Is it Legal to Sell a Car with an Open Title?

Is it Legal to Sell a Car with an Open Title

Is it legal to sell a car with an open title? Yes, it is illegal. An open title on a car is when the seller signs the title to give it to the buyer but leaves the buyer’s part empty. This is not the correct way to transfer ownership and is both very risky and illegal. It can lead to title jumping problems. Normally, when you sell a car, the seller signs the title to give it to the buyer. The buyer then fills out their information and gives it to the DMV to transfer ownership.

Is it Legal to Sell a Car with an Open Title?

As I mentioned earlier, it is illegal to sell a car with an open title. A car has an open title when you buy it, and the owner signed the title but did not fill in your details. The seller’s information is there, but the buyer’s is missing in the buyer’s section.

You need to fix this at your local DMV, especially if you plan to sell the car. Passing around a car with an open title, skipping these details, is illegal and can get you into trouble. An open title can occur if a seller does not put their signature on the title (accidentally or deliberately), the buyer does not put their signature on the title (accidentally or deliberately), or previous owners fail to sign the certificate of title.

Usually, open titles are used when a private seller sells a car. Sometimes, even dealerships do open titles. Some dealerships without a license, known as curbstoners, use open titles to avoid sales taxes as well as get around the number of cars they can sell in a year.

In other cases, a car title can be left open due to the buyer losing the title certificate before they can transfer ownership at the DMV. This is like a temporary problem, and it can be fixed in two ways:

  1. The seller gets a new title and signs it again.
  2. The buyer gets a bonded title to transfer ownership of the car into their name.

Common Open Car Title Problems

Below are some of the problems with selling a car with an open title.

Shady Vehicle History

Let’s say a buyer has a car, and the title says it is a flood or salvage vehicle. If the seller lists it for sale, finding a buyer might be tough because of that label. Even if the seller gets a rebuilt or revived salvage title, ‘flood’ or ‘salvage’ will permanently remain in car history. However, one might decide to be sneaky and sell a car with an open title. An open title will likely disclose that the car has never been salvaged. Since the title does not disclose the true information, a buyer might not discover the title status until it’s too late. Hence, before purchasing, a buyer has to verify an open title with AAA or the local DMV.

Title Issues and Responsibilities

Typically, if you buy a car, you should transfer the title to your name before getting license plates. If you skip this step, any fines or traffic violations will go to the former owner, not you. When a car’s title isn’t updated, the previous owner bears all responsibilities linked to the car. Signs of this are when they continue to receive tickets, reminders, and fines even after the car is sold.

Neglecting to cover registration fees for your car? Eventually, they will need to be paid. Each state has its own regulations. For example, in California, a seller can submit a “notice of transfer and release” form. It implies they are no longer liable for fees and fines, but they’re still the car’s recorded owner. If legal issues arise, a court will decide who pays.

Title Jumping is Illegal

Avoiding the proper transfer of car titles, known as title jumping, is illegal in all 50 states. Some rare exceptions exist, such as when a deceased owner’s family sells the car. If a car’s title keeps switching without official transfers, the state might notice. Should the DMV discover this, they would trace it back to you, the recent owner, holding you accountable for a grave violation.

When the state identifies a missing car ownership trail, it will impose extra charges. They will also reach out to everyone associated with the car’s history. Such gaps could mean former owners dodged taxes, which is illegal.

How to Know if a Car Title is Open

When you’re buying a car, always ensure the title is not ‘open.’ But how do you do that? Here’s a guide to help you.

Compare the Seller’s Name with the Title

If the person selling you the car has a different name from the one mentioned on the title, this might indicate an open title. Here’s a simple step:

  1. Request the seller’s ID.
  2. See if the name on their ID matches the name on the car’s title.
  3. If they’re not the same, you’re possibly looking at an open title.

Inspect the Vehicle History Report (VHR)

A name mismatch does not always spell trouble, but it’s wise to be cautious. You want to ensure you can transfer the title to your name after the purchase. So, a buyer should consider getting a VHR. It gives insight into the car’s past and any title transfer challenges.

Where do I get a VHR?

  1. The National Motor Vehicle Title Information System (NMVTIS) is a government initiative against car theft. Their report costs around $4.95.
  2. Carfax, A known private company that offers VHRs for $39.99.
  3. AutoCheck charges about $19.99 for this service.

To order a VHR, navigate to the service provider’s website and enter the vehicle’s VIN, commonly located on the dashboard’s driver side.

If you find ‘salvage’ title in the report, it means the car had significant damages. However, if you get the bill of sale, the title can still be transferred. If the title is a lien or stolen report, the title transfer is a no-go. If there is no mention of the title, it likely means the vehicle’s fine. But always reach out to your local DMV or AAA.

Verify with the DMV

While a VHR is useful, your state’s DMV is the final authority. Sometimes, recent liens might not appear in a VHR, but DMV records will capture them.

If the title appears open, take some time to schedule a visit to your local DMV or an AAA office providing DMV services. They’ll confirm any potential roadblocks in the title transfer process.

Put an End to Open Vehicle Titles

Don’t get caught up in the risks of selling a car with an open title. If you are the seller, make sure to sign the title certificate. Ensure the buyer does the same to avoid any responsibility for the vehicle after the sale. You can also ask the new owner to confirm the transfer.

As a buyer, never buy a car with an open title. Only consider it if you are sure the car is clean by checking with AAA or the DMV. If you decide to go ahead with the purchase, make sure to change the title to your name as soon as possible. Most states have a deadline for this, but even if you go beyond it, transfer the title to protect yourself from any liabilities.

To put the car title in your name, you need a vehicle bill of sale. If you don’t have it, just check with your state’s DMV’s website to get a copy.

Ultimately, if you find yourself in the middle of having to sell a car with an open title, consider the following solutions:

  1. If you got the car from a dealership, complain to them.
  2. If you bought it from a private seller, try to work things out with them to fix the open title situation.
  3. You can get a bonded title to show that you are the real owner.
  4. If the person who sold you the car isn’t helpful, try to get your money back, but this might be difficult.
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