The Expert Podcast

So you buy a used vehicle and you get a title. Are you in the clear? Are you safe? Well, there may be scenarios where you are handed a title for a vehicle and you still run into problems. Here's an example story out of Hawaii that purchased a used truck for ten thousand dollars and still had a title problem even though they were handed the title. How does that happen? We'll take a look at this case and also some other scenarios where you can be handed a title and still not be a valid legal owner. In this case, after he did the deal, he realized the name on the title was not the person who sold him the truck. The signature was forged.

So if, let's say, the truck title on the front says Joe Smith, and you give somebody money and they sign the back of the title "Jon Jones," well, that's invalid. Joe Smith is the owner of the vehicle. That person is the only one allowed to sign over the title to the buyer. Right? It's a crime, according to the police officer, and they see forged titles all the time — or non-existing titles. Right? It's not stolen. That's one of the things a lot of people will try to look at — "Well, I checked to see if it's stolen." It's not stolen, but it's still a forged title.

And here's where it can get tricky. A dealership owned that car before, and they sold the truck at auction to a third party and notified DMV. But the title that the buyer got was a duplicate. It wasn't the original title. Right? So what happens is, let's say you have a vehicle that you have title in your name, and you get a loan on that vehicle. Before you get the loan, you get a replacement title — a duplicate title certificate. You take your duplicate, which is now the valid title. Duplicate titles have a different title number on them. The old title now becomes void, but it looks the same.

So you take your duplicate title, which is now valid, you go to your lender, and you get a car loan. You get a lien on that vehicle, and you get cash. The lender holds your title — the duplicate, the active valid new title. But you still have your old title that was now void because you got a duplicate. But a buyer may not know that. You take that duplicate title, you put your car on Craigslist, Facebook, Auto Trader — wherever you want to sell it — and you say, "Hey, car’s ten thousand." Guy gives you ten thousand. "Here's the title. I signed it." You hand it to him.

Well, guess what? Now that person takes that title to the DMV, and they find out it's no longer valid because a new one was issued — subsequently, that voids that prior title.

How can you protect yourself from this? Well, you can do your transaction at the DMV, and the DMV can look it up right then and tell you if it's a valid title. You can also use an escrow service that holds the money until the title's transferred to your name. There are other legal methods you could use. You might want to check with an attorney to find out what those are. But be aware that a title is a legal government document. It's kind of like a security instrument, but you have to verify it.

You want to make sure the person that's selling it to you on the front of the title is the same person signing it over on the back of the title. No forged signatures. You don't want somebody to tell you, "Well, I got this title from somebody. They already signed it." You only want to give money to the person who's listed on the front of the title and watch them sign it and check their ID. That will eliminate a lot of the problems. Also, verifying that the title number that you're seeing is a current valid title, not an old title that's already been voided because a new one was issued subsequently to that.