Clean Title? Not So Fast!for Auto Dealers on Thursday, June 13, 2013 by Les Cravens
Originally Published in theFlorida Independent Dealer magazine.
The issue of salvage vehicles entering Florida with “clean,” unbranded titles has been one faced by used car dealers, retail consumers, law enforcement and the Department of Highway Safety and Motor Vehicles (DHSMV) for some years. Recently, this problem has escalated as it has become much easier for dealers to purchase salvage vehicles by bidding in auctions over the internet. Most recently, sellers intentionally avoiding the branding of salvage vehicles in order to sell the vehicles for a higher price has worsened the problem. The bottom line is that a purchasing dealer is responsible for disclosing any prior salvage condition to a buyer, and needs to be able to protect his interest by disclosing the historical condition of a vehicle when he resells it.
Florida law and DHSMV procedures are in place to protect buyers by making sure salvage vehicles are correctly branded. Florida statute 319.30 defines a “salvage” as a motor vehicle which is a total loss and then defines a “total loss” as either a wrecked, damaged, or stolen insured vehicle that an insurance company has paid the vehicle owner to replace, or an uninsured motor vehicle or mobile home that is wrecked or damaged to the point where it would cost 80% or more to replace or rebuild the vehicle. Simply put, when an insurance company declares a vehicle a total loss and pays their insured to replace the vehicle, it becomes a salvage motor vehicle under Florida law. Any total loss salvage vehicle in Florida or vehicle brought into Florida from another state with a salvage certificate of title or a “clean” title either in the insurance company’s name or endorsed over to the insurance company, is a total loss salvage vehicle.
Used car dealers should take this into consideration when making purchases of wrecked or damaged vehicles being sold through salvage auctions with “clean” titles. If the seller of the wrecked or damaged vehicle is listed as an insurance company, the chances are very good that the “clean” title advertised is either in the insurance company’s name or has been endorsed over to the insurance company as the result of a total loss payout – meaning that neither the purchasing dealer or the consumer will be able to get a “clean” Florida title on the vehicle.
If the used car dealer who has purchased a wrecked or damaged vehicle from an insurance company resells the vehicle in the wrecked or damaged condition, the Florida title issued as a result would be a Rebuildable Salvage Certificate of Title or a Certificate of Destruction, depending on the amount of damage. If the vehicle is repaired by the used car dealer, the Florida Rebuilt Statute (319.14) that prohibits offering for sale, selling, or exchanging a rebuilt vehicle until proper application for a Rebuilt Certificate of Title is made and a physical examination of the vehicle is completed would apply. The rebuilt vehicle would have to be processed through the DHSMV Rebuilt Procedure, and would receive a “Rebuilt” Florida title.
Dealers are urged to be cautious when buying and reselling these wrecked or damaged vehicles sold by insurance companies with “clean” title designations. A simple check of the vehicle in the National Motor Vehicle Title Information System (NMVTIS) may reveal that an insurance company and/or auction have reported the vehicle with as a total loss or salvage designation to NMVTIS. The Florida DHSMV is fully connected to NMVTIS, and that salvage designation will be revealed when the first title transfer in Florida occurs. Additionally, it is advisable for Florida dealers to familiarize themselves with the Florida titling and rebuilding statutes and DHSMV procedures (TL 36 and TL 37), which can be found on the DHSMV website.
Tallahassee-based Auto Data Direct (ADD) is an approved provider of NMVTIS reports and offers its customers easy access to NMVTIS reports as well as real-time access to 28 state databases, for DPPA-qualified entities. With a NMVTIS report from ADD, automobile dealers can search a VIN and receive a vehicle history which lists title brands applied by other states, as well as indicate the most recent state of title. Using ADD’s DMV123 database, a dealer can then search the appropriate state for owner/lienholder information to confirm ownership and a clear title.
For more information on ADD’s dealer services, visit its website at www.add123.com or call and speak with a customer service representative toll free at 855-300-3455 .