All You Need to Know about Types of Car Titles
You might be aware that a car title is a state-issued legal document certifying ownership, but the variety of car title types might surprise you. Familiarizing yourself with these different types could prove valuable as a current or prospective car owner, especially if you encounter an unfamiliar title type.
Different types of car titles
There are several types of car titles, broadly categorized into three main types based on their specific indications:
- Ownership status titles: These titles denote legal ownership of the vehicle and may also provide historical ownership information.
- Vehicle condition titles: These titles certify the roadworthiness of the vehicle and its legal status for operation on roads.
- Manufacturer titles: Used by vehicle manufacturers to verify details such as make, model, and VIN, or to clear a vehicle for import or export.
Categorizing titles into these three groups (and their respective subcategories) is useful due to the various legal scenarios a car may undergo during its lifecycle. A vehicle might be manufactured, financed, sold multiple times, and ultimately retired from use, with each stage potentially requiring a distinct type of car title. Understanding whether a title pertains to ownership status, vehicle condition, or manufacturer-related information can be advantageous in navigating these complex scenarios.
Car title examples
There are numerous types of car titles, and although you might not encounter more obscure varieties like an odometer rollback title, having a basic understanding of different titles can still be beneficial:
Ownership status titles
- Clear or “clean” title: This is one of the most common types of titles, indicating that the vehicle is fully owned by the person listed on the title without any outstanding liens. Depending on the state, the lender might hold the physical title until any loans against the vehicle are paid off, or the title status might be managed electronically.
- Bonded title: This type of title is necessary when ownership documents for a vehicle are missing or improperly transferred from a previous owner. To assert legal ownership, you pay a bond or surety to your state’s Department of Motor Vehicles (DMV). This bond protects against claims from other parties asserting ownership. After a designated period without any claims (which varies by state but can be up to five years), the DMV typically replaces the bonded title with a clear title.
- Affidavit title: This refers to a notarized legal document provided by the seller of a property, confirming ownership status and disclosing any legal issues associated with the property and the seller. It shields the buyer from potential legal liabilities linked to the property, such as outstanding liens that the seller must settle before the sale can proceed.
- Memorandum title: This type of title is often temporary and issued by state DMVs when a vehicle is purchased across state lines or financed with an outstanding loan (lien). Once the loan is fully repaid, the buyer can replace the memorandum title with a clear title, which grants complete legal ownership of the vehicle. Procedures for converting a temporary memorandum title to a permanent one can vary among states.
Condition of car titles
- Salvage title: Insurance companies typically label a car with a salvage title when it is deemed totaled from an insurance perspective. A vehicle with a salvage title is generally not permitted to be driven on public roads.
- Rebuilt or reconstructed title: A salvage vehicle that has undergone repairs, rebuilding, or restoration to meet state-mandated roadworthiness standards may receive a rebuilt or reconstructed title.
- Parts-only title: Often a subset of salvage titles, this designation indicates that the vehicle is not suitable for rebuilding and should only be sold for parts.
- Dismantled title: This title is assigned to vehicles missing critical components that render them inoperable. Dismantled titles may signify that the vehicle cannot be restored to roadworthy condition.
- Junk title: Given to vehicles deemed unsafe for public roads due to age, condition, or other reasons, indicating they are not suitable for repair.
- Owner-retained title: Similar to salvage titles, these are issued when an insurance company declares a vehicle a total loss. Unlike salvage titles, the owner retains possession without repairing the vehicle, maintaining active registration for legal road use.
- Flood or water damage title: This title is applied to vehicles that have sustained significant water damage.
- Lemon title: Assigned under lemon law regulations to vehicles repeatedly returned to the dealership or manufacturer for unresolved defects.
- Odometer rollback title: Used when evidence suggests tampering with the vehicle’s odometer to show a lower mileage.
- Certificate of destruction title: Issued by insurance companies after paying a claim for a severely damaged vehicle, indicating it will never be registered again for use on public roads and is slated for destruction.
Manufacturer titles
- Certificate of origin (CO): Also referred to as a manufacturer’s statement of origin, this document certifies the original ownership of a vehicle. The CO is often required by the DMV when titling a new car.
- Export/import titles: These titles are necessary for customs clearance when transporting vehicles across borders for sale or other purposes.
Car title types: More things to know
Besides familiarizing yourself with the types of car titles, there are some terms related to car titles that may be unfamiliar:
- Pink slips: This term, not to be confused with a termination notice at work, colloquially refers to car titles. It originates from the traditional color of paper used for car titles in many states.
- Car title colors: Different states use various colors to indicate different title statuses. For example, while blue titles often denote salvage status in many states, in Texas they signify a clear title instead. Knowing your state’s specific title laws and color conventions can help avoid confusion.
- Electronic Liens and Titles (ELT): Many states are transitioning to electronic systems (ELT) to manage titles and liens. These systems make it easier to check for liens on a used car before purchase.
In Conclusion
As you can see, there are numerous types of car titles, each applicable to different situations you may encounter, whether personally or not. Nevertheless, understanding the fundamentals of various car title types can be beneficial in case you come across any of these examples in the future.