any court can do it. There are 3,611 different counties in the country. Every county can do this. You just have to have all your ducks in a row, fill out the right forms, submit the petition to the court, and get it.

That’s the best way to get a title in 2023. The best way is a court-ordered title. Don’t be intimidated by the process. It’s not as hard as dealing with DMV—it’s actually easier. You just have to know how to do it. And that’s why our website gives you free consumer resources to be able to figure it out.