Have you ever encountered a car title that the buyer or seller didn't sign? Have you purposely not signed your name on a car title to avoid paying taxes? Did the previous owner of your car skip signing the title, or maybe a few owners have? The process of knowingly transferring an open title is called title jumping. Many risks are involved for both the buyer and the seller, it’s illegal, and it’s a bad move all around.
In this article we’ll talk about the open title itself, then delve into the problems one can cause. To learn more about the effects of title jumping from a bird’s eye view, check out this article inspired by movie stunts and The Office (US).
What is an Open Title?
An open title is a car title which has not been signed or dated by the parties involved in the sale. Usually only the buyer’s information is left out. This problem should be fixed at your local DMV before you sell the car. Transferring an open title is an illegal practice called title jumping.
Don’t worry, this problem is easy to fix.
Open titles occur in 3 main ways:
The seller does not sign the title, either intentionally or accidentally
The buyer does not sign the title, either intentionally or accidentally
Multiple successive buyers do not sign the title
So, What’s the Big Deal?
Selling a car with an open title allows for undocumented owners to enter the mix. The state could misattribute taxes to the wrong person and issues would arise if an accident ever occurred. Leaving a title unsigned sounds innocent enough but can cause serious problems, all of which would be amplified if multiple people pass along the same open title.
Open titles hide the truth
When a car title is branded with a status like Salvage or Flood, usually nothing changes on the paper title until the next time it’s transferred. That means a seller could pass a salvage vehicle off as clean by way of an open title, and the buyer wouldn’t know until it was too late.
Open titles confuse everyone
In most cases the new owner must process the title before registering the plates. That means any citations from sources like traffic cameras and parking tickets will go to the currently titled owner – who just sold the car – instead of the car’s new owner. Unpaid tiling fees and property taxes will accrue and somewhere down the line of ownership, someone will have to pay them.
Open titles can cause legal issues
Let’s say this goes on for awhile. You have a car that multiple owners have not had titled to them. If the state ever realizes they don’t have a complete ownership history, they can assess fines and fees to everyone involved. Legal action is possible as well, since those people have stolen money from the state by dodging taxes. Licensure fees and additional assessments will have been unlawfully avoided as well.
Examples of Open Car Titles
The names are fake, but the stories are real. Do any of these stories remind you of yourself?
Tom and his taxes
Sometimes a person isn’t ready to pay the taxes and titling fees when they buy a car. Tom says that’s fine by him, so Lesley buys Tom’s car without signing or dating the title. Six years go by before Lesley remembers she never titled the car. She writes last Friday’s date on the title and heads to the DMV.
What’s wrong with that? Lesley is telling the state she just bought that car. The state now thinks Tom still owned it all those years, so according to the state Tom owes 6 years’ worth of personal property taxes and title fees which he never paid – and shouldn’t owe. Only the most honest Lesley would agree to pay those back taxes, and the real Lesley can’t be bothered. Tom is SOL and may be stuck paying back taxes when actually Lesley should be paying them.
Jerry and the dealership
The Honda S2000 is a venerated sports car for the ages, and Jerry just found a low-mileage unmodified example at his local dealership. After the perfect walk-around and a thrilling test drive, the salesperson tells Jerry the title is unsigned – an open title. “Well it’s still in the last person’s name, Jerry. That’s no big deal, it just goes straight to you without all the added hassle! Come on Jerry, you look great in this car!”
What’s wrong with that? The next day Jerry notices that his shiny new S2000 is pouring smoke. He pulls over and finds there’s no oil in the engine – but there are no leaks either, meaning the dealership forgot to add any oil when they changed it! The engine is toast! Jerry learns that there are laws protecting used car buyers even with “as-is” dealership sales, but since the dealership never titled the Honda in their name, Jerry has a problem. Things get even more complicated when the dealership disappears overnight. How do you fight a legal battle with someone who doesn’t exist?
Ron and his truck
Everyone needs a truck now and then, and Ron is no exception. He just bought a used Silverado from a private seller on Craigslist and he paid top dollar for an exceptionally clean example.
What’s wrong with that? Little did he know that Silverado had prior flood damage. The title doesn’t reflect it because the damage happened a few owners ago and those people kept transferring an open title; it’s only when Ron registers the truck in his name that the flood branding will appear on the title. Ron has just overpaid by thousands of dollars for a truck with a slew of potential problems ahead. Which of the undocumented owners caused this problem? Ron may never know.
How Do You Avoid Open Titles? Sign the Title!
As a seller, signing the title (and making sure the buyer does too) keeps you off the hook for other people’s actions.
As a buyer, not accepting an open title helps protect you from scammers and schemes.
Here’s how to do it:
Never buy a vehicle with an open title. Ask the seller for at least one form of ID. Compare that name to the name on the title. If they don’t match, ask why.
Remember, you can always walk away. Unless you’re buying an abandoned car or an old project car, there’s no reason to risk buying a car when the titled owner is long gone. Another opportunity will come your way.
Always do your research first. Before you buy, get a VIN check to ensure you’re not buying a stolen car, salvage car, or one with an active lien.
Contact us with any questions. Our staff is well-versed in all manner of car title issues including open titles. If you encountered a strange situation and need to ask someone about it, or if you have questions about unsigned titles, contact us for a no-obligation chat.
We are not attorneys. This article is not legal advice. Cover image source
The act of transferring a car with an open title, some states classify title jumping as a felony.