Car dealers must provide title to the vehicles they sell

A particularly awful form of auto fraud is when the dealer sells a vehicle without being able to provide a title. This puts the buyer in a really bad spot. She can't sell the vehicle without the title and can't prove that she owns it if she is stopped by law enforcement of if she needs to get it back after being impounded. Fortunately, every used vehicle sale by a dealer creates a warranty that the vehicle has a good title that is free from liens. This warranty of title arises by law--so it doesn't have to be in writing--and you don't have to prove that the dealer knew about the title problem. The warranty of title can only be excluded by specific language that gives the buyer a reason to know about the title defect. This means that an "as-is" statement will not be sufficient to exclude the warranty of title.

In general, the warranty of title is breached if:

  • The dealer fails to provide title after the sale. This must be more than just a delay by either the dealer and/or DMV in processing the buyer's new title. Most often, a dealer fails to deliver title to the buyer when the title is being held by one of the dealer's unpaid creditors.

  • The vehicle is subject to an undisclosed lien. Most commonly, this is a lien from the prior owner's lender.

  • The vehicle is stolen.

Most courts have found that the warranty of title is not breached if the dealer delivers a branded title. But there may be other claims against the dealer in this situation, especially if the dealer didn't disclose the title brand.

As with most warranty claims, the buyer must give the dealer notice of the breach of warranty of title. If the dealer fails to fix the problem after getting notice, the buyer will have legal claims for breach of the warranty of title. Depending on the circumstances, these claims may require the dealer to pay the buyer's attorney fees.