When you buy a car, you take ownership of the title, transferring it to your name when you register it with the DMV. It's important to make sure the name on the title matches the identification of the person or dealership selling the vehicle to you to avoid issues with making the title transfer. Buying a car with a title not in the seller's name could be a red flag that the seller is hiding something, such as the fact that the vehicle is a salvage title.
Buying a car with an open title can make it difficult for you to register it, as well as disguising issues with the vehicle or the seller.
What Is an Open Title?
The term open title refers to a title that has not been signed by both the seller and the buyer. During a sale, often it's the buyer's signature that's missing from the title, but there may be cases where both the seller's and buyer's signatures are missing. Although this can happen in error, it can also be done in order to mask illegal activity, and that is why it's problematic.
From a regulatory standpoint, the problems with an open title include:
- It interferes with a paper trail. If an item is salvaged after a flood or serious accident, nothing is recorded until the title is transferred. This makes it easy for someone shady to sell a salvage vehicle as though it had a squeaky-clean past.
- It provides no contact information. When there's no name on a title, any transgressions like traffic tickets will go to the seller, who was the last known owner on it, rather than the buyer, who actually earned the ticket.
- It can signal tax avoidance. In order to register the title with the state, a name needs to be on it. Too long without a name and the state will suspect that someone has been avoiding paying taxes and fees.
Buying Car With Open Title
Generally speaking, buying a car title not in the seller's name is always risky. Not only should you make sure there's a name listed on the title as the owner, but you should ask the seller for identification and make sure it matches. Otherwise, you're taking the risk that there's an issue with the car that will cost you serious money down the road.
In some cases, the seller's name isn't on the title because she's engaging in something called title jumping, which is when you buy a vehicle and sell it so quickly, you don't have time to register it. From the state's standpoint, a title transfer should take place before the vehicle is sold, even if it's bought and sold the same day. As a protective measure, you should walk away from a situation where the name on the title and the seller don't match.
Transfer a Car Title
You don't just perform a title transfer to pay taxes and fees. In fact, each time a title is transferred, it provides a record attached to the connected Vehicle Identification Number, and that record protects consumers. When you look up a VIN using a service like Carfax, you can see how many times that vehicle sold, along with other registered information.
To transfer a title, the seller first needs to sign it. The seller will then give it to the buyer, who then should verify that the person on the title matches the person selling it to them. The buyer then takes the title to the Department of Motor Vehicles, where a new title and registration is issued in the buyer's name.
Selling an Open-Title Car
When you buy a car, the first thing you need to do is register the title in your name. This is the case whether you bought the car from someone who never signed the title or not. Most states have a timeframe for this transfer, but even if you've exceeded it, you're still expected to transfer the title to your name as soon as possible.
In order to put the title in your name, you'll need something proving you are, indeed, the owner of the vehicle. In most states, this will be the Vehicle Bill of Sale, which you should have gotten when you purchased it. If you don't have this information, check with your DMV on how to proceed.