The Expert Podcast

What is a car title, and what happens if you have a problem getting a car title?

A vehicle title is a legal government document issued only by a government agency. You can't buy one from a company, and you can't download one from the internet. This is a great guide from Kelley Blue Book about everything you need to know about car titles. It explains what a title is and, more importantly, what happens if somebody sells you a car and either doesn't give you a title or gives you a title that's not valid.

Meaning that it's signed by somebody else, it's not signed at all, or you lose it before you put it into your name. What do you do if you have a title problem? It gets into all that. As an example, the first thing that makes it very clear—the first question is: What is a car title?

A car title is a legal document establishing proof of ownership of a vehicle issued by the state where the vehicle is registered. This is not a form that you fill out yourself. It's not something that you can print on a sheet of paper. You can't buy one from a company, and you can't just download one from the internet. It's a government document issued by the state, and it's jurisdiction-specific, meaning that it's not a national form that looks the same everywhere.

In fact, the next question is: What does it look like? Here's one from Pennsylvania. The one that they showed above is from a different state—looks like that might be Florida. It looks like that form is from Florida. But if you notice, there are a lot of similarities. Look around the edge—see all this scroll work? That means it's a secure document. See the scroll work? It looks similar, although this has the Pennsylvania seal on it. The reason they do that is because, just like money, it's got security instruments built into the documents.

There are watermarks, so you can't white it out or make changes to it because you don't want to change a VIN number and then have a title for the wrong vehicle.

What has to be on the title? Well, it's got the VIN, year, make, and model. This is important because it tells you what vehicle we're talking about. If you have a title that was for no specific vehicle, then what good is it, right? This tells you that your VIN number is owned by you.

The next thing is the owner's name and address. A title isn't just whoever has it in their hands owns the vehicle—it has to have the name on it. Even if somebody stole a title, if it doesn't have your name on it, that title is no good. You could steal a hundred-dollar bill, put it in your pocket, and you have that hundred dollars. But if you steal a title, it's got somebody else's name on it. Even if it's destroyed, that name is recorded in the records of that titling authority.

Now, what happens when the title is not available to you—if it's lost, stolen, or damaged? If you are the legal owner already, which means your name is printed on the front of the title and it's in the title record—no brainer. It's easy. Just go to the DMV or titling authority in your state, show them your ID, and they'll look it up in the system to see you're the owner. They'll give you another title—no problem.

What if you weren't the owner? Well, now you have some other options. Most states allow you to do what's called a bonded title. This means that if you sign an affidavit saying, "Here's how I got the vehicle, here's my bill of sale, here's the proof that I bought it—maybe text messages, whatever it is," and you have a surety bond—someone backing you up saying, "Yeah, we'll back this person up. You don’t have to take their word for it, DMV. If they’re lying to you, we’ll back them up"—then you can get a bonded title. More information on the website.

You can also do a court order title, where you file a petition in the court of the county where you reside to have a judge declare you the owner of the vehicle by court order. You don’t have to get a surety bond. You don’t have to go out of state for some loophole. You don’t have to deal with the DMV. The DMV or the title division in your state is very bureaucratic—they have certain rules. They can’t just hand out titles on request. You either have the old title, or you don’t.

By going through the court process, you go over the head of the DMV and get a judge to sign your order saying, "Yep, you’re the owner." You bring that to the DMV, slap it on the counter, and they give you a title. Again, that’ll be described more on the website.

What about liens on a vehicle? Well, there are two types of liens: a mechanics lien and a financing lien. If you have a lien on a vehicle that's been recorded—meaning that somebody borrowed money against that car—that lien stays in the title record until the lienholder signs a document and submits it to the titling authority.

It doesn’t go away when you pay your last payment. It doesn’t go away when it’s paid off, charged off, or written off. It only goes away when that lienholder signs a very specific formal document and that document is submitted to the DMV. Until that happens, that lien can stay on there forever.

So if you have a vehicle that has a lien on it, you want to make sure that you get that document from the lienholder. The instructions on how to do that are also on the website.

Another type of lien is a mechanics lien. This is a process where if you’re an automotive facility and you do repairs, storage, towing, or other types of work, you can use that authority to take ownership of a vehicle that's been left at your facility to get paid for your work. It’s a very powerful process given as a privilege to automotive facilities.

Now, what if you're not an automotive facility? Well, now you can do a civil lien. That’s another type of lien against a vehicle. So, the lien can either be a benefit to you or a liability. A lien can be against you if you owe money, but it can work for you if you have a claim against a vehicle.

Again, you can look at the website to get more information about liens—either getting rid of them or placing them on a vehicle so that you can have clear ownership and don't have to worry about somebody else coming forward and trying to take that car away from you.