The Expert Podcast

In our sales meeting this week, a couple of our salespeople mentioned some stories from clients who have called us with very similar scenarios, and this is becoming more and more common. People are buying vehicles without a title, which they always have, but the stories are getting more extreme. First of all, we never recommend you buy a vehicle without a title. In many states, it's actually illegal to sell a vehicle without a title or buy one. Now, that doesn't mean the SWAT team's going to swoop in and pick you up if you buy a car without a title; people do it all the time. But the reason they have this law is to protect you. And here are some scenarios where people took some big risks by buying a car without a title to come with it.

Look, when you buy a car and you give the money, you should have a legal title certificate handed to you at the same time that you give the money. If you don't, that's a red flag. Now, on older barn finds or older vehicles that have been sitting around, it may not be that big of a risk. But on newer, later-model vehicles, a lot of times there's something going on with that vehicle. There could be a lien against it; it could be salvaged; it could be back taxes. And here are three stories that provide evidence of how that could be the case.

In one story, the buyer bought the car and was told the reason that they didn't have a title was because the guy who was the owner got deported, and the people who are selling it own the house where he used to live and were just trying to get rid of the car. Well, okay, that might be true, but just because he's deported doesn't mean that he loses his car automatically. It also doesn't mean that the people who sold it have the legal right to sell somebody else's vehicle. It turns out that, in addition to that, there's a lien on the vehicle. The guy who bought it who was deported owed money to the bank, so they were trying to sell a car that belonged to the bank. And the theory was, well, I have a bill of sale, so I should be able to get a title. Well, if there's a bank loan recorded on the title records, no state DMV is allowed to issue a title for that vehicle until that lien is removed from the title record. Even if it's paid off, the bank has to remove it. Well, how do you do that? Well, that's what you'd have to do in order to get a title.

Now, there's a way to go about doing it. Normally, if a vehicle has a charge-off or write-off, or if it's just in delinquency or non-performing, then the bank can issue a lien release. But you have to go about it a certain way. You can't just call them up and say, Hey, give me a lien release. You have to go through the paperwork process of a request and formal notification. You also can't do a mechanic's lien. A lot of people think I'll just file a mechanic's lien as a garage. I can't do that. States require that the mechanic's lien applicant have a proper signed repair order authorizing work on a vehicle that the owner said was okay to work on. You won't have all of that. So the person who called told our salesperson, Well, what if I just pay off the loan? Can I get the title? And she said, well, you could pay off the loan, but now you're paying off somebody else's loan, and they're still the owner. Just because you paid the check to clear that loan balance doesn't make you the owner. It just makes you the person who paid the money for somebody else's vehicle. So then you'd have to get a transfer to your name, and that could be tough.
Another one that came up is somebody who bought a car and was actually handed a title. They got a title certificate, but they went to the DMV. In this case, it was in Pennsylvania, so they went to PennDOT, which is their version of DMV, and tried to get a new title and register it, and they said no. You can't do it because this is an old title. Somebody got a new title after this one. This is a dormant title; the other one was a duplicate replacement. Well, where does that put you? Well, it turns out the reason they got a new title is because they took that title to a pawn shop and got a title pawn loan. That's a troublesome scenario.

The last story is about a customer who calls up, buys a vehicle with no title, and the seller tells him, Well, it's because, you know, my ex-wife and I had this vehicle together, and we got divorced. I get the car in the divorce. So I'm selling it. I don't need it. Okay, fair enough. And he even had paperwork showing in the divorce that he's supposed to get the car. Well, it wasn't titled in both names; it was actually titled in his wife's name. Not in both names, but in his wife's name. Even though the paperwork says he's supposed to get it, the DMV can't use that paperwork to transfer the title. They're not authorized to make legal determinations about paperwork, right? They're not authorized to say, well, we interpret this to mean something because they don't know if maybe that's forged. They don't know if there was another set of paperwork that came out afterward for the divorce. They're just taking you at your word that this paperwork is correct. They don't know if it's true or not. So in order to have that validated, you'd have to go to court to have a judge review it, analyze it, verify that this is true, verify that there were no modifications made later, and then you go to DMV. Well, it turns out this buyer already bought the car. They had a copy of this divorce decree, and they tried to get a title. Well, when the wife found out that the husband had sold the car, she filed an objection with the DMV that said, This is a fraud; don't transfer the title, even though it might not be true, even though the court might sort it out. Now you have to jump through all those hoops to dispute some ex-wife who doesn't like the husband selling the car.

Anytime you purchase a car without a title, be aware that there's some risk that you won't get it. Look, most of the time, it works out. Seventy, eighty percent, eighty-five percent of the time, if you buy a car without a title, you'll get one as long as it's a legitimate vehicle. It's not stolen; there's no open lien; there's no back tax; it's not a part-son vehicle; it's not an export-only vehicle. If it's a legitimate vehicle, you'll probably get a title, as long as you're willing to take that risk. Then go ahead and buy it. If you already bought the vehicle, you don't have a choice. You have to try to get a title. And that's where the website you see below will give you some instructions on doing a court-ordered title, a bonded title, PR to contact, and many other methods. But if you can all avoid it, don't buy a car with no legal title. Buy a legitimate vehicle that somebody hands you the title to. Is it going to cost a little more money? Maybe. But in this day and age, you can get a deal on a car even with a title. If you have no title, it doesn't matter how good the deal is if you can't get one. All that money is thrown away.