How to Get a Clear Title on Salvaged Vehicles in Alabama

A salvage-titled vehicle is not a vehicle that can be driven on a public road. Due to sustaining some type of damage, it has been deemed a total loss, making it inoperable. A vehicle owner cannot get a salvage title cleared in the state of Alabama, but if they make the necessary repairs, they can obtain a rebuilt title. To do this, they must get a rebuilder license to have the car repaired and to have it inspected to make sure the vehicle is in working condition.

A salvage title assigns ownership of a wrecked or an otherwise damaged vehicle to а person, an insurance company or to a third party. The salvage title documents that a vehicle is inoperable and too dangerous to drive in its current state. States created this type of law in order to protect vehicle sellers and buyers. They require vehicle owners to give the complete history of the salvaged vehicle, including the damage it sustained.

Alabama also has what is called a junk certificate. If a vehicle is not repairable due to extreme damage, it won't qualify for a salvage title. In this instance, the car will receive a junk, or parts-only, certificate which permanently disqualifies the owner from getting another title or new registration. In other words, no one can legally drive it again, but it can be used for parts.

A total loss occurs when an insurance company or other entity settles with the owner of a damaged vehicle, and the settlement is more than, or equal to, 75 percent of its fair retail value before the damage occurred. In a collision, the owner's insurance company or the at-fault driver's insurance company will pay the fair market value of the vehicle, provided the owner has collision coverage. Alabama insurance companies must also pay any taxes and title costs if the policyholder buys a replacement vehicle.

The car's owner is responsible for the difference between what they owe to a lender on the vehicle and its fair retail value. The salvage value of a vehicle is generally less than $1,000.

A vehicle owner or an insurance provider that requests a salvage title has to follow a series of steps to receive it. They are:

• Verify the vehicle identification number (VIN) and the vehicle's primary information.
• Fill out an Application for Salvage Certificate of Title (Form MVT 41-1).
• Complete and sign Section A if the person filling out the application is uninsured or self-insured, or sign Section B if they are an insurance company representative.
• Fill out the lien holder information or get lease release forms.
• Submit the documents to the Alabama Department of Revenue, Motor Vehicle Division P.O. Box 327640, Montgomery, Alabama 36132-7640 with the applicable fee.

After receiving and processing the request for a salvage title, the Department of Revenue (DOR) will send the vehicle title directly to the applicant or the lien holder. An insurance company will have to get the reassigned title from the vehicle owner before submitting their application.

A rebuild title shows that the owner fixed the vehicle after they received the salvage title. To do this, they need to get a rebuilder's license from the DOR before applying for a rebuild title. This doesn't mean that the owner has to rebuild the car themselves. They can hire someone else to do the work, but the rebuilder's license gives them the right to rebuild the car and start the repair work as soon as they get the license. Once a person has obtained a rebuilder's license, they can obtain other salvage-title vehicles and rebuild them as well.

If the owner doesn't get a rebuilder's license, the vehicle cannot be inspected, and if it's not inspected, the owner cannot get another title or a new registration. Further, they cannot operate the car. Before getting a rebuilder's license, the vehicle owner also has to obtain a $10,000 surety bond, which states that they will have the vehicle rebuilt.

In Alabama, the inspection that an owner is required to have in order to obtain a rebuild title is not only for safety – the state requires inspectors to also look for fraud and stolen car parts. The DOR will schedule the inspection for a rebuild title after the owner restores the car to operable status. When applying for a rebuild title inspection, the owner must submit these documents to the DOR:

• Salvage title.
• Completed Application for Inspection of a Salvage Vehicle and Affirmation Supporting Salvage Certificate (Form INV 26-15).
• Vehicle bill of sale and any sale or ownership documents for the rebuild parts.
• Copy of the vehicle registration, if the person applying is the original owner, or of a rebuilder's license, if they are the new owner.
• Inspection Application Remittance Advice (Form INV 31-1).
• Payment of applicable fees for inspection and titling.
  

When the DOR gets the request, it will schedule an appointment for the inspection and inform the applicant. When the vehicle passes the inspection, the DOR will create a new rebuilt title and send it to the applicant.

Titling fees are relatively low in Alabama. The salvage title fee is around $15 and is nonrefundable. When getting a rebuild title, the owner will have to pay additional costs.

The state charges a $75 application fee for a rebuild title, plus the $15 title fee for a total of $90. Applicants will also have to pay registration costs if they want to get new license plates for the vehicle.