Restored Salvage Titles


A Salvage Vehicle Title Can Sometimes Be Sold With Disclosure if the Vehicle Is at Least 6 Years Old

Interviewer: How often do you see salvaged title cars being passed off as clear title cars?

Andrew Campbell:  Quite frequently. Here’s the problem in Michigan.  Our laws allow a salvage title vehicle be sold without disclosing its salvage title status if it’s more than six model years old.

So, let’s say it is 2017 and you are looking for a 2011 vehicle. If you buy that vehicle, the dealer doesn’t have to tell a consumer that it is salvage title UNLESS the vehicle came from another state and was a salvage title or should have been a salvage title vehicle.

Most used car dealers don’t know and don’t follow this rule.  They think that ALL cars six model years or older do not need any type of disclosure but that is only for vehicles that had accidents or issues in Michigan.

The internet has made committing fraud so much easier for scam dealers. This is because everyone now has the ability to participate in online auctions.

There are dealers out there that exclusively buy vehicles from insurance auctions. These vehicles have all been either stolen or damaged in accidents or by weather.

Now all of the vehicles are not necessarily damaged to the extent that they must be designated as “salvage title”

If the accident or damage occurs in Michigan and the vehicle is more than 6 years then the status does not have to be revealed. Instead, the vehicle can be sold with a clear title.

So these dealers know this law but tend to misapply it because they forget that vehicles that come in from out-of-state that are titled as salvage have to have that designation properly transferred to Michigan.

These dealers then perform repairs (usually illegally unless they are properly licensed) on the vehicle. This creates another potential reason to sue a dealer.

This is because Michigan requires different levels of licensing for different types of vehicle repair. If the dealer is not even licensed under the Motor Vehicle Facility Repair Act then it cannot conduct any repairs with limited exceptions.

I recommend every single person who has bought a vehicle in Michigan to get a full and complete VIN history check.

Here is a service that does it for free http://www.vehiclehistory.com

If you run a vehicle history report and see 1) it titled in the name of an insurance, 2) titled in the name of a repair facility, or 3) sold at auction in states outside of Michigan you might want to think twice about your purchase.

How washing a title can allow a crook to hide a vehicle’s history

Say its 2013 and you’re looking at buying a 2010 model and it’s a salvaged title that has been washed or cleaned in some way. If that vehicle is not disclosed to you as salvage then you are entitled to sue that party (and the holder of the consumer contract).

That constitutes fraud or innocent misrepresentation.

By actionable I mean you have a claim you can assert against the dealer.and you’re looking at three times the value of the vehicle you bought as your damages.

When I say a title has been “washed” I mean that a process was followed to allow a dealer to illegally exchange a non-salvage title with a salvage title.

Typically this is done by transferring the car across state lines. States do not have uniform laws or systems to designate or brand a vehicle title. Instead

Instead, states utilize about thirty different terms and another thirty abbreviations to indicate a salvage title status.

So the same designation may have different meanings in different states.

So titles can be washed by merely transferring the title across state lines due to the different systems and non-uniform standards, designations, and laws.

In fact, three states, New York, Alabama, and Nevada allow issuance of certificates of title to owners that merely possess a bill of sale but not a title.

So this means that some companies can get titles for older vehicles even if the vehicle is not present in the state. So if you run a vehicle history report such as the one at http://www.vehiclehistory.com and see that your vehicle was title in New York, Alabama or Nevada that is potentially a red flag.

Another way to wash titles is to simply order a duplicate title. The title might come back clean. So if you see a duplicate title having been issued that is another potential issue.

But just because you see a duplicate title having been issued does not necessarily mean fraud or wrongdoing has occurred.

Another very important thing to look for is whether an insurance company or repair facility ever took ownership of the vehicle. That is a huge red flag.

If you see either in the chain of title that means that the vehicle was in a bad accident or had some serious issue arise.

You should immediately conduct a full title history report from your state. Doing that will likely expose other parties in the chain of title.

You can even search for previous owners of the vehicle and send them letters requesting information about the vehicle.

Can You Convert a Salvage Title?

Interviewer: Can you restore a title from a salvage status to a clear status if you make certain repairs?

Andrew Campbell:  Sure you can do that. You just have to find dealers that specialize in these types of vehicles. Michigan requires certain designations for dealers.

There are actually special police officers employed that will inspect the vehicle to make sure it’s roadworthy.

Keep in mind, though, that these officers are not making a determination that the vehicle is safe. They are simply there to verify that new parts were used and to verify that the vehicle identification number (VIN) is accurate on the vehicle.

Each car company has the VIN number stamped on the windshield, typically, right near the dashboard.  But the VIN number is also secretly stamped on two or three other areas of the car.

But the VIN number is also secretly stamped on two or three other areas of the car.

The Police Have Specially Trained Officers to Inspect Salvage Cars

The areas where they stamp them are top secret.  Only the manufacturer and the police know.

However, the scammers will know as well because they can disassemble all these cars and try to look for the VIN number on some random spare part.

But it’s still pretty hard to find all the VIN numbers on all the different cars out there.

Interviewer: Do you ever encounter cases like that?  Or is that pretty rare?

Andrew Campbell: Salvage title vehicle cases are fairly rare.  In many of these cases, you’ll have a repair facility that’s been in on the scam. Don’t forget, insurance companies do have financial incentives to cheat the system.

When you total out a vehicle certain rules must be applied. In some states an insurance company might only have to state that it would cost more to repair the vehicle than it was worth to label it as salvage., insurance companies have to comply with a certain test,

Remember, insurance companies want to maximize profit and an obvious way to do this is to sell a vehicle to a dealer without disclosing the proper status.

When a vehicle is designated as salvage, the value drops dramatically. Remember, insurance companies will not always insure a vehicle that is designated salvage title because the structural integrity might have been weakened in an accident.

That increases the risk to the insurance company.

So a buyer will not want to give a lot of money to purchase a salvage title vehicle. Dealers know this and some want to take advantage. The get a vehicle at 15% of retail value and can make a lot of money selling it just for 50% of its value.

If you can prove that the insurance company manipulated the valuation required to be made in violation of state then you can always go after the insurance companies and perhaps even the repair facilities as well.

Sometimes insurance companies will sell the vehicle to a repair facility. The repair facility will have to ensure they are properly licensed and that the mechanics they employ are licensed to conduct those kind of repairs.

A person that has been harmed in this way can pursue a number of different damages. The minimum would be a return of all funds paid for the vehicle.

In some situations pursuing the dealer for additional damages is also recommended.

 

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