Buying a Used Car & Signing A Title

I have no experience to draw from, so bear with me: When one buys a used car and the owner signs the title over to me, can a title have a lien against it and/or other issues (like some defect) that now becomes MY headache? Or, is this only true with buying real estate? If it is possible, how can I know if a title is free and clear of such issues? Is there such thing as a title search akin to what is done with a deed search before closing on real estate?

How does this work and, if you can, please describe the sequence of events. Like, does a title get searched while some private seller waits patiently (ha-ha-ha) for you to pay up? How does all this come together in reality?

Moderators: Seeking Factual answers here, but if you feel this question falls under “IMHO”, please feel free to move, as necessary.

Yes, cars can have liens.

Read all about it:

In the next few years, there are going to be a whole lotta used cars infiltrating the market that might be described as have some water damage. They will all have salvage plates, and no one is required to tell you that. That’s why you can look up their VINs. Without a written warranty, you have bought exactly what you have bought.

In Missouri the title will have the lein holder listed. That’s assuming there was a lien when the title application was prepared. When the lien is satisfied its indicated on the title. In fact based on my experience the title is sent to the lien holder and you don’t get it until the lien is released. I don’t know how the Title Loan places work but I’d imagine they might keep your title until they are paid. Some states do not use titles.

Whaaat!?! :eek: That’s just CrAzY talk! Never heard of such a thing, but who am I to doubt you? How does such a State track and show proper ownership? Strictly by registration alone?

It depends on the state. in some states, the lienholder is in possession of the title until you pay off the loan, then they transfer it to you.

in my state (Michigan) you are sent the title, and on the front it indicates any secured parties (lender(s) with liens on the vehicle.) When you pay off the loan, the lender sends you a certified “Release of Lien” letter which you can attach to the title in order to either transfer it to yourself (make it “clear”) or transfer to another party when selling the vehicle. AFAIK the Secretary of State will not allow transferring a title to another party if there is an unsatisfied lien on it, it must be paid off.

Yep. Definitely depends on the state.

In some states, the lien holder keeps the title until the lien is paid. Maryland, IIRC, has a two part title. The owner has one part and the lien holder has the other part. When the lien is paid, the lien holder sends the second part of the title to the owner.

In Pennsylvania (where I live), the title indicates that there is a lien on the vehicle. When the lien is paid, the DMV sends a clear title to the owner.

But to answer the second part of the question - the lien (loan) on the car does not become ‘your’ problem - you didn’t buy the loan. But if the lien is not cleared, you also don;'t get to buy the car.

If you see the title and the lien is still listed - call the local DMV to check the status - it may be cleared and the person didn’t just go and take care of the paperwork (in Ky, this is certainly possible). Do not trust the seller on this - they may even think it’s cleared, but if the DMV has not recieved the paperwork, it’s not.

Yep. The principle here is that the seller didn’t completely own the car, so couldn’t legally sell it to you.

It’s possible in Pennsylvania, too. The title might show a lien, and it could just be that whoever owned the lien never bothered to register that it was paid off. In this case, the seller would have to contact the lien holder and have them submit that the lien has been paid off (this can be done electronically in PA) and the DMV will issue a new title showing that it’s clear. It’s also possible that a duplicate title was issued at some point and the title that the seller has in-hand is not the current title to the vehicle.

Pennsylvania requires titles to be notarized. When you sell a vehicle, you have to go to a notary and sign the title in front of them. Generally you go to a place that does title transfers and they also are a notary so it’s all taken care of. If there is a problem with the title, they usually won’t know immediately. I bought a used car once and had the DMV kick the title transfer back about a week or so later because a duplicate title had been issued for the vehicle. The seller was able to find the duplicate title and we submitted that and all was good.

In PA, if there’s anything funny with the title (like it still shows a lien), I personally wouldn’t even bother trying to do a title transfer on it. I would wait until the seller had the title completely taken care of and had a clear title in-hand before even attempting the transfer.

I’m not sure if you can contact the DMV for a title search of any sort. I do know that the owner of the vehicle can request a duplicate title. It won’t be free, but that will be the current title as the DMV has it. If there’s a lien on it, it will show up then.

Historically, bill of sale. All states have titles on new cars now. Some didn’t have titles in the past, and cars older than the date they introduced them may still be sold without a title, rather than retroactively titling old cars.

Addendum - I think some states may have a fixed age, like say 20 years, after which a car no longer requires a title for sale, even though titles existed by that time.