Beware: Title Loopholes Can Lead to Legal Troubles

  • 4 min read

Why does it seem difficult to obtain a vehicle title? Why does the DMV make it seem like you’re a criminal for trying to obtain a title for your vehicle? Well, the reason it appears so complicated is not necessarily as sinister as it seems. If you’ve purchased a vehicle without a title, bought one at a lien sale or an auction, and encountered title issues, there may be a straightforward explanation. 

When the DMV grants you a title for a vehicle with your name on it, it’s not merely that you’re obtaining a title. Instead, it implies that the previous owner is relinquishing the title to you. Receiving a title declares that the vehicle is now exclusively yours, and no one else can claim ownership. Why is this significant?

Here’s an article from Texas where companies were accused of illegally selling cars owned by service members. These military members are at the center of this issue, yet it has more to do with the titling process than with the military and service. Defendants failed to obtain a court order before auctioning the vehicles, which prevented service members from disputing whether a lien sale of a vehicle should have been delayed. 

So, here’s the thing. Firstly, a court order title is undoubtedly the best method of title recovery. Although other options exist, such as a bonded title, the Vermont loophole, or a prior contact, obtaining a court order title is optimal. This article clearly states that a court order title is a potent method. However, there might be undisclosed claims against the vehicle. Perhaps you bought it with a bill of sale from someone on Craigslist, or the seller did not provide you with an appropriate title. Before the DMV issues a title, they want to ensure that all other ownership claims are eliminated. 

Here’s why: your title could be jeopardized if there are other ownership claims. Those who purchased these 176 vehicles without a court order may have their titles revoked. They could lose their car, despite having paid good money to the towing company. This situation demonstrates the importance of obtaining a valid title when purchasing a vehicle.

It’s your responsibility to undertake the challenging task of obtaining a title. This will prevent your title from being seized or, worse, never receiving one at all. Following the correct process eliminates all other ownership claims, such as liens, prior owners, probate, and civil actions. Opting for a bonded title puts your title at risk of being revoked. Other types of loopholes or backdoor methods of obtaining a title could result in losing your registration for the vehicle. Although proper title paperwork may seem slightly more difficult, avoiding losing your title or having your vehicle seized is worth the effort. 

This issue has been thoroughly investigated by the US Department of Justice (DOJ), the highest authority level. This isn’t a matter handled by local or state police but by the Federal government’s DOJ, where the FBI is located. A person’s vehicle was towed and sold for $6,200 at an auction, despite them still owing $13,000 on loan. They were left without a vehicle, and the buyer allegedly never received a title from the towing company, which is a severe problem.

The issue is that if you don’t follow the correct process, whether it’s a mechanic’s lien or a court order, buyers, sellers, and even previous owners are at risk. By following the appropriate title process, such as a court order title, you eliminate the possibility of spending money on a vehicle without obtaining a title. Avoid using loopholes, such as a bonded title, which could create future problems. 

Additionally, you don’t have to worry about previous owners claiming the car as theirs and demanding its return. Although many people consider bonded titles, there are risks associated with them. For instance, if someone comes forward later and claims that the car was transferred improperly or through a bad lien sale, the bonding company will pay the claim, but they’ll also come after you for reimbursement. Unlike insurance, you’re not off the hook once they pay the claim. 

To avoid such scenarios, opt for a court order title, magistrate title, or civil lien to get it right the first time and avoid problems like having titles revoked for 167 cars, being investigated by the US Department of Justice, and facing potential legal liability down the road, which could result in losing your car.

The Solution for Your Court-Ordered Title

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