Selling a car can be a challenge no matter what, but when complications arise from the process, it is downright frustrating. When you sell a car, you are responsible for it until the ownership has been transferred to the buyer.
When the buyer fails to do this, this is called “title jumping” and it can cause a wide range of problems including liability for parking tickets, moving violations, and more. You could end up with fines and penalties even though you don’t physically have the car anymore or you could end up having problems registering a car if it has a jumped title.
Knowing what to do when a car’s title doesn’t get transferred can help you avoid these issues if you are ever faced with them. While you can’t control whether or not the buyer or seller is going to do the right thing and register a car in their name after they buy it, there are steps you can take to protect yourself and make sure you are not held responsible for their actions.
What to Do if the Car Title Was Signed but Never Transferred
If you have purchased a car that was never transferred to the person you bought it from, you could be a victim of title jumping. This means that the vehicle was never put in the seller's name and it will still be registered to the original seller who owned it before them.
In some cases, the car may not have been transferred because it has been labeled as “flood damaged” or “salvage” and the seller did not want this to be on the title when they sold it. You may not find out about these issues until you get a duplicate title or go to the DMV to put the car in your name. Luckily, you have some recourse if you are a victim of title jumping and still want to keep the car you have bought.
File a Fraud Claim:
Filing a fraud claim is not usually possible if you have bought the vehicle from a private party. Title jumpers tend to disappear after the sale has been made since they want to take the money for the car and be done with it. This can make it difficult to get any recourse for your vehicle if it is damaged or has a salvage title.
However, if you have bought the car from a dealership, you can file a fraud claim on the car dealer and possibly recoup some of your money. Make sure you hold onto any documentation having to do with the sale and take it to a professional legal advisor. They will be able to help you file your claim and potentially get the restitution you deserve if the car is unusable.
Get a Bonded Title:
If you are not able to locate the person you bought a car from, you can get a bonded title through the Department of Motor Vehicles. These titles will allow you to register the car but they also indicate that there is an issue with the original title, which can make it difficult to sell the car if you want to do that down the line.
While bonded titles are considered marked, which can lower the resale value of the car, they can usually be cleared within three to five years. However, this is only if there are no other significant issues with the car. If it has a salvage title, it will need to stay this way and the new title will indicate this once you get it.
Buy a Lost Title Bond:
To get a bonded title, you will need to purchase a lost title bond from your local DMV. These usually cost around $100 and are valid as long as the bond is not challenged by someone who claims that they are the rightful owner of the car. These bonds state that even though you don’t have the original title for the car, you are the owner and are therefore liable for the vehicle. These are also sometimes called surety bonds.
Not all states allow bonded titles for used vehicles and you will need to check with your state DMV before you try to obtain one. As of 2022, the states that do not issue bonded titles are Delaware, District of Columbia, Kansas, Kentucky, Louisiana, Maryland, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Virginia, and West Virginia.
What is a Transfer of Title?
A transfer of vehicle title happens when the new owner of a car registers that car with the DMV. This not only puts that vehicle in the buyer's name, but it also releases the previous owner from any criminal or financial responsibility. Because of this, it is one of the most important steps when buying or selling a vehicle.
In many states, there is a deadline for transferring the title, and failing to do so could result in fines. For example, in California, you must transfer the title within 10 days of the sale, which helps prevent fraud and issues with the title. However, as the seller, you don’t have much control over what the buyer does once you have sold the car, which can complicate things.
Why Title Transfer is Important
Unlike many other types of property, cars have strict regulations and processes when it comes to ownership. This is because of the potential harm that can be done by improperly handling a vehicle and the amount of responsibility the owner has. Due to this liability, a car always has to be registered to the current owner so the DMV can have a record of ownership.
When you sell a car, you are responsible for it until the buyer takes official ownership. This is why when selling a vehicle, you should always sign the title to avoid having an open title on it. This will, at the very least, indicate that you authorized the sale and that the car is not in your possession anymore.
Why A Buyer May Not Transfer the Title
There are several reasons why a buyer might not completely transfer ownership of the car to themselves. Sometimes, it can be as simple as negligence on their part, but other times, it can be with the intent to commit some kind of fraud or a crime. Being able to recognize some of these reasons is a good way to watch out for red flags as you are making the sale.
The Buyer Intends to Title Jump:
One of the main reasons someone may neglect transferring the title is that they are intending to do something called title jumping. Title jumping is when someone buys and then immediately sells a car without ever informing the DMV of the change in ownership. This helps them save money on registration fees, sales taxes, insurance, and title transfer fees so they can get a much higher profit margin on the car.
Title jumping is illegal in every state and can result in serious penalties if a person is caught doing it. Not only does it endanger the seller of the car by leaving them with financial liability, it can also cause serious problems when the second buyer tries to register the car with the DMV. This is why it is so important to write up a bill of sale and keep detailed records of when you sold the car and what the mileage was when it left your possession.
The Buyer Lost the Title:
It is possible that a buyer did not transfer the title because they lost it. When this happens, the car then has an open title. This will need to be rectified before the buyer can transfer the vehicle’s ownership to them. The DMV will be able to help the new owner with this process and they will be responsible for all the charges and fees if they want the vehicle to be in their name.
The buyer will have to go to the DMV and get a replacement or transfer of title using the car’s Vehicle Identification number, or VIN. The new owner will then get an entirely new title as well as new license plates and you as the seller no longer have any responsibility for the vehicle.
There Are Liens on the Title:
If you still owe money on a car and you sell it to a third party, the title will not be transferable. This is called having a lien on the title and it can happen for a number of reasons. If you still owe money on the car loan or you have used the car as collateral for a different loan, this will result in a lien on the vehicle. It can also happen if you have outstanding fees from work that has been done on the car. This is called a mechanic’s lien.
If you still owe money on the car itself, you can usually still sell it by transferring the loan to the new buyer. However, you will have to go through the lienholder to make sure they have all their terms worked out for the sale and that the new owner can seamlessly take over the payments.
How to Avoid Non-Transferred Title Issues When Selling a Car
Complete a Bill of Sale:
The best way to release yourself of all responsibility when selling a used car is to complete a bill of sale. This is an official document that lays out the terms of the sale and shows that you are releasing ownership of the vehicle to the buyer. You should retain a copy of the bill of sale for your records and get it notarized to ensure it is legally sound.
In many states, you will need a bill of sale in order to sell a vehicle and it should contain details like the mileage on the car, the names and information of the original owner as well as the new owner, and the terms of the sale. Having this will help you as the seller in the event that the car title doesn’t get transferred and the vehicle is involved in an accident or other issue.
Record the Odometer Reading:
While the mileage reading will be on the bill of sale, it is a good idea to take a picture of the odometer as well. If you take the picture with your cell phone, the date and location will be contained in the metadata of the photo and provide even more proof that the sale happened when you say it did.
You should record the odometer reading because if the vehicle is involved in an accident or crime, you can show that you did not have the car in your possession when it happened. If the new owner takes the car out and hits and injures somebody before they transfer the ownership, you have definitive proof that the mileage was at a certain point when it was out of your hands so you will not be held responsible.
Make a Copy of the Signed Title:
When you sell a car, you need to sign the title and put the date of sale on it. After doing this, you should then make a copy of the front and back of the title before you hand it over to the new owner. Retaining copies of as much documentation as you can protects you from liability and ensure that you can present proof that you sold the car.
Ideally, purchasing or selling a used car should be as free of a hassle as possible. Unfortunately, though, this isn’t always the case. Whenever you are dealing with private parties, there is the chance that you will end up with a car that has problems with its paperwork or its mechanical elements.
Knowing what to look for during the transfer of ownership of a car’s title can help you avoid some of the problems that can arise from a bad title. It can also help you fix the issues and get them sorted out with the DMV so you can drive your newly purchased used car with confidence knowing that the paperwork is in order and that everything is legal.