Title Trouble

“Legal Files” recently received a call from a distressed longtime friend and client. “Mark” had moved to Arizona and tried to register his 1972 Ferrari Daytona. Mark had owned the car for many years, and presented his clear title issued by his former state. To his surprise, the Arizona DMV clerk would not register the Daytona because it had been reported stolen in 2007.

Mark was incredulous and asked for proof. The clerk advised that a check of the National Motor Vehicle Title Information System (NMVTIS) database showed that a “Williamson County Sheriff” had reported the vehicle theft and assigned a case number to it. That was all the information that was available.

From bad to worse

Exasperated, Mark sought help from a local title agent, who started digging. He found there was a Williamson County in Tennessee, one in Illinois, another in Kansas, and one in California. Oh, and also Texas. Armed with only the case number, the agent started making calls. He eventually determined it was the Texas county they were looking for, but the sheriff’s office there knew nothing about a stolen Ferrari.

The point of confusion is that Mark’s Daytona was titled using its five-digit chassis number, which was how Ferrari identified its cars in the early 1970s. Williamson County dug into its archived records and located a 1967 Jeep that had been reported stolen by the Texas DMV, which also carried the same serial number. But that vehicle did not show up in the NMVTIS report. Then the sheriff found its original report, which showed a stolen farm trailer with, again, the same serial number. The trailer manufacturer’s name had been abbreviated on the report. Apparently, no one knew what the abbreviation stood for, so they must have just ignored it.

The title agent went back to the Arizona DMV with this new information, to no avail. The DMV insisted that it was unable to ignore or modify the NMVTIS report, and Mark would have to get NMVTIS to correct its database. When he contacted NMVTIS, he was told that he would have to get the Williamson County Sheriff to correct its report.

Franz Kafka would have loved the response: The sheriff couldn’t change anything because, aside from this all being ancient history, it had done nothing wrong. It properly reported the trailer stolen, including the correct serial number, and what NMVTIS or the Arizona DMV did with the information wasn’t the sheriff’s responsibility.

Designed to help

NMVTIS is the brainchild of the U.S. Department of Justice. In its words, NMVTIS is “an electronic data system designed to prevent stolen vehicles from being introduced into interstate commerce, reduce the use of stolen vehicles being used for illicit purposes, and protect consumers from title fraud and purchase of unsafe salvage vehicles.”

Under federal law, all insurance carriers, auto recyclers, junk yards and salvage yards are required to report to NMVTIS on a regular basis. Under the federal Anti Car Theft Act, state DMV participation is required as of 2010, but currently only 44 states are in compliance. Arizona is one of the most recent to participate. Those that do, make their vehicle databases available to NMVTIS, which states that it currently holds about 88% of the U.S. DMV data.

As you might have gathered, NMVTIS is not particularly consumer friendly. To start, a DMV is not allowed to give you a copy of the NMVTIS report on your car. Rather, you can only get a brief summary. Consumers can’t access the NMVTIS database directly but must go through an intermediary. The NMVTIS website identifies 10 approved data providers for consumers. I tried one at random, which couldn’t search without a 17-digit VIN. A second one didn’t instill much confidence but wanted $3.50 to give it a try. Companies such as CARFAX, Experian and DMVdesk are not authorized to offer NMVTIS information to consumers and can only provide such information to car dealers.

Garbage in, garbage out

Standardized VINs with 17 digits became the norm in 1981, with each manufactured vehicle getting a unique identifying number. For these cars, which don’t have numerical overlap, the NMVTIS database can work well. But earlier cars can be troublesome. Prior to the advent of the 17-digit VIN, cars were typically just assigned chassis numbers by their manufacturers. These were often only five digits, as many car manufacturers weren’t building more than 99,999 cars. State DMVs had little choice but to use chassis numbers as “serial numbers.” When cars lacked even those, many cars were titled using their engine numbers.

Automobile manufacturers weren’t the only ones doing this. Tractors, trailers, farm equipment and other sorts of things needed serial numbers, and many of these were also five digits. This data now shows up in computer databases, without any guarantee of accuracy.

NMVTIS is a noble idea — but you know what is paved with good intentions. It certainly needs a better error-correction system. Right now, everyone just points the finger at everyone else. Mark asked if we could sue somebody, but each player in this soap opera could honestly say it did nothing wrong and were just passing on information provided by others. You would need to get all of them in the same courtroom, which would be difficult. It would require filing in federal court, but in which federal court could you get jurisdiction over both the Arizona DMV and the Williamson County Sheriff? How much would it cost?

Fortunately, Mark’s title agent was able to get the folks at the Arizona DMV almost as frustrated as Mark was. They were persuaded to ignore the NMVTIS report and titled the Ferrari with its correct serial number. While this solved the immediate problem, Mark justifiably worries that if he sells the Daytona, the buyer will run into the same NMVTIS report. This is obviously a matter that he should disclose.

Round two

Just as I was thinking this might be a fluke, I got a call from another client. He had purchased a collector car from a out-of-state dealer who gave him the consignor’s clean title. But when the buyer took the car to his home state’s DMV, he was told he could only get a reconstructed title because the car had been reported as having been salvaged. The current title said no such thing, and the dealer had no idea what the problem could be.

It seemed obvious that NMVTIS was once again the culprit. This was a driver-caliber example, so unwinding the deal and looking for another car was an acceptable solution. But what about the seller? Had he done anything wrong? He had a clean title, and there was no evidence that he knew anything about the salvage report — or that the report was even accurate. Most likely, the buyer could have titled the car in the same state that had issued the current title without any hang-up, except that he doesn’t live there. If the seller resisted taking the car back, forcing him to do so would be expensive. It might even require proving that the car had been salvaged, which no one believed to actually be the case.

Faced with these uncertain options, the buyer went back to his local DMV. A more thorough explanation of the NMVTIS problem piqued the interest of the clerk, who dug deeper. It turned out that the salvage report had transposed one of the digits of that car’s VIN. With that discovery, the buyer was able to get a clean title in his home state.

Be wary

NMVTIS is here to stay. Despite its wrinkles, it is a good tool and works effectively for the vast majority of cars that carry 17-digit VINs — at least so long as there are no data-input errors. Collector cars with five-digit VINs are a tiny fraction of the automobile population, so these situations are easily dismissed as collateral damage. But, to us, these are real problems that can be thorny to solve.

If you are going to buy a collector car with an older, non-standard VIN, it would make sense to have someone run it through the NMVTIS database before you cut a deal. Learning about a titling problem before you buy the car makes it the seller’s problem to correct, which is clearly better than it becoming yours afterwards. ♦

John Draneas is an attorney in Oregon and has been SCM’s “Legal Files” columnist since 2003. His recently published book The Best of Legal Files can be purchased on our website. John can be contacted at [email protected]. His comments are general in nature and are not intended to substitute for consultation with an attorney.