Motor Vehicle Titles

Branded Vehicle Titles

A branded title is a title that has a brand, or warning, on the face of the title. A brand is a warning that the vehicle may have a mechanical issue, might have been involved in an accident, may have had the engine changes, or might have been imported from another country.

A few examles of Branded Titles may be a Prior Salvage, Motor Change Vehicle, Specially Constructed Motor Vehicle, Reconstructed Motor Vehicle, or Non USA Standard Motor Vehicle.

A prior salvage brand is warning to all potential buyers that the vehicle has had some type of previous damage. If you are bidding on a vehicle at a dealer auction you may see a red light flashing or the auctioneer might say “this vehicle has some frame damage”. An auction will make their best effort to disclose any branded title before the bidding starts so you will want to bid accordingly. When you are purchasing a vehicle from an individual, be sure to look at the title before you make the purchase. Many people to do not realize they are required to disclose that they have a vehicle with a branded title.

A couple of years ago I bought a motorcycle from an individual that had advertised the bike in my local paper. During the transaction I did not pay much attention to the title until I brought the motorcycle back to my dealership. When I took a closer look at the title I realized it was a branded title with the words “PRIOR SALVAGE” printed on the front. I could have taken the motorcycle back to the seller and demanded my money back since he did not disclose the branded title which is required by law. Instead, I kept the motorcycle and just chalked it up as a lesson learned. Now I always pay very close attention to the front of a title to make sure it contains no brands.

If you replace an engine in a vehicle you are required by law in most states to apply for a branded title that will state “Motor Change Vehicle” or some similar phrasing depending on what terms your state uses on branded titles.
You may also find vehicles that were originally purchased in another country, and then exported to the United States. The brand on these titles will say something like “Non USA Standard Vehicle”.

Most vehicles with a branded title are worth much less than a vehicle without a branded title. If you are going to purchase a vehicle with a branded title be sure to research prices on similar vehicles with branded titles so you can purchase it for its true value or bid accordingly at an auction.

Hurricane Katrina Vehicles

I am sure you have heard of Hurricane Katrina, the devastating storm that hit Gulf Coast in the summer of 2005. You are probably also aware of the large amount of motor vehicles that were lost or damaged due to the storm. Studies have shown that over 400,000 vehicles were lost to this storm. Of these 400,000 vehicles about 135,000 belonged to dealers or individuals that either lacked comprehensive insurance with a flood clause, had only liability insurance, or had no insurance at all. So instead of losing their money, many owners cleaned them up, put in new oil, installed a new battery and magically these vehicles started right up. After finding out the vehicles started and seemed to run fine, these owners resold the vehicles.

Over 100,000 of these uninsured, flood damaged Katrina vehicles ended up at dealer auctions all over the country.

At first these vehicles ran fine, but now they are having major mechanical malfunctions. Most of these vehicles sat in salt water for two to three weeks and have suffered damaging corrosion, not only to the metals in the vehicles, but also to the computer and electronics equipment. While these vehicles may have ran great right after the storm, now the vehicles are known to simply stop running while traveling at highway speeds. Many of the safety features of these vehicles no longer function correctly such as the seat belts and airbags. You may think you would be protected from purchasing a Katrina vehicle by simply running a Carfax to view the vehicle history. Running a Carfax on a vehicle before you purchase it is not always an accurate way to find Katrina vehicles. Let’s say a dealer in New Orleans bought several vehicles at an auction in Wisconsin a few weeks before the storm. He then shipped the vehicles he purchased to his dealership in New Orleans. Hurricane Katrina then hits leaving his entire inventory under water for 3 weeks. Then he cleans up each vehicle, ships them to a dealer auction in California to resell them. A dealer in California runs a Carfax before the purchase on one of the New Orleans dealer’s vehicles that states the car was still in Wisconsin during the storm. Carfax is great, but it is not always the best way to establish whether or not you are about to purchase a Katrina vehicle. Some people think that you might find a brand on a Katrina vehicle title that would state “Flood Damage”. There is no such thing as a flood damage title. Any vehicle that is involved in a flood is always totaled, only to be sold at an insurance auction, a salvage auction, or to be sold for scrap.

One way of finding out if you are about to purchase a Katrina vehicle is to trust your nose. If a vehicle you are inspecting has a foul odor, it could be a Katrina vehicle. You should also check the engine compartment for any water stains. If you observe any water stains around the engine compartment, it may be a Katrina vehicle. Then check the upholstery on the roof of the inside of the vehicle. If you see water stains on the roof upholstery, the vehicle has been under water. You should also check for rusted screw heads up under the dash. There should never be a rusted screw head on the inside of a vehicle, if there is a rusted screw head on the inside, water has been on the inside. You might also want to pull back a piece of carpet and look for any signs of mud or sand. One of the most effective ways to discover a Katrina vehicle is to pull out the seat belt completely smelling the base of the seatbelt. The base of the seatbelt may be one part of the interiors that someone failed to steam clean. If the base of the seatbelt has a foul odor, it is very likely the car has been under water.

If you suspect you are contemplating the purchase of a Katrina vehicle, step away from the vehicle. Don’t make the buy. If you discover a vehicle you purchased is a Katrina vehicle, you may want to seek legal recourse against the person who sold it to you. And no matter how much money you lose, you must disclose to all future potential buyers that it is a Katrina vehicle.

Recently a dealer in Missouri hooked up with a dealer in New Orleans and purchased fifty-five Katrina vehicles. The dealer then shipped them back to his lot in Missouri and applied for fifty-five fresh new titles. The dealer then sold all fifty five vehicles without disclosing to his customers that they were Katrina vehicles. That dealer is now sitting in prison.

If you think you have a Katrina vehicle, you are required by law to disclose the information to any potential buyer.

And by the way, never, ever buy a vehicle that stinks. I have purchased a couple of cars over the years that had a strong odor in them. I got a great deal on both of the cars that stunk and ended up selling both cars for less than what I paid for them. No one wants to buy a car with a bad odor no matter how inexpensive it may seem. Stay away from cars that stink.

Out of State Titles

When you purchase a vehicle at your local dealer auction you would assume that the titles to the vehicles you purchase are mostly from your state. This seems to rarely be the case. When your purchase vehicles from your closest dealer auction you may receive titles from states all over the country. There are many reasons you will work so often with out of state titles. Dealer auction vehicle prices tend to follow trends throughout the country. Your area dealer auction may have some of the highest prices the last couple of weeks while another area’s prices have temporarily hit rock bottom.

For example, let say Enterprise Leasing in Dallas, Texas has two hundred cars to sell. After doing some quick research, they decide this week’s hot market is in Minneapolis, Minnesota. Enterprise may choose to ship all two hundred vehicles to the dealer auction in Minneapolis where they would receive much higher profits on each vehicle sold. If you purchase ten vehicles at the Minneapolis dealer auction this week, you might come home with ten Texas titles. If you purchase vehicles at dealer auctions you will definitely work with titles from all over the country.

One thing I have found out about out of state titles is that most states allow at least three dealer to dealer reassignments. Some states allow five dealer to dealer reassignments, and some states allow unlimited reassignments with the appropriate title rider. If you read the back of an out of state title carefully, it will instruct you on exactly how to complete it. For example, the net price, sales price, and dealer number will be located on the title but it just may be in a different location on the out of state title as compared with your state title. If you have a question about an out of state title you could always call the capitol of the state of origin with your questions, but when you obtain your dealer license, your state laws will override any out of state laws. So if you have a question about a California title and call Sacramento with your questions, any instructions from your state dealer license bureau will override any instructions given by another state’s dealer license bureau.
Remember to always operate under your state laws as opposed to another state’s dealer license regulations.

Illegal Titles

Many times when you are attempting to purchase a vehicle, the person will have an illegal title. If someone is trying to sell you a vehicle licensed in another person’s name, the transaction could be illegal.

For example, let’s say you call about a vehicle in you located on Craiglist.org. It is very important to ask the seller “Is the title in your name?” If the person says something like “Yes the title is in my name, I bought it seven years ago, paid it off, and have the title right here.” Great! That is what you are looking for, go make the buy. Or the person may say something like “No the title is not in my name, I bought it from my neighbor, but you can just come over here and buy it from me.”

If you purchase the vehicle from this individual, you are breaking the law in every state. The title this person is holding is sometimes called a blank title. The seller has signed the title but the purchaser's information has been left blank. This title is also sometimes called an “open” title, because it has been left open. The person trying to sell you a vehicle with a blank title is acting as an illegal dealer. They are trying to profit off the sale of a vehicle, yet they do not have dealer license. Every state requires you to pay sales tax on a vehicle transaction. When you obtain your dealer license, you do not have to pay sales tax when you purchase a vehicle. You only pay income tax on your profits. When a person asks to buy or sell a vehicle without completing all information on the title, they are skipping the payment of taxes on the vehicle transaction. That is why this title is also known as a “skipped” title.

You may only purchase a vehicle from the person or persons whose name is printed on the front of the title.

If anyone ever tries to sell you a vehicle on a blank title, step away from the vehicle. Do not make the buy. If you purchase a vehicle from someone with a blank title you may face immediate dealer license suspension and will be charged with a misdemeanor. If you are caught with a blank title a second time you could lose your dealer license permanently and you could be charged with a felony. All states are cracking down on anyone in attempting to buy or sell a vehicle with a blank title. No matter what, always complete all parts of a title at the time of the sale and never, ever support the operations of an illegal dealer.