What happens if your car title is signed but never transferred? When you go to sell a vehicle, you can have the title signed around by the buyer and seller, but that is not a guarantee that the buyer will then go to the Department of Motor Vehicles and get the title officially transferred and registered in their name.
As a seller, that's one reason it's essential to report the car as sold with the DMV and make sure that you have filed any release of liability forms as well as having them in your records.
What is Title Jumping?
The process of buying a vehicle and never transferring the title in your name, but then selling the vehicle again is called title jumping. It describes the action of the title "jumping" over one owner and on to the next. The new owner gets the title, but the previous owner avoided sales taxes and registration fees by never registering the car in their name. The origin of this process was with shady car dealers who wanted to avoid paying taxes. However, plenty of regular car buyers now do it to avoid paying taxes. It's important to know that title jumping is illegal in every state. It doesn't matter if you buy a vehicle and then immediately sell it, you still have to transfer ownership into your name first.
What Happens to Title Jumpers?
The majority of states require a vehicle title to be transferred within a specified period after buying the vehicle. If you don't do this, you're subject to fines and penalties. Not only that, but you still have to transfer the title. At no point is that not an option. If you don't move the title and then try to sell the vehicle, you are committing an illegal act. You could be fined and even do jail time.
What Happens if You Buy a Title Jumped Vehicle?
As a buyer, it's essential to ensure that the current owner selling your prospective car is also the person on the title. There are some exceptions. If the person signing over the title to you has power of attorney over the person on the title. However, they need to present proof of it, and you will need proof of it to transfer the title. Otherwise, you could have difficulties getting the title in your name, not to mention having to get back to the last person's name on the title. Sometimes people who are title jumping will tell you that they have lost the title or something similar. Don't buy a vehicle until a duplicate title arrives with the correct names on it.
Recourse as a Title Jumping Victim
If you end up buying a vehicle with no certificate of title, or a title that doesn't have the seller's name, then you have a few options. If you bought the car from a dealership, then you can file a claim of fraud against the business, or you can have them take the car back.
If you bought from a private party, contact the seller and try to get them to transfer the original title into their name. Once they get it, sign the title over to you.
If you bought a car where the title was lost, then you'll likely have to seek help at the DMV. You may have to get a bonded title, or you may have to contact the last known owner of the car to ensure their release of interest.
To deal with title jumping or a missing title, you may have to get a bonded title. That is a marked title. It looks like a regular title except for the bonded brand. You can get the brand removed in three to five years if there are no issues, and then you can apply for a clean title. To get a bonded title, you will be required by the DMV to buy a Lost Title Bond.
Getting a Bonded Title
Start by checking with the DMV to see if you're eligible. Only the DMV can tell you for sure if you're eligible. Explain your situation and then ask if you're eligible.
The following are four common situations where you might need one:
You didn't receive a title when you bought a vehicle
You only got a bill of sale when you bought a vehicle
You received an improperly assigned title when you bought a vehicle
You lost your title after receiving it
Buy a Lost Title Bond
To get a bonded title for a vehicle that doesn't have a title, you have to buy a surety bond. The average cost is usually around $100. Once you receive the bond by mail, you can turn it into the DMV to finish the application for a bonded title. The bond is there to confirm that you are the real owner of the vehicle. As long as you are the rightful owner, you shouldn't have to be concerned about anyone appearing and making a claim against your bond.
States That Don't Allow Bonded Titles
Not all states allow you to get bonded titles. Those are Delaware, Kansas, Kentucky, Louisiana, Maryland, New Jersey, North Dakota, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, and Virginia.
Indiana and Ohio do not accept bonded titles, but they do take court-ordered titles.
How to Ensure Title Transfer as a Seller
Unfortunately, there's only so much you can do as the seller to ensure that the buyer transfers the title into their name. They are subject to penalties if they don't in a certain amount of time, but those typically aren't enforced until the buyer does the transfer.
However, you can protect your liability. The primary way to do this is to get on the DMV's site and report the sale immediately. Make copies of the bill of sale, odometer disclosure and the signed-around title. You can then file these with the DMV through the mail or in person. Make sure to take all vehicle registration papers out of the vehicle and call your insurance company to cancel insurance as well.
When You Don't Ensure Vehicle Transfer
If you don't follow up and trust that the buyer will do their job, you could end up getting traffic or parking tickets in the mail. You might even get an impound or towing notice if the new owner ends up in that situation. In all of these situations, having proof is your best friend. Most states will back up sellers who have evidence that they sold the vehicle. If you're a buyer, it's essential to be a good customer and obey the law on your end to give the seller peace of mind. Even when selling to a family member, it's a good idea to cover all your bases.
Title Transfer by State
Different states have different rules on transferring a title. Most have a specific period that you have to transfer the vehicle's title before being penalized. This period is usually 30 days from the date of sale, but can be as long as 60 or as short as 15. Some states require an odometer reading, while others don't.
States like Washington also require the seller to notify the DOL of the sale date, including the name and address of the buyer as well as a driver's license if available, and a description of the vehicle including the vehicle identification number. The original seller is required to file this notice within five business days of the sale. Washington also requires the new owner to apply for a new title within 15 days versus the usual 30. Many states also require you to remove license plates before letting the buyer leave with the vehicle.