When one person sells a car to another individual, the parties must officially transfer ownership through the vehicle’s title. The buyer’s name needs to be recorded in place of the seller’s name. However, for a variety of reasons, this does not always happen. When the buyer’s name is left blank, this is known as an open title.
TL;DR (Too Long; Didn't Read)
An open title occurs when a buyer’s name is not recorded on the vehicle’s title after the sale.
Why Open Titles Happen
Open titles occur when an unlicensed dealer does not fill out the title properly after a sale, hoping to avoid detection and state regulations. This is common for “curbstoners,” who purchase cheap vehicles, fix them up a little to look road-ready and sell them for a quick profit. In many situations, curbstoners are not the vehicle’s legal owner, since they have obtained totaled and abandoned vehicles. Posing as the owner is another way to avoid becoming a licensed dealer.
Another way open title happens is if a buyer leaves the title blank and does not register a purchase at the DMV in order to avoid paying sales taxes and registration fees.
The buyer also might leave the title blank if he loses it before being able to go to the DMV. When the issue is accidental, there are ways for the buyer to correct the problem, such as obtaining a duplicate title or a bonded title.
Vehicles With Open Title Should Not Be Bought and Sold
Buying and selling a car that does not have the latest purchaser’s name on the title, and which was not registered with the DMV, is known as title jumping. The title jumps from the previous seller to the newest buyer, leaving a person out in between.
Title jumping is illegal. Every state has laws regarding vehicle registration. Any purchased vehicle needs to be registered by the new owner at the DMV within a certain period of time. Even if a new owner intends to have the vehicle for a very short period of time before selling it, the vehicle must be registered.
A person cannot lawfully sell a vehicle with an open title. Without registering the vehicle, the buyer is not the lawful owner. The previous seller remains the vehicle owner in the eyes of the law. The buyer must complete and register the title to sell it.
Vehicle purchasers should be very wary of open titles. Spotting an open title requires taking a close look. If the current seller’s name is not on the title, title jumping has occurred, and this could be a sign of fraud. Receiving an open title makes it difficult to register the vehicle with the DMV and obtain clean title. Also, if it turns out the vehicle was totaled, salvaged or should be identified as some other brand or model, it could be difficult and expensive to insure.