The Expert Podcast

If you have a vehicle with a title problem, you've probably heard a lot of information online about how you can get a title. You may have heard about the Vermont loophole, abandoned vehicles, or mechanic's liens. We're going to talk about why there are some serious problems with the information you may have heard online. Some of these are urban legends, some of them are people talking on chat boards about things they know nothing about, and some of these things either don't work, or they could get you into big trouble.

You want to make sure you're actually getting correct information about how to get a title and not fall for one of these tricks or loopholes that either doesn't work or is going to get you in trouble. So, we're going to talk about mechanic's liens, abandoned vehicles, and the Vermont loophole. We'll discuss the problems with those methods, why you want to be very careful before you jump into them, or pay anyone to get you a title if they plan on using one of these methods. By the end, we'll also talk about what you can do to get a title yourself without paying anyone, and what will work without putting you in jeopardy.

First of all, let's talk about Vermont. For 20 plus years, the Vermont loophole has been kind of an urban legend. People have talked about it on chat boards and internet articles, and even some very high-profile automotive publications like Jalopnik and Hagerty have discussed this loophole. It has some validity. Basically, what you do is apply by mail to the state of Vermont to get a registration. Then, you take that registration and exchange it in your state for a title.

Why does that help you? Well, if you don’t have a title or a legal document in your state, this Vermont registration is a version of an ownership paper that you can use as a loophole to get a title in your state. What's wrong with that? Well, first of all, you have to pay tax to the state of Vermont. The tax is always going to be more than you want to pay, and it's going to be more than you think it is. You might say, "Well, I have an old car, it's not worth much because it's in bad shape," but Vermont is going to look it up in a very high book value and charge you a lot of tax based on that book value.

Even if you do pay that tax and get the Vermont registration, you still have to bring it to your state to exchange it for a title. This is not a big secret. You might have just found out about this Vermont loophole yesterday and think it's a big revelation, but guess what? It's been going on for 20 years, and every single state in the country knows about it. All the DMVs know about this. Some of them give you a hard time, some reject it, and some tell you you're doing something wrong. But they still have to accept it because it's a legal document from Vermont. Some are more aggressive than that.

For example, Florida has an official publication on their DMV website titled "Fraud Alert: Vermont Registrations." They’re calling it fraud, though not every case is fraud. They're getting your attention with the headline. What are they saying? The Florida DMV has been informed that in lieu of a title, the Vermont Department of Motor Vehicles will issue a registration form of ownership. This is true—they are a non-titling jurisdiction, meaning they don't give titles on vehicles older than a certain age. They only give a registration.

This works on vehicles that are 15 years or older, so right now, in 2023, it applies to vehicles from 2008 and earlier. People are using this as a loophole, thinking, "Wait a minute, I have a car or truck or trailer, and I don't have a title. I bought it, lost the title, or never got one from the seller. I'll apply to Vermont by mail to get a registration and then use that to get a title."

But your DMV knows about this. Florida's DMV, for example, says that in many instances, the registration ownership is being issued to people who did not present a title to Vermont, do not live in Vermont, and the vehicles were never located in Vermont. The Florida DMV knows this. They say that in some cases, people are using this registration form as proof of ownership, but it doesn't offer the same safeguards as a traditional title.

It's easier to get the Vermont registration, but it doesn’t have the same level of scrutiny that comes with getting a title. This makes it easier for potential fraudulent transactions. Because of that, Florida DMV has added additional documentation requirements when submitting a Vermont registration to get a Florida title. For example, Florida residents must provide the original registration (no copies), proof of sales tax, a Vermont residence address (which you won’t have), and a bill of sale with all the same information reflecting the seller.

Florida is one state, and others may have similar procedures, which sometimes change over time. At some point, Indiana didn't accept these registrations at all. They had a big notice in their DMV saying, “Don't bring us any Vermont registrations. We'll turn you away.” That went away, and now they're accepting them again. Different states have had periods where they didn’t like this loophole, so what does that tell you? It tells you that there's resistance to it.

So why not look at some other options? What else can you do? Many states offer something called a bonded title. A bonded title means you don't have the proper old title for the vehicle, and in order to convince the Department of Motor Vehicles that they're able to give you a title, you give them a surety bond affidavit. This means you sign an affidavit telling them how you got the vehicle, and you have to back that up with a surety bond from a bonding agent. The bonding company guarantees the DMV that what you're saying is true.

The downside? It costs money—probably around $100 to $200 for a bond. There are also restrictions. For example, vehicles eligible for bonded titles must be less than 8,000 pounds and between 10 and 30 years old. They cannot be vehicles with an electronic title or with a lien or security interest, nor can they be vehicles involved in inheritance, gift, or divorce. The advantage is that the process goes through your local DMV, so you don’t have to deal with out-of-state loopholes.

Another option is a court order title. This is a process where you submit an affidavit to the court, explaining how you obtained the vehicle. You don’t go to the DMV. The court can issue an order of ownership, and with that order, you can bypass the DMV's procedures and take it straight to them. This is an option that can be faster and more straightforward than going through the DMV.

Now, let's talk about mechanic’s liens and abandoned vehicles. If you’re a private citizen and not an automotive facility, you can't do a mechanic's lien. A mechanic’s lien is only available to licensed repair facilities. They have to have proof of the vehicle being brought in for service that wasn’t paid for. You have to jump through a bunch of hoops to file a mechanic’s lien, and even then, it’s harder than getting a court order title.

As for abandoned vehicles, they’re not finders-keepers. Just declaring a vehicle as abandoned doesn’t mean it’s yours. There are specific legal procedures involved, and it’s not as simple as signing a paper and calling it abandoned.

In conclusion, when it comes to getting a title for your vehicle, be very careful about the loopholes and methods you hear online. Make sure you understand what you're getting into, and consider legal, straightforward options like bonded titles or court order titles, which don’t carry the same risks as some of the loopholes.