We frequently hear from used car buyers dealing with a problem with their vehicle’s title. In some cases, the buyer is surprised to learn that their title is branded as “salvage” or “flood.” In other situations, the buyer never gets the title at all. Here’s a quick guide to these unfortunate situations.
I received my title, but found out that it’s “branded.”
A branded title has a permanent notation on it that the vehicle has a serious defect. Here's a list of the title brands used by the Minnesota Department of Motor Vehicles:
Prior Salvage. This is usually used to indicate that the vehicle has previously been declared a total loss by an insurance company, often because of a prior accident.
Flood. The vehicle has suffered flood or water damage.
Reconstructed. The vehicle has been altered by the removal or substitution of essential parts
Rebuilt. The vehicle has sustained damage in excess of 80% of its cash value and the "Prior Salvage" brand doesn't apply
Lemon Law Vehicle. This usually indicates that the vehicle has been bought back by the manufacturer under the lemon law.
Minnesota law requires that a dealer verbally tell you about the brand during the sales presentation--they aren't required to disclose it in writing. If the dealer fails to do this, they’ve broken the law. Even, probably, if they didn’t know about the title brand.
A related situation is where the previous owner’s title is clean, but your title comes back branded as “salvage.” This occasionally happens because the Minnesota DVS does its own prior accident database search and will brand your title even if the prior title was clean. This creates a grey area, legally speaking, because the title at the time of sale (the prior owner’s title) is clean. This means, probably, that the dealer doesn’t have to disclose anything to you about the vehicle’s title.
I never received a title at all
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. 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. This 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 isn’t 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.
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.
What are my legal rights if I got a branded title or didn’t get a title at all?
In most of these cases, you will have legal claims against the dealer for your damages, which are usually the diminished value of the vehicle. In some cases, you may be entitled to unwind the sale altogether. In most cases, the dealer will have to pay your attorney fees and court costs if your case is successful.
Found out your title is branded? Never got a title at all?
Get a free consult with auto fraud attorney Todd Murray.
Since 2009, Todd has been helping Minnesotans combat fraudulent auto sales by used car dealers. His work has returned hundreds of thousands of dollars to his clients’ pockets and has improved the legal protections for used car buyers throughout the state. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.