Buying a car with a title issue can be a hassle, but don’t let it deter you

Note: As of June 26th 2023, the Vermont Department of Motor Vehicles has reportedly closed “The Vermont Loophole.

So, you answer that Craigslist ad for the apocryphal $4000 ’63 Jaguar XKE or split-window Corvette. To your stunned surprise, you arrive and find that it’s real, it’s been sitting in an old barn, it’s being sold as part of the clean-out of a piece of real estate prior to the disposition of the property, and the seller simply wants it gone. You’re the first one there, the car is solid and completely intact, and you pinch yourself at your good luck.

There’s just one problem: There’s no title. What do you do?

You buy it, of course. You’re not an idiot, right?

There are two questions here. The first is: How much risk do you want to take on? The second: What does it take to get plates—and with them, legal ownership—for a car without proper paperwork?

Regarding the risk question—I’m not a lawyer, but there are plenty of stories regarding high-dollar cars with provenance issues. As the value of a car creeps high enough to be in the rarefied air breathed by collectors, the possibility that someone may come out of the woodwork and challenge your new ownership becomes quite real. (Just Google “Shelby Daytona Phil Spector” to learn about the nightmare scenario that may be waiting on the expensive edge of the bell curve.)

But let’s assume for the moment that there aren’t any provenance issues, or that the car isn’t valuable enough to attract them. Let’s say the car is being sold by nice people. They say it was their father’s. You’ve looked them in the eye and you trust them. Maybe they have photos of them and their dad with the car. It’s been sitting in his barn for 40 years. The story feels and smells right—they just can’t find the paperwork. Or maybe there was a title, but it was in the glove compartment and has been eaten by mice. You write up a bill of sale and have them sign it, then hand them the money—but legally is that enough? What is the process you need to go through to own and drive the car in your state if there’s not a title?

The answer, of course, is: It depends on which state you live in.

Certain states have fairly lax title laws. For example, in Maine, a title isn’t needed for cars built before 1995. All you need to register a newly-bought vintage car is a bill of sale from the seller. So if you live there, Bob’s your uncle. Well, it’s a little more complicated than that. You’d need to pay the excise tax to the city or town you live in, then insure the car, then present the proof of insurance and the bill of sale at the Maine Registry of Motor Vehicles (RMV), and then pay the registration fee and state sales tax. There’s no question that the process will produce a registration and a set of plates. And if a state doesn’t issue titles for old cars, the registration is the proof of legal ownership.

I, however, live in Massachusetts, and in my state, every car needs a title, no matter what its age. So what do you do?

In states like Massachusetts that require titles for all cars, the policy of the RMV typically accommodates states with different title laws as follows: If you buy a car from someone in a state where old cars don’t require titles, Massachusetts and similar states will register it (and assign you a new title in your name) if and only if you provide both a bill of sale and an old registration in the name of the person listed on the bill of sale. So, if that split-windowed ’Vette in the barn has an old registration in the glove box in the owner’s name, and if the owner is alive and writes you a bill of sale, you’re all set. You’re in like Flynn. And if the owner has passed away and the seller is the executor of the estate and is authorized to sell you the car, and that person writes you a bill of sale in the name of the person listed on the registration, there should be zero issue—at least with the state of Massachusetts. Again, I’m not a lawyer. (A side note: Getting back to the question on risk, I’ve just constructed a scenario in which, if the car is worth millions of dollars, one child of the original owner could claim that the other was never authorized to sell you the car. Then the real fun begins.)

When there’s neither a title nor an old registration, you have a problem. Ask the seller to apply for a duplicate title in their home state—that’s the cleanest, most correct way to solve the problem. However, that may not be possible or practical. The seller may have never titled the car. Or the state may not offer titles for cars past a certain age. Or there may be issues of the state claiming back taxes are owed on a car that has been sitting for decades. Or, once the cash is in the seller’s pocket, he or she may have little inclination to go through a time-consuming process to help you. I’ve had all these things happen. When I lived in Austin, Texas, in the mid-1980s, I bought a 1967 BMW 2000CS from a guy who had no paperwork, claiming he got it in trade from a tenant for back rent. I wanted the car, so I paid him. He promised to help me sort out the title issue, but once he had my money, he didn’t lift a finger. Six months later, I had the car running, but I couldn’t register it. The issue was finally solved through a hearing with the tax assessor, who assigned me clear title.

Let’s back up a moment. In states where every car needs a title, the seller is supposed to produce the title, sign and date it on the line for “seller,” and give it to the buyer, along with a bill of sale. The buyer then signs the title on the line for “buyer,” and brings that, the bill of sale, and the registration paperwork (usually with proof of insurance) to the RMV, which issues a registration and new plates. In a few weeks, a new title in the buyer’s name should arrive in the mail.

If the buyer is a dealer, there is a place on the title he or she can sign so the title is temporarily assigned to the dealer without being turned in and reissued. If a buyer is not a dealer but plans on flipping the car, it’s common to want the title left “open”—that is, signed by the seller, but not signed by the buyer and not dated. This is fairly common practice—you’ll see “car comes with open title” frequently in descriptions on eBay, Craiglist, and Bring a Trailer—but the legality of it is a little gray. If the title isn’t in the seller’s name, it means that the car was never legally the seller’s, and they’ve never paid their state sales tax on it. In fairness, titles are sometimes left open not because of a planned flip but because the car is a long-term project that’s been bought and sold several times and never registered. As a buyer, I rarely care whether the title is in the seller’s name or in the name of the person he or she bought it from as long as it is truly “open.”

But the most confusing situation is when the title exists, isn’t completely open, and has a problem. With project cars that have been passed between several owners without being registered or titled, it’s common to find titles that have old dates or have been signed by previous buyers but never turned in. From a practical standpoint, it’s often impossible to track down a previous owner and get a new title issued and signed over to you. I’ve sometimes taken problematic titles with the old date or incorrect buyer’s signature to the registry and gotten lucky, but I’ve also gotten tripped up over discrepancies in the date, as Massachusetts law is that cars must be titled within 10 days of purchase, and they will assess penalties and interest for missing that deadline. For a taste of how ridiculous this can get, check out this astonishing article.

Massachusetts has a process to allow you to assume ownership of a title-less barn-find car. It involves both you and the seller filling out an affidavit where you each tell your story (most importantly, the seller explains why the car is really his or hers), then have the affidavit notarized, followed by a police officer inspecting the car and verifying (via the VIN) that the car hasn’t been reported stolen. The problem is that it is a capricious process. You can buy the car, but the state can deny your application. Then you have a much bigger problem.

If you’ve read this far, you might ask, “Well, can’t you just register the car in one of those states like Maine that has lax title laws?” The answer is: If you live there or know someone who does, yes. In my book Ran When Parked, I tell the story of buying a 1972 BMW 2002tii in Louisville, Kentucky. Both the title and the old registration had been stored in the glove compartment, had literally been eaten by mice, and were reduced to little shreds of paper that were identifiable in origin but not reconstructable. The seller had bought the car from its long-time owner, and when he tried to reach him to get a duplicate title, he was stymied by an issue of unpaid taxes. The fact the car was advertised as having a “title issue” scared off buyers, but I bought it anyway.

I have a very good friend who lives in Maine. After I bought the car, I wrote up a bill of sale and “sold” it to him. He then insured and registered the car in Maine, and I reimbursed him for his expenses. Once he had a Maine registration in his name, he sold it back to me. With the Maine registration and bill of sale, both in the name of my friend, I was able to register the car in Massachusetts and get a new title for it in my name. I don’t believe there was anything illegal about this. In fact, I provided not only my home state of Massachusetts the registration and tax fees, but the state of Maine as well. So I dodged nothing; I paid fees and taxes in not one state, but two. Clearly the person who did this for me is a very good friend, as he had to add the car to his insurance policy, then wait in line at the registry. And clearly I trusted him, as I was giving him legal ownership of the car without him paying me for it. It worked flawlessly. And no, you can’t have his phone number.

If you don’t have a good friend in a title-lax state, you can take advantage of what’s sometimes called the “Vermont Loophole.” Similar to Maine, the state of Vermont doesn’t require titles for vintage cars (anything older than 15 years) and will register a car with a bill of sale. But unlike Maine, 1) you don’t need to be a Vermont resident to register a car there, 2) the registration process can be done entirely by mail, and 3) you don’t need to present proof of insurance, although you’re certainly supposed to get the car insured before driving it. You mail in the registration form, the bill of sale, and a check; and in a few weeks you receive a Vermont registration and a set of plates. Note that the Vermont DMV website doesn’t say anything about not needing to be a resident, nor does it mention the ability to conduct the process by mail. It’s even hard to see what all the fees are—you need to tease that last part out yourself and write the check for the correct amount. This site explains the basics of how to do it and offers to do it for you for a fee.

Note that the Vermont Loophole can also be useful when only a title is present, but it’s problematic—for example, if it’s already been signed over to a buyer who isn’t you or if it was dated long enough ago that late-payment penalties might be a problem.

A downside of the Vermont Loophole is that Vermont, like Massachusetts, assesses sales tax based on the low NADA value of the car, so if you scored a great deal on the car, and if your home state taxes on the basis of what you actually paid, you’re going to overpay on the sales tax. For example, I paid $3500 for the 1972 BMW 2002tii I spoke of earlier. Six-percent sales tax on that amount is $210. However, the NADA low value of the car is currently $13,900, so the sales tax is based on that ($834)—meaning you pay an additional $624 in sales tax. Whether it’s Vermont or Massachusetts, I’ve just learned to regard this as part of the cost of passion, swallow that bitter cup, and move on.

When I sold the 2002tii to my friend in Maine and had him sell it back to me, I then registered and titled the car in Massachusetts as if I’d just purchased it. Using the Vermont Loophole, however, is a little different. The car is registered in Vermont, but it is not titled. If you desire a title from your home state in your name, you’ll need to take another step to transfer the Vermont registration to your home state and get the car registered and titled there. Some states reportedly balk at this process, so it’s best to do some research and make sure you won’t be stymied at the last gate.

Another option is to go through a “title service.” Having read to this point, you won’t be surprised to learn that title services use a process that’s essentially what I just described with the Vermont Loophole—they generally issue you a registration and a set of plates for whatever lax title state they’re based in, and you must then transfer this registration to your home state if you want a title from your state in your name.

Hopefully you can see that when confronted with a title-challenged car there are, in fact, options. You should, however, still carefully assess risk vs. reward.

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Rob Siegel has been writing the column The Hack Mechanic™ for BMW CCA Roundel magazine for 30 years. His most recent book, Just Needs a Recharge: The Hack Mechanic™ Guide to Vintage Air Conditioning, is available on Amazon (as are his previous books). You can also order personally inscribed copies here.