What Is a Certificate of Title?
Written by : Ray Pierce
Last Updated: 11/26/2023

A quick overview of the topics covered in this article.

What Is a Certificate of Title?

Certificate of title

A title certificate demonstrates who is legally in charge of a piece of property or other assets. The DMV and the title insurance company mainly issue it, and it is valid for only one year. This is mainly a piece of evidence or confirmation that a person owns a piece of land, a car, or other property. Before issuing a certificate of title, a title insurance firm investigates to determine the legal owner of an asset or personal property.

What Is a Title Certificate?

A certificate of title is a type of legal document mainly issued by a state governor or a municipality. It proves who the property’s legitimate owner or owners are. It usually relates to real estate or property and evidence of an owner’s ownership rights. The average cost of a title search report is between 0.05% and 0.15% of the property’s total value.

These documents, also known as pink slips, are given for various vehicles, including cars, buses, motorcycles, motorhomes, trailers, trucks, airplanes, and boats. The specified state agency provides these to identify the owner of the concerned vehicle. The owner’s name, address, and vehicle identification number are all listed on a car’s certificate of title. In addition, the certificate of title also contains a list of any liens or unpaid loans.

Once the buyer and seller complete their final payment procedure, the buyer becomes the property’s new owner. After that, a municipality or government authority issues a title certificate in the buyer’s name.

This title does not always guarantee that personal or real property is free from liens, encumbrances, or easements, which is important to remember. Even though liens and other encumbrances are typically stored in public records documents, sometimes these are not stored properly. Another issue is that some property owners don’t disclose all of the liens and encumbrances on their land and vehicle title certificates.

Why is a Title Certificate Important?

Title certificates are essential in order to establish ownership of a piece of property. Selling your vehicle or home or persuading a lender to provide you with a loan will be difficult if you cannot prove that you are genuinely and legally the property owner.

Liens, unpaid taxes, and other outstanding debts on the property will all be listed on the certificate of title. A free and clear title enables you to demonstrate that you are the rightful owner of the property, allowing you complete power over how to utilize it or pass it to another party. The majority of buyers will want proof of property ownership, such as a title certificate, before they will agree to finance a car purchase from you. The Certificate of Title is especially significant when someone wants to sell their junk car because if they don’t have any certificate of title, no one will not be interested in buying it.

In junk car transactions, certificates of title are especially important. If the insurance company of the title company issues a title certificate for the vehicle, the certification conveys the title company’s view that the seller is the property’s legitimate owner and verifies the car’s condition.

What Is a Car’s Certificate of Title?

A document that establishes ownership of a car is called the car’s certificate of title. Without it, anyone can not prove that they are the rightful vehicle owner. When the vehicle is being sold, the state’s DMV or transportation department issues the certificate.

Depending on the state where the title was granted, the information on a car title differs a little. But it must always include all the 17-character Vehicle identification numbers. The titles also may contain information such as the title number, the vehicle’s weight, the number of chambers in the engine, its engine’s serial number, the fuel type, and the license plate information.

A dealer will almost always take care of the entire process of obtaining the ownership and the registrations and license plate when you buy a new vehicle from them. But if you acquire a car from a private seller, you will be in charge of doing this process on your own. Furthermore, the loan company will normally hold onto the title certificate till the debt is fully repaid if you take out a car loan. Sometimes the title certificate will still have the lender’s name on it even after the title paper has been given to the buyer, who is now in charge of the car.

Title Certificate

Different Car Title Types

There are various forms of car titles available now. Depending on the specifics of your car, you may receive a different kind of title. However, you should attempt to get a vehicle with a clear title. This is due to the fact that these vehicle has never been in an accident that required extensive repairs or suffered any serious damage. Here is a list of the various automobile title types:

Clear Title

If an automobile hasn’t been seriously damaged or had no liens put against it, a clear title will be given to the car’s owner. This kind of car title is typically the most desirable and occasionally the only kind that qualifies for auto finance.

Lienholder Title

In most states, a memorandum title, commonly referred to as a lienholder title, is given for vehicles that have an unpaid loan. You will be given a lienholder title if you have financed your vehicle. Once the loan has been repaid, you will receive a “clean” title.

Bonded Title

This title is issued to vehicles without ownership documentation. The new owner is given a security bond equating to the vehicle’s worth. This gives the owner a surety that they will be economically secure against any potential ownership claims in the future. The “Bonded” stamp will remain on the title for three to five years.

Salvage Title

Vehicles with salvage titles are those cars that have been stolen, significantly repaired, or have several damages that decrease the 60% of the car’s total value. A car with a salvaged title can be repaired to be fit to drive. But it will never be able to obtain a clear title. However, by maintaining extremely costly and through arduous procedures, you might be able to restore the automobile to obtain a clean title. Still, these techniques will cost much more than the car is worth.

If a car gets rebuilt title, it has undoubtedly undergone considerable repairs to get it back to full functionality. Normally, an automobile with something like a rebuilt title can be registered for use on public roads. Although, an inspection might be required to ensure it is safe to drive.

Junk Title

After being picked up by a junkyard, a car’s title will become a junk title. It is later demolished or sold for components. A title that is nearly permanent and difficult to erase is referred to as a junk title. Getting rid of the junk title status can be difficult because it requires a complete reconstruction. For customs clearance, title papers will probably be required for an exported car. Acquiring a clear title might not be possible if the car is not disclosed at the customs exit.

Import Title

For a car to pass through customs and be imported into the US, it needs a valid title. This rule does not apply if the vehicle previously had a title in the United States. In addition, all automobiles made outside of the United States that were not designed or promoted for use in the United States must be certified as safe and authorized for use on American roads.

Benefits of Having a Title Certificate for Car

There are a lot of benefits to having a car title. Because this title is the main proof that you own this car. If you need some urgent money and you don’t have it, using this title, you can mortgage your car to the bank or other financial companies. But, if you don’t have it, they won’t agree to deal with this.

Whenever you want to sell your car, the buyer will be asked for your title certificate. In this specific circumstance, having a title will make it much simpler for you to sell your vehicle. A car title also helps you to change the ownership of the car.

Final Verdict

You must adhere to a protocol when purchasing real or personal property and other assets. It also holds true if you purchase a vehicle from its previous owner. This procedure includes getting a certificate of title as evidence. This proves that the buyer has the authority to sell the asset to you. To safeguard yourself from potential losses, it is crucial to comprehend how an ownership certificate functions.

A title certificate represents the rightful or genuine owner of a piece of property or other assets. So, before making a deal with your seller, you must check their certificate of title to prevent any problems. You can also go to Zippy Cash for Cars if you want to get some incredible bargains on vehicles that still have original titles or even cars without any titles!

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Written by : Ray Pierce

Ray Pierce founded Zippy Cash for Cars in 2001 and has been in the automotive industry buying cars ever since. Starting off with 2 employees, Ray is proud to now have over 50 employees buying cars coast to coast.