Pesky Title Issues

Let’s talk about titles.

A title is the most important thing when it comes to purchasing a moto because it signifies that you actually own the damn thing.

There’s a variety of terms that you should understand first. Let’s go through them.

  1. Title - Denotes ownership of a vehicle.

  2. Lienholder - You didn’t have enough money for a moto. You borrow money from a bank. You get the moto. The bank gets the moto’s title. The bank is the lienholder because they hold ownership rights to the moto, until you have paid them back in full, plus interest.

  3. Lien - can be interpreted as “unpaid dues on a moto” (having a lien on a moto). Whoever has not yet been paid for the moto itself or services on the moto (bank, repairman, individual) has rights to the moto.

  4. Notarized - person A selling his/her moto to person B needs to get the title “notarized.” Person C is a notary, a legal representative who is authorized to ensure certification of documents. Person A, B, and C meet up in a location, and C is a witness to both A and B signing the title - those documents are thus, notarized.

  5. Embossed lien release - fancy schmancy way of saying “a document that the bank gives to the dude or dudette that owes money to said bank telling him/her that they no longer owe money to the bank.”

  6. Notarized power of attorney - legal documents that say you (ya, you), can make decisions on behalf of another person. Example: you got an unsigned title, but you have a notarized power of attorney document signed by you and the seller, thus, you don’t need the seller’s signature anymore. He/she signed over their power to you in the notarized power of attorney document, so now you can act as them and sign the title yourself.

  7. Clean (title) - the moto was not deemed a “total loss” (due to damages) and is not reported to be salvaged (re-built) from used parts.

  8. Clear (title) - the title is without any lien and does not have any other legal claims to its ownership.

The general rule is that if it looks too good to be true, it probably is, unless you know your shit and just came across a really good deal. So, taking those definitions, if you encountered a moto with a lien, the basic principle is that the person has to pay off his/her debt, get the title into his/her name, and legally transfer the title to your name; this necessitates signature and release from the lienholder (if there is one) and the person selling the moto.

The catch usually comes from where he/she is in the process. It’s mostly about:

  1. Does the seller actually own the moto and have the title in his/her name?

  2. Can you transfer that ownership in that one time you see this person?

Best scenario - owner does all the shit him/herself:

  1. Make sure the owner was crystal clear about a non-clear title and that he/she didn’t lie to your face.

  2. If the moto has as lien on it, the owner needs to pay off the loan.

  3. The owner goes to the bank and receives the embossed lien release.

  4. The owner receives the old title (title with the lienholder’s name on it) from the lienholder (bank/financial institution).

  5. The owner takes the embossed lien release and the old title and gets a new title at the DMV; the new title should be clear - no liens, no loans, and in the owner’s name.

  6. The owner calls you back and says he/she has got a clear title. You call the lienholder to make sure the transaction was legit. You meet, the owner signs, you sign, you signed a notarized bill of sale, you take those two documents, and you moto off.

Decent scenario - you go to a bank with the owner and do all the transactions there.

  1. Make sure the owner was crystal clear about a non-clear title and that he/she didn’t lie to your face.

  2. If the moto has as lien on it, the owner needs to pay off the loan.

  3. You meet up with the owner at a bank where you and owner, at whatever agreed price, pay off the moto (either you help him/her pay it off as part of the selling price, or he/she pays it him/herself).

  4. The bank hands over the embossed lien release and the old title.

  5. The owner hands over the embossed lien release, old title, signed bill of sale, and a notarized power of attorney stating that you can sign the new title for him/her and get ownership into your name. 1

  6. Take these four documents and moto off.

Bad things - don’t do these.

  1. Not making sure the owner was crystal clear about a non-clear title.

  2. Not checking for the correct name or names on the title, either in hand or after the owner receives it from the bank.

  3. Just taking the old title and embossed lien release from the owner. (You’ll find out that when you go to the DMV get the new title, the new title will still be in the owner’s name, and you’ll still have to get him/her to sign it … something the owner(s) might not do because they’re long gone. Best to get notarized power of attorney AND a notarized bill of sale.

  4. Paying the owner when the moto is on lien and trusting that the owner will send the title to you from the bank. (No guarantee that he/she will send it over.)

  5. Things can get super dicey if the seller isn’t the owner. Make sure the correct person signs the correct document. Lienholder signs the lienholder part. Owner or owners sign the owner part. Once again, none of this bullshit about “oh this is my son’s/brother’s/half-removed stepfather’s moto.” Fuck that. The owner shows his/her face, or you leave.

  6. Not checking the mileage on the title and the mileage on the moto.

Combinations of documentation you should ALWAYS have when you walk away from a sale.

  1. Clear title with owner’s name, owner’s signatures, correct mileage, and your signature.

  2. Notarized bill of sale.

Or …

  1. Old title with lienholder’s name, lienholder’s signatures, correct mileage, and the owner’s signature.

  2. Notarized bill of sale. 2

  3. Embossed lien release.

  4. Notarized power of attorney.

There are many scenarios that may happen, I’ve only given cursory examples of a few. The safest way is for the owner to do the upfront work in order to get a clear title.

This stuff can be confusing - my knowledge is my own research and experience. Unfortunately, I’m not an expert on all scenarios, so you might run into scenarios where you would have to consult Dr. Google (or a good lawyer friend). Best to not get yourself in a sticky scenario in the first place, so do your research before you put any money down. Oh, and also, this shit varies in every state, so you know, rules …… yadda yadda.

Key points to remember:

  1. You are never the owner until you sign the title that has the owner’s name, owner’s signature, the correct mileage on it, and is released from all liens. Not the old title with the lienholder’s name, not the promise of the owner that he/she will “send” the title to you, not being hasty and leaving only to find out you still need signatures.

  2. Do not pay a goddamn penny until you are crisp and clear on what will happen and what the status of the paperwork (where the title is, what the loans are, does it need a lien release, etc) is. My general rule is that the title hand-off should be within the same day. When payment and title hand-off takes longer than that, things can get dicey.

This is why I don’t deal with titles that have not been cleared. It’s just a fucking hassle.

  1. The power of attorney is necessary because when the bank hands back the old title, it still isn’t in the seller’s name. The seller (now owner) has to get a new title and sign that one in order to release it to you. Because a new title can take weeks to arrive, a notarized power of attorney states you can can sign it for him/her. ↩︎

  2. Technically you don’t have to do this (I didn’t), but you can never be too safe. At the very least, you can print off a standard bill of sale contract off the Internet and ask them to sign it. ↩︎