What is a Clean Title and Why It is Important?
What Is a Clean Title?
The automobile title is a legal document that provides information on who owns the car, its state, and its collision history. The VIN is also listed on the vehicle title along with information on the model, manufacturing year, and financing options.
You must search for a car title when buying a used vehicle. You can learn insights and details about the car by paying great attention to the title. It will inform you of any previous car damage that has taken place. It’s crucial to understand that a clear title does not necessarily imply that the vehicle is in good condition.
What Does Clean Title and Clear Title Mean
What Does a Clean Title Include?
A clean title is a car title that is free of liens and other encumbrances. Having no unpaid debts or financial commitments implies the vehicle can be legally sold or transferred to a new owner without any complications. A clear title is essential for a seamless and trouble-free transfer of ownership because it acts as ownership documentation.
A clean title should include the following information:
- Vehicle make, model and year
- Vehicle identification number (VIN)
- The names and addresses of the most recent and previous owners
- Brand history (if applicable, such as salvaged, rebuilt, etc.)
- Odometer reading
- Signature of previous and current owners
- Date of transfer
- Any applicable government certifications or inspections.
A clean title is a crucial document in the sale or transfer of ownership of a vehicle. It ensures that the ownership is clear, and there are no outstanding debts or encumbrances associated with the vehicle.
How Is a Clean Title Different From Other Titles?
A clean title refers to a vehicle title that has no outstanding debts or legal claims. A title with liens or encumbrances means the vehicle has an outstanding debt or legal claim. Clean titles are preferred when purchasing a used vehicle as they reduce the risk of disputes.
Types of vehicle titles that you may encounter when buying or selling a car:
- Salvage title: indicates that the vehicle has been declared a total loss by an insurance company due to significant damage from an accident, theft, or another event.
- Rebuilt title indicates that a vehicle with a salvage title has been repaired and restored to safe driving condition.
- Flood title: indicates that a vehicle has sustained water damage, usually from a flood.
- A lemon title indicates that a vehicle has been deemed a lemon, meaning it has persistent mechanical problems and cannot be repaired after multiple attempts.
- The lien title indicates that the vehicle is being used as collateral for a loan and the lender holds the title until the loan is repaid.
A clean title is different from other types of titles because it indicates that a vehicle has no outstanding debts or encumbrances, making it easier to sell or transfer ownership. Other title classifications, such as salvage, rebuilt, flood, lemon, or lien titles, may make it more difficult to sell or transfer ownership of the car since they reveal that it has a history of damage, mechanical issues, or unpaid debts.
How to Obtain a Clean Title
A clean title is an important aspect to consider when purchasing a used vehicle. A clean title means the vehicle has no outstanding debts or legal claims, making it easier to transfer ownership. If you are planning to buy a used vehicle, here are the steps to obtain a clean title:
- Check the title: Check the title to check if there are any liens or encumbrances listed on it before making any payments. If there is, it signifies that there is a debt that needs to be paid off or a lawsuit that needs to be settled before the title may be transferred.
- Contact the seller: Speak with the seller to determine whether they are willing to address any liens or encumbrances on the title before the sale. Consider acquiring another vehicle if the seller is unwilling to fix the problem.
- Pay off any outstanding debts: If the seller is willing to resolve the issue, they may ask you to pay off any outstanding debts to obtain a clean title. Make sure to get proof of payment in writing.
- Transfer the title: Once all debts have been paid off and all liens and encumbrances have been lifted, you can convert the title to your name. You need to visit your nearby Department of Motor Vehicles (DMV) and provide the necessary documentation, including the title and payment proof.
- Check the title again: Check the title again to be sure it is now clear and free of liens or encumbrances before completing the acquisition.
Follow these steps to ensure that you get a clean title for your used vehicle, simply transfer the ownership and reduce the risk of disputes.
How to Conduct a Title Search
For many people who commute to work, use their car to transport children to and from school, do necessary errands, and more, cars are a necessity. Having a car also expands a person’s ability to travel freely and participate in social events. But buying a new automobile may be expensive, and for some people, it’s either out of their price range or just not worth the added cost. Most consumers then resort to the used car market at this time.
To make sure you’re buying a vehicle wisely when you’re shopping, you may learn more about it by running a vehicle title search. Learn more about automobile title searches in this guide, and discover how to conduct one successfully. If you don’t obtain the vehicle history before making a purchase, you can find yourself parting with your hard-earned cash for a car that wasn’t worth it.
Why Perform a Car Title Search?
Beyond what the owner has told you, conducting a vehicle title check might help you learn more about a vehicle’s past. While most merchants are fully honest, others might be dishonest. Others might not be aware of the entire history of the car because they weren’t provided with all the details.
You can discover if the car has been in any small or significant collisions by running a title search on it. This may have an effect on the car’s resale value as well as the car’s potential overall performance.
What to Do if a Lien is Placed on the Vehicle
One of the primary reasons to conduct a car title search is to see if there is a lien against a vehicle you wish to purchase. If you discover that the vehicle has a lien, you still have a few purchasing options.
• Make a deal to pay off the lien when you purchase the car. If the buyer and seller meet in person to pay off the lien before transferring the title, this may usually be done securely. Consider what you’ll have to pay to have the lien released while negotiating the ultimate sale price.
• Request that the seller release the lien in exchange for a good faith promise from you to purchase the car once they can demonstrate that it is now lien-free.
• Use an escrow company to hold the title to make sure both parties fulfil their obligations. A buyer who agrees to pay to have the lien lifted may benefit from this.
Lookup government vehicle titles
The majority of states do not give complete title information, even for vehicles registered within their borders. Most states just can’t keep track of this information; therefore other groups are left to do it.
However, registration abstracts are offered by some states. These contain useful details like parking tickets that might have been left on the automobile. Abstracts of title registrations might provide additional information on the current and prior owners of the vehicle.
The Seven Most Regular Real Estate Title Problems
Think twice if you believe title insurance to be a luxury rather than a need. According to a Washington Post story, one-third of all real estate purchases need “special labour” to remedy a title issue, therefore the possibility of having a title with a “cloud” or fault is rather significant. Unknown faults like unresolved liens or encumbrances, as well as mistakes in the deed, may cause the buyer to incur additional expenditures or possibly forfeit ownership of the property.
There are numerous reasons why a title could be flawed, but these are the top seven that SMART typically encounters:
- Liens
- Judgments
- Bankruptcies
- Undisclosed Heirs and Wills
- Boundary Disputes
- Forgeries
- Easements
Liens
A lien is a legal right to retain ownership of another person’s assets up until the debt is paid off. Property, mechanics, and judgment liens are the three main categories of liens.
Each property receives a property lien at the beginning of each tax year, which is removed upon complete payment of the tax amount. Owners who don’t pay their taxes won’t be able to release the lien on their titles until they do.
General contractors or companies that perform property services can encumber properties with a mechanical lien. When a bill for work done on a property is not paid, a lien is put on the property.
When a court grants a judgment, the owner is mandated to settle the creditor’s debt. The creditor attaches a lien to the property until the whole amount is paid, which prevents the owner from transferring ownership by selling, trading, or otherwise.
Errors in public records
Humans make mistakes, thus there may be mistakes in the way property information is recorded. Common mistakes include misspelled names or addresses, wrong square footage, incomplete paperwork, and mortgages that haven’t been released.
Non-computerized heirs and wills
Missing heirs, such as children from prior partnerships or distant cousins, who are entitled to the property may be discovered through a title search. Additionally, the search may turn out previously secret wills that reshuffle the ownership. You can find yourself in court if you do not have title insurance that addresses these circumstances.
Boundary controversies
A dispute between two landowners about the location of a property border and ownership of specific parcels of land may arise. It is advised that you obtain a location or boundary survey to prevent these kinds of issues, but challenges to boundary lines can still happen even with a survey. This problem arises when property owners attempt to construct a disputed property (e.g., building a fence or cutting down a tree).
Forgeries
Forgery is one unknown title issue that might appear at any time. Past claims to the title may have included fictitious names, forgeries, fraudulently supplied deeds, fraudulent notarization, flaws in the legal description, and access rights removed by a nearby foreclosure. Even though such transgressions had a place with previous owners, the current owner is nonetheless accountable for the title and all of the associated baggage.
Easements
Access to utilities and shared driveways are two prominent examples of easements, which are rights to utilize someone else’s land. Easements are meant to be publicly recorded, and your title report ought to include a list of them. However, when building something that blocks someone else’s right of way, many owners run into problems with easements.
How may some of these title problems be avoided?
- Before closing, sellers and purchasers should both undertake their house inspections to find any potential problems.
- Before closing, buyers should obtain a survey to compare their understanding of the property.
- To ensure that all necessary circumstances are disclosed, sellers and buyers should be aware of DC’s property disclosure rules (or should engage an expert who is).
- To perform an in-depth title examination, the buyer should use a seasoned title business.
- Finally, get title insurance to cover a variety of other title problems that can arise both before and after closing.
Conclusion
When transferring ownership of a vehicle, a clean title is essential since it guarantees that the vehicle is free of any liens or other obligations. Potential buyers should examine the title for liens or encumbrances, speak with the seller, settle any outstanding debts, transfer the title, and perform a title search to achieve a clean title. To find out more about the history of the car and make sure it’s worth the investment, a vehicle title search is crucial. A clear title is necessary for a simple and trouble-free transfer of ownership and lowers the possibility of legal issues.
