What Happens When a Dealership Sells You a Car Without a Title?

When you buy a new car, you expect to actually become the owner of the vehicle. But far too often, the dealership sells you a car without a title. When that happens, it can create a cascade of problems that leave you without any vehicle at all.

Yes, You Really Do Need the Title to Your Vehicle

A title is the piece of paper that documents who owns a vehicle. Without that piece of paper, you cannot be recognized as the owner of the vehicle. That means you can’t register it, insure it, or take a loan out using it as collateral. Anytime ownership of a vehicle passes from one person (or company) to another, the title must be transferred and registered with the Michigan Secretary of State. The piece of paper must be signed to transfer ownership and travel with the vehicle from owner to owner.

Why Wouldn’t a Dealership Have a Car’s Title?

But sometimes, a dealership comes into possession of a vehicle without a title. They may have accepted a trade-in from a customer who didn’t have the paper title to sign or who failed to pay off the car loan. Maybe they improperly sought a duplicate title to a trade-in vehicle. Or sometimes, a car comes into a used car dealership that had been stolen.

It sounds obvious – a dealership needs to own a car before it can sell it to you. When a dealership in possession of a vehicle, but no title to it, it creates a problem for everyone involved. Dealerships can sometimes try to pass that problem off to their customers rather than let the vehicle sit on their lots.

What Happens When a Dealership Sells You a Car Without a Title?

When a dealership sells you a car without a title can create big problems for you as a used car buyer. Michigan law requires sellers, including dealerships, to have a valid title in their “immediate possession” before listing the car for sale. Stolen vehicles, duplicate titles, and other work-arounds dealerships come up with mean that someone else out there is the technical owner of the vehicle. And that can cause problems for you at the Secretary of State.

Without a properly executed title, you cannot register your vehicle with the Michigan Secretary of State. An unregistered vehicle cannot be legally driven or insured. Essentially, you will have purchased something you cannot use. When that happens, you are entitled to return the vehicle to the dealership and demand that the contract be cancelled. However, if you used a trade-in as part of your purchase, cancelling the contract can create problems of its own.

Cancelling Contracts When Trade-Ins Are Already Resold

In most cases, you won’t know there is a problem with your car’s title until you try to register it with the Secretary of State. Car buyers have 15 days after the sale of the vehicle to get it registered. It is entirely possible that your trade-in will be sold during those two weeks.

When that happens, you will be left in a difficult situation. You can’t drive your new, unregistered vehicle, and you can’t get your trade-in back. As a consumer, you have the right to demand the company give you the fair market value of that trade-in as part of refunding you the value of the bad sale. However, when a dealership isn’t following the law about title transfers, it will often compound the problem by refusing to give you what the car is worth.

That’s why it is important not to wait before registering your vehicle. The time it takes you to get to the Secretary of State gives the dealership the time to make your life difficult. If you discover that your dealership sold you a car without a title, you need to speak to an experienced lemon law attorney right away. At The Liblang Law Firm, P.C., we have decades of experience helping people get what they deserve from dealerships that do them wrong. We can help you return the untitled vehicle, demand that the contract be cancelled, and get your trade-in or its value back.

Dani K. Liblang is a consumer protection lawyer at The Liblang Law Firm, PC, in Birmingham, Michigan. She helps the victims of auto fraud schemes protect their rights and their property. If your car has been repossessed on a dealer’s loan, contact The Liblang Law Firm today for a free consultation.