What is Title Jumping and is it Illegal?
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What is Title Jumping and is it Illegal?

By Michael O'Connor | September 11, 2021

Title jumping is the practice of purchasing a car and selling it right away without properly transferring the ownership. Oftentimes, this was done by small used car dealerships to avoid paying taxes or other Department of Motor Vehicle (DMV) registration fees. However, with the advent of online used car sales and marketplaces like Craigslist, it has become much more common with individuals and private sellers.

There is no grace period for getting a title transfer if you are going to sell a used car. Even if you only have that car for one day, you still need to register the change of ownership with the DMV. This not only helps keep the vehicle’s records up-to-date, it also protects the new owner and keeps them from getting saddled with fees when they go to transfer the title.

Is Title Jumping Illegal?

Title jumping is not only unethical, it is illegal. In many states, title jumping is a Class 6 felony and can result in fees and even jail time. It is taken very seriously and you should avoid the temptation to skip the DMV no matter how quickly you are going to sell a vehicle after buying it.

Title jumping is common when people are just trying to flip a car for a quick sale. When this happens, it is usually because there is an issue with the vehicle or it does not have a clean history to begin with. Generally, title jumping is only done when there is a larger issue at hand with the car or the seller is trying to avoid sales taxes.

Why is Title Jumping Illegal?

Title jumping is illegal because the state needs to be able to hold people accountable for fees and violations that occur with each and every vehicle. If there is a discrepancy with the ownership, it can be difficult to trace who has the vehicle in their possession and where it is at any given time. Every car must have a registered owner with the DMV.

This is why you sign a release of liability form when you sell a vehicle. This form clears you of any responsibility for what happens with the car after it is out of your possession. With a jumped title, the next owner could end up liable for moving violation fees or other fines associated with that vehicle.

When is Title Jumping Legal?

Anyone who engages in title jumping is engaging in an illegal activity. There are no states where title jumping for the sake of saving money on fees is legal. However, there are some cases where an open title would be allowed in the eyes of the law.

One such circumstance where selling a vehicle without transferring ownership is legally okay is when the original title holder is deceased. If you are the next of kin, you can sell a vehicle to someone else without transferring the title to yourself first. The only reason this is legal is because it is impossible to get the signature of the deceased person. You can also sell a vehicle for someone else if you have power of attorney over them. This is essentially the same principle since they are not handling their own affairs.

Why Would Someone Engage in Title Jumping?

With the penalties for a title jump being as serious as they are, it can be difficult to understand why someone would engage in it. However, there are a number of reasons that car dealers and individuals try to avoid the process of transfer of ownership. Almost all of them have something to do with avoiding payments of some kind.

Avoid Taxes

Perhaps the most common reason someone would jump a title is that they can avoid paying sales tax. If the sale is never registered to them, then the government has no way of knowing that they have made it. In these cases, the original seller will end up being liable for the sales tax.

Avoid Fees

The seller who has jumped a title can also avoid paying the fees for getting a new certificate of title from the DMV. There are fees associated any time a new title is issued and a transfer of ownership is done. Title jumpers can avoid this process altogether and simply pass those fees onto the new owner.

Avoid Moving Violation Fines

If the vehicle has moving violations associated with it, the title jumper can avoid dealing with them by never transferring the ownership. In fact, the title jumping previous owner can rack up those violations and then simply pass them off to the buyer. This is when the new owner will end up being responsible for the highest fees and when title jumping is the biggest issue.

Sell a Vehicle With Mechanical Issues

If a vehicle has been in an accident or has significant mechanical issues, an owner can keep those off the vehicle history report by not transferring the title. This helps them avoid dealing with lemon laws and other regulations. If you are purchasing a car that has a jumped title, history reports may not be up to date since the vehicle is essentially in limbo during the time it is in the current owner’s possession. This makes it difficult to accurately determine what kind of mechanical shape the car is in.

Quick Turnaround

Perhaps the most common reason that someone would jump a title on a vehicle is to have a quick turnaround. Going to the DMV and going through the process of transferring the ownership takes time and can be a hassle. Often, vehicle flippers want to sell them as fast as possible so they neglect this part of the process. However, with a fast turnaround time comes many other issues that could affect the longevity of the car. Odds are, if someone is looking to sell a car quickly, it is for a shady reason.

Recourse as a Title Jumping Victim

If you purchase a car that is not in the seller’s name, you could end up liable for a lot of different fines and fees. This is especially true if the car title has been branded with something like “flood damaged” or “salvage.” Oftentimes, these brands will not appear on the vehicle title until the ownership has been transferred and the duplicate title comes, so you may not know about it until you go to get the car put in your name. Luckily, there are a few things you can do if you find yourself in this situation.

File a Claim of Fraud

If you have the information of the seller, you can file a claim of fraud against them. This is usually only an option if you have bought the vehicle from a dealership or registered seller. If you bought it from an individual, you can try to sue them but it may be more difficult to locate them if they are accustomed to running scams. In cases like this, it is best to get professional legal advice.

Get a Bonded Title

If the title you get with your vehicle ends up being invalid, you can get what is known as a bonded title. A bonded title is considered marked, which means that legally there is some kind of issue with the original title. If there are no other issues with the vehicle, the marked title can be cleared in three to five years when you can apply for a clean title.

Buy a Lost Title Bond

In order to get a bonded title, you will have to purchase a lost title bond. This is also called a surety bond and it essentially states that you are liable for the vehicle and that you are the true owner. As of 2021, these bonds usually cost around $100 and will be valid as long as no one comes forward to challenge the bond. After you have received the surety bond, you apply for your bonded title from the DMV.

It should be noted that not all states allow bonded titles. The states that disallow 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. You will have to check on the bonded title laws for your particular state before you apply for one.

How to Protect Yourself When Buying a Used Car

While title jumping happens no matter what the consequences may be, there are some ways that you can protect yourself. As with any other kind of secondhand purchase, it is important that you take responsibility for your own safety. Doing your due diligence when purchasing a used car can give you peace of mind that everything is above board and you will not be responsible for anyone else’s fees or fines.

Check the Title

Any title that you get when buying a used car should have the seller’s name on the front and their signature on the back of the title. Check this against their driver's license to be sure. If it does not, you could be dealing with a title jumping situation. A title will also list any significant registration issues with the vehicle so you can be sure you are not buying a salvaged or damaged car. You should also be sure to get a bill of sale with every vehicle purchase.

Get a Vehicle History Report

You should get a vehicle history report for any car you plan on buying used. These reports will list any accidents or legal issues involving the vehicle, including odometer fraud. They do this by tracking the Vehicle Identification Number and the license plates. If you are purchasing from a dealership, you should be able to get one of these reports from them at no extra cost to you.

Final Thoughts

Buying a used car is a great way to save some money and get a vehicle outright instead of taking out a loan. However, it comes with a few risks that you have to weigh against the benefits. By knowing what title jumping is and how to look for it, you can save yourself trouble and potential legal issues down the line.