A variation on this scenario might be painfully familiar to you: On Craigslist or Facebook Marketplace, you spot a great deal on the Toyota Sienna minivan you need for your antiques business. The vendor wants to meet you in a random parking lot, which seems a bit sketchy, but you keep the appointment and the car looks great and runs fine. There are no plates on the Sienna, but you run the van surreptitiously up and down a few streets to confirm it tracks straight and handles well. You agree on a reasonable price, which the seller wants in cash. He gives you a bill of sale and a title with the correct VIN.
So far so good, right? It’s when you get to the DMV that the problems can start. While in line, you notice that the title isn’t in the name of the person who sold you the car. Instead, it’s in the name of the owner they bought it from. So the vendor never registered it; not a big deal, right? Wrong. It is a big deal if they signed the title, and in that case, you’ve just entered the crazy world of the “jumped” title and the unlicensed “dealer.”
I know about this from painful experience. Twice I looked at Hondas that had weirded-out titles and “I swear this is true” stories attached. The first one I wisely passed up, but the second one was in really nice condition, fairly priced, and close to home. Not wanting to drive 100 miles to look at another car that might turn out to be a rustbucket, I decided to buy the line about the much-traveled paperwork sailing through the DMV. It didn’t. In fact, it got shot down six times, and I had endless hassles before finally being able to procure a newly issued clean title.
Rightly or wrongly, many of the cars being sold through online classifieds are part of an underground economy—cowboy car sellers who move a lot of product quickly, often buying vehicles at smaller auctions. In itself, selling cars you bought legally is an above-board practice, but states like to regulate their dealers, and they want them to get licensed.
In Connecticut, it’s a possible Class B misdemeanor to sell motor vehicles to consumers (or repair them) without a dealer license. In Florida, it’s illegal to sell more than three cars in a year unless you have a dealer license, which you also need to advertise more than three cars for sale. According to the San Diego city attorney’s office, illegal “curbstoners” (so called because they park their unregistered for-sale vehicles at the curb) regularly “buy and sell vehicles without a dealer’s license, proper permits or an established place of business. This practice is illegal under California law.”
California will theoretically put chronic curbstoners in jail for up to six months and give them $1,000 fines, but in that state and elsewhere, the prospect of getting prosecuted doesn’t appear to have dissuaded that many operatives. In some suburban and urban locations, and especially when 10-year-old or older Honda and Toyota vehicles are being sold, freelance curbstoners make up a lot of the vendors.
Sellers jump the title because they want to move cars fast, want to avoid the time and money necessary to register them (for example, in California registrants can avoid a hefty tax of approximately 10 percent), and want their operations to be as invisible as possible to the DMVs. They also want to skirt those laws limiting how many cars they can sell annually. It’s understandable why they do it, but the DMVs and their allies take umbrage.
“Title jumping is an unethical practice to cheat governments out of fees for sale of a vehicle, effectively hiding the intermediary,” Thomas Roberts of the Thomas Roberts & Associates law firm in Richmond, Virginia told The Autopian. “Part of the problem is the buyer, if they’re careless and leave the title open. The title should record, on the back, the buyer’s name, the amount paid and the mileage on the vehicle.”
Roberts said that “a DMV investigating officer with time on his or her hands can pursue charges,” but he added that he’s rarely retained for this kind of case because “the cost of counsel often exceeds the money they could get.”
New York makes it illegal to list more than five cars for sale in a year, or repair them, without being licensed, but a 7 On Your Side Eyewitness News television investigative team in the Bronx borough circa 2018 “found auto body shops and illegal car dealers blatantly disregarding all of those laws.” A DMV spokeswoman told the team that the hottest it could get for curbstoners is an administrative sanction carrying a $25 fine.
Nevada is evidently tougher. Also in 2018, the state DMV arrested a Las Vegas man and charged him with 56 counts of Unlicensed Dealership Activity, Operating as an Unlicensed Salesman, Forgery and Conspiracy to Commit Forgery. The latter charges were for allegedly making it appear that some sales were via actual licensed dealers. The alleged scofflaw, in a settlement, got three to five years of probation and was ordered to pay restitution. In Nevada, a dealer’s license is needed for sales of more than three personally owned vehicles annually.
Is the practice waning? According to Steve Lang, a licensed dealer in the Atlanta area and the founder of the Facebook page 48 Hours and a Used Car, “I’m not seeing curbstoners as often as I did 10 to 15 years ago, and one reason is that more titles are now being transacted electronically, which means there’s not as much loose paper around to go any which way. There’s also not as much unemployment—with people trying to make money any way they can. And the auctions are also cracking down and doing the paperwork themselves, not leaving as many open titles.”
Lang thinks that now most curbstoners are using car sales as a casual income source, rather than their sole employment.
What to Do
If you do buy a car from a private seller, insist on a bill of sale and a title in the actual seller’s name. Don’t believe assurances that a replacement title can easily be issued after the sale—demand it before the money trades hands. DMVs can and do turn away skipped-title paperwork. And your legal ground is shaky if the seller signed the title but their name is otherwise not on any paperwork.
Some signs of curbstoning:
- The name of the owner on the title is not the same as that of the vendor;
- Multiple ads online with the same phone number;
- “Lost” titles or maintenance records;
- No actual physical location for the alleged dealership.
If the sale has already happened and you’ve been left with a car that can’t easily be registered, you can demand the seller—if you’re still in contact—get you a clean title. Or consider getting a bonded title, also known as a certificate of title surety bond. The owner assumes legal and financial responsibility for the accuracy of the information about the car, and pays a sum to a third party to cover any obligation. Insurance companies underwrite these bonds, which vary from state to state and are based on the value of the car.
David Bennett, senior repair manager at AAA’s national office, told The Autopian that buyers “need to do the due diligence, and understand what it takes to buy and sell a car. If you don’t have a proper title, you won’t be able to insure, register or drive that car. That’s how the states track car ownership. All the information you need about the process is at your state DMV.” Bennett said that “more safeguards are now in place to catch curbstoning,” but buyers are hardly out of the woods.
“If you’re buying a vehicle and the title is in someone else’s name, stop right there,” Bennett said. “Say to the seller, ‘Wait a minute, the title says Jim and you’re David.’ It’s a red flag. Maybe they can come up with a logical explanation that sounds good, but the bottom line is that you’ll be in trouble when you get to the DMV.” The officials behind the counter will try to verify if someone claiming to be a dealer actually has a dealer number, and a clear chain of custody.
[Ed Note: First, watch my friend Steve Lehto’s video above, which he made specifically for us at The Autopian (please follow his channel; he’s awesome). As for my own experiences, I’ll admit, I’ve purchased multiple cars from title-floaters, but they don’t do it in the way Jim here is describing. These sellers get the previous owner of the car to sell them the vehicle for cash and sign the title. These previous owners only sign their name; the name of the new owner (whom I buy the car from later) is never signed into the title, so it looks to the DMV like the previous owner signed the car to me directly, with the person I bought the car from nowhere to be found on the paperwork. This is illegal because the middle-man didn’t pay any taxes, in much the same way as dealerships flip cars without having to pay taxes on the purchase (though they pay taxes elsewhere). The big thing, as Jim says, is: Don’t buy a car if it’s already got a signature in the “purchasers” section. And if the seller isn’t the “seller” on the title, you may be able to get away with buying the car like I have, but that person selling you the car is breaking the rules. Because I’d be crazy not to get input from the owner of Wilmington, North Carolina’s Gossin Motors, here’s SWG… -DT]
[Contributor Note: I have bought and sold 136 cars since 1995 and can say that “curbstoning” is just one of those expected and understood parts of the game. I’d say metaphorically that it’s similar to going to a party and there’s some guy (friend-of-a-friend) on the back deck/outside with weed. Is it legal (in most states)? No. Are you going to freak out and call the cops? Also no.
The seller is actually taking a huge fast & loose gamble with trusting that you/the buyer will sign the title correctly and present valid ID, etc. and not have the DMV Inspector coming back on them for a “floated” title. I know a guy who sold to a “William Johnson” who signed his name as “Billy Jo Johnson” on the title. He was denied a title transfer at the DMV counter. Guess who that hard-stop fell back upon? The seller.
Jim makes a well laid-out argument describing all the associated risks with buying a car with a “flipped” title, so let’s just put it out there that there’s 100% agreement (and props for a well-posited piece) first and foremost from this guy. But I will say this: If you find that diamond on the rough that you’ve been drooling over for way too long, that perfect gem of exactly the car you want, in the exact trim, mileage, color and condition, for a killer price, from a seller that’s very close by, are you sure that you’re going to say “no way!” due to an open title? -SWG]
Interesting. I buy cars so rarely I never heard the term title jumping but it makes sense.
TIL that is what happened when I bought my RV. The title was signed over by the person that owned it before the guy I bought it from. I was a little concerned about that when I registered it but the DMV didn’t seem to notice. They took my tax and registration money then handed me a plate.
I’ve bought so many cars from title floaters, as long as the title is properly open (aka the intermediary person hasn’t signed it) I don’t really have an issue with it personally. Hell, I’ve bought a lot of cars with messed-up titles (or just no title at all) and have gotten bonded titles for them. When there’s a will, there’s a way.
I’m with David on this one, it’s not ideal but if you buy one of these cars, you just gotta know what to look for.
Basically the “original” seller’s part should be signed and nothing else.
I guess it also depends on the state, but I’ve been through many examples of this in both MA and NH as a buyer, and never had any issues registering at the RMV.
If the buyer is already signed and you’d sign the reassingment sections, then the seller needs to be a dealer. Only dealers can fill out those reassignment sections, so if the seller is not a “real” dealer avoid that car.
I bought my E30 racecar with a title that was signed over to the person 2 owners ago, who never re-titled it because they turned it into a racecar. All was fine until I had it street parked and, while I was away on a business trip, it was towed. Without proof of ownership, I had no way to get the car back.
I got really lucky… I needed an affadavit signed from the selling owner on the title that stated that the person they were signing it over to had backed out and he was selling it to me. However, the guy was unlisted. The only number I could find for him was a fax number. In desparation, I faxed a letter stating what had happened and pleaded for him to call me back. An hour before I was set to leave on anothe work trip, to San Antonio, I got a call from him. He was in Houston and was willing to meet me to sign.
After I landed, I dropped my co-worker at the hotel and headed to Houston. He couldn’t care less about the fact that his car was now a racecar, but I was very thankful that he responded to me and met me. When I got back home, I got the car titled, then went to the impound lot, paid my storage fees, and got the car back.
That car eventually carried me a NASA SpecE30 National Championship 🙂
“Title jumping is an unethical practice to cheat governments out of fees for sale of a vehicle, effectively hiding the intermediary,”
You could argue that charging tax on the same vehicle again after it’s already been paid on the initial purchase should be illegal. But, the law is the law. Evade at your own risk.
There are a lot of factors there. Like the state. Where the vehicle is currently titled vs where you are bringing it into. Where the seller got the car. How long the title has been open, age and value of car. Who the actual person is at the tag or dmv place. Private party shitbox deal probably ok in many states but I guess you could be unlucky anywhere.
Regarding selling a non-running old vehicle, that is currently not registered: As a seller, what should one do to prevent headaches later? I get offers on the vehicle from time to time. I’m assuming that I should get a buyer’s signature on the title, and write up a bill of sale that includes the buyer’s name and driver’s license. Is that enough to prevent later shenanigans from coming back to me?
This reminds me of how fraught and downright useless used car listing sites have become. If it’s not curbstoners, it’s sketchy dealers pretending to be private sellers. Caveat emptor!
Note: This article was written by Jim Motavalli. For some reason it had his name on the homepage but my name when you click it. Weird!
I’ve been window shopping FB Marketplace (I know, I know) and there are clearly some local curbstoners who keep turning up like a bad penny. Never knew the term for this. Thank your for this enlightening article and heads up.
I got super lucky buying an E46 that had one of these deals on marketplace.
The original owner sold the car to a dealer in PA, who then auctioned it off. The auction buyer (my seller) was a two man operation in MD, one of whom had an uncle with an OH dealer’s license.
There was a chain of signatures on the title along with a limited POA since the original owner was elderly / incapacitated. Not knowing any better, I told myself that this, along with a bill of sale from the OH dealer would be okay and drove home to PA on the plate from my E39. (I can now attest that EZ Pass cameras only care about make, not model.) This took more of a Saturday than I’d planned, but the drive home was uneventful and on the whole everything seemed to be working out well.
Sunday I casually checked out the PA DMV website just to make sure I had my ducks in a row and fairly immediately freaked out that I had gotten played by this whole deal. I priced out a bonded title and built out a good part of the one seller’s family tree via internet research of real estate and business records in case I had to try and track him down and/or go to court.
At lunchtime on Monday, I went to the tag and title place that had seemed pretty expert when dealing with (admittedly much more normal) stuff in the past. They looked at the title for about 30 seconds, said nothing, processed it, and even reactivated a tag that I had hung onto from a prior car. I was in and out in 20 minutes and drove back to work in stunned disbelief that I didn’t have to spend countless weeks and dollars sorting out these issues.
My local Euro indy checked the car over and found no issues except for changing fluids that looked okay but might be a little old. As an added bonus, since the car had started out in PA, there was still 6 months or so left on the annual inspection. The car has been great and my wife has very much enjoyed tooling around in a convertible of her own.
3/10 – Got lucky, car exceeded expectations, would not recommend
Consistently Lucky > Occasionally Good
Consistent Luck ≠ Life Strategy
Adulting = Hard
When I’m responding to a car ad I always start with “I’m interested in your car for sale…” That weeds out the guys flipping cars pretty quickly when they have to respond with “which one?”
And I never reply to potential buyers who don’t mention anything about the specific car for sale because it’s probably a bot. Especially when it’s “Do you still have this item?” and it’s a car.
Same here. If they don’t mention the actual car (or piece of furniture, electronic, etc) then they are almost assuredly a bot or scammer.
Another aspect of this is when you accidently sell to one of these jerks. I recently sold an old Chevy Cruze that was barely running, I did everything right on my end. I got the bill of sale, kept the plates, removed the registration stickers from the window, and filed the paperwork with the state to make sure my registration was cancelled.
Two months later, I got a letter in the mail regarding the car. The dude I sold it to wrecked it 6 weeks later, he had not titled it in his name, nor had he put insurance on it so the party he hit was coming after me for the damages to their client. Luckily, because I had done all the right things on my end I was able to provide proof that it was not my car and get them off my back, but if I hadn’t had the bill of sale and contacted the state to cancel the registration, I would have been on the hook for the $9k repair bill.
Not quite the same situation but I’ve purchased a car from a guy where the title was signed by him as the buyer, but it hadn’t been transferred into his name. He bought the car then found out it had an oil pressure issue and wanted to dump it. He was totally up front and honest about it. We both went to the DMV to transfer the title paperwork, and they made him sign an additional form. It was no big deal.
TLDR is that if the seller is willing to accompany you to get the paperwork done you’ll probably be fine, if not good luck.
It’s so cool to see Jim here! 🙂
My experience is similar to SWG’s in this regard. Some guys buy a $500 project bike that they found in a barn, never actually get it running, and then sell it. Rinse and repeat, say about three more times until it reaches you, and surprise, the title you get has the name of the original guy who left it in his shed 4 decades ago. But then you’ll notice that the “Buyer” line is completely blank.
Jim is totally correct in that all of the guys before you screwed up because, legally, you’re supposed to title the thing and pay taxes with each transfer. But yeah, like SWG says, if you find that diamond in the rough and the guy selling it isn’t the guy on the title but the buyer area is totally blank, I wouldn’t let that get in your way. From personal experience in my state, the authorities usually get mad at the title-jumper, not you the buyer.
Also, be careful buying cars from dead people in some states. Here in Illinois, my wife bought a pickup truck from a dead man. Basically, the gent was trying to sell the truck and then passed. The truck then sat for years. His son eventually sold it to us, but the state wouldn’t register it because the seller passed away years before. State said we had to go through probate to obtain the right to transfer the title…which wasn’t worth it for a $600 Dodge Dakota.
Vermont fixed that problem in a jiff…RIP.
I am so glad to live in the land of the free, In the UK I can buy, sell and broker vehicles. Folk here complain about the DVLA, if only there was a system that allows anyone to find the history of a car? Bloody government interfering again.
UK has a good system. A central registry of all cars. Plate stays with car when sold.
As the seller, you write the name and address of the buyer on the paperwork and send it to the DVLA. There’s no break in ownership, unless you sell to a registered dealer.
Why do we even have to pay taxes on used cars in the first place? Every time it’s sold, the state gets sales tax again. Usually I feel like taxes are a relatively fair thing to have to pay, but tax on a used item is a borderline scam as far as I’m concerned. The only car-associated cost that annoys me more is the MSRP-based plate fees.
On the topic of jumped titles, I currently have a car that I picked up last year that was never transferred to the previous owner. Still haven’t put it in my name yet, but I’m not too worried about it, since it was a $750 car. I will put it in my name before trying to sell it though, I don’t want to double-jump it, and it would likely be harder to sell that way anyway.
My ex’s Element from California was also a title jumped car. Not only was it in someone else’s name, but they had either lost or already sent in the slip at the bottom of the title that says it was sold (and maybe who it was sold to, I’m not sure?). It was going to be registered in Michigan so I wasn’t too worried about it, but I would assume people in California would have been a lot more wary, and maybe even run into issues when they tried to register it.
Have long wondered this as well.
It does seem like some states are different, at least based on the ads I see for lightly used cars where the seller advertises “save $XXXX by not having taxes” as if that’s a thing that applies to me.
If the seller had to pay taxes on the vehicle they were flipping, they would have to charge you more for the car to make money.
Because consumption-based taxes are a reasonable way to spread the tax burden, sales tax gets applied to any range of things depending on your location. Some don’t tax food or clothing. Places without sales tax increase income or property taxes. Each method has different impacts. Having a little of each is really a hedge against people who want to name the system or large economic swings that might hit one area more than another. The actual details are due to the rules being compromises written over centuries by people who had very different ideas of what the best methods might look like.
Think of progressive taxes on things like the value of a car, like insurance. They help align how much a person pays for state services with the value they receive. Poor people don’t get much value out of fire and police protection, the military, or courts because they don’t have much of value to lose. Folks with expensive cars and houses have a much larger interest in a functioning set of laws that can be enforced.
Every time I bought an used car from a private seller, the Bill of Sale will have the right amount of what the car was sold for but in Michigan, usually sellers will leave blank on the sale price as put whatever you want in there before you go to register the car in your name, that way you only pay 6% of “$500” lol
North Carolina doesn’t even care about bills of sale for private party sales. They have already determined the value of every car for tax purposes, and use the same value for used car sales tax between private parties because they know everyone lies about the sales price. The only problem is they also lie about the tax value, for instance the tax value on a car I owned that was recently totaled was $5700, the other person’s insurance ended up paying my $2200 as ‘fair market value’. How is the ‘tax value’ more than 2x the fair market value? If you buy from a dealer you pay tax on the actual sales price.
Yeah, I almost always lowball it, unless it’s already really low. Some sellers have been weird about it and put the selling price. Probably the worst one was when my brother bought his Volt, and the seller put the full $11k down as the selling price. He was already near the top of this budget, so those extra hundreds in tax (and the higher registration for being considered an EV) wasn’t exactly fun for him to deal with.
When my in-laws gave their old car to my wife we put it in my name for insurance purposes (she had an old accident that hadn’t fallen off her record yet). The catch was that they could have given the vehicle to her for free, but because I was their son-in-law we had to process it as a sale and pay taxes. No biggie, we were going to save more on the insurance than we would on the taxes. The state knows people do this and goes along with it as long as the taxes paid reflect the vehicle’s fair market value. I told the clerk at the secretary of state branch that the purchase price was $1,500. That was a lowball but not by much. The clerk warned me that the state could contact me and say that I had set the value too low, but they never did. I wasn’t expecting anyone would want to make a case against me because they thought the car was worth $2,500.
I never touch the cesspool that is Facebook. Craigslist is only for things that don’t have moving parts, like patio furniture. The minimal effort it takes to post something means scammers and bad ads are the norm rather than the exception.
I’ve had multiple folks that I helped after they had similar experiences because they were young or didn’t have English as their first language. It is the kind of crime that hurts the people that can least afford the cost.
What a fascinating look into a set of practices to which I, in all of my oddball automotive purchases, have never had any exposure whatsoever. Ahem.
lol
I wish our DMV had a counter for buying/selling cars. My state has a form you can fill out letting them know that you sold the car but you’re still hoping that actually gets filed. More recently I’ve taken to removing the license plates off the vehicle before the seller takes it which more or less forces them to register it.
I have done just that. The last time I purchased a used car from a private seller, the owner insisted that we go into the DMV, sign, and process the title at the counter. I was happy to do so.
Here in PA most local Notaries can handle it right in their office.
I moved from PA to MN decades ago and was floored by the lack of inspections and the no notary title transfers.
Yep, do the title transfer at the Notary and get your new plate right there. Actually makes private transactions very easy.
Not quite the same, but the first motorcycle I bought had a leinholder’s name on the title that I didn’t notice so when I went to register it, it didn’t have their signature so I was denied. Huge hassle to bug the seller and track that person down, I was lucky they were still in the area and willing to help, but I definitely learned to look more closely after that.
Been there, done that. It sucks. We had one car with a floated (but fortunately un-signed) title and an incomplete chain of SEVEN handwritten bills of sale. My wife had to track down the original seller and have him write out a bill of sale directly to her to make the DMV happy.
It can also go the other way; you do everything right, but the person who buys your car never transfers it, then gets it impounded (happened to me twice) or gets in a hit-and-run (happened once) and the cops are calling you about “your” car. Luckily, I had copies of bills of sale, so I was off the hook, but it was a pain in the ass I didn’t need.
These days, buying or selling, we go to the DMV together, and neither one of us leaves until the paperwork is done, and if you don’t like it, go find another car.