Can a Used Dealer Sell a Car Without a Title?

Most used car sales transactions go by in a straightforward manner and without a hitch. You find a car you like, arrange financing, sign a bill of sale, pay for the car and then you receive the title. But, in some cases, problems may arise if you haven't received the title from the dealership. Issues regarding the car title can cause serious complications when it comes to registering the car and completing the sale legally.

A used car dealership is commonly a fast-paced operation. As is the case with any company that sells tangible goods, one of the dealership's main goals is to sell off inventory as soon as possible before it ages. Used car dealers commonly get their cars from private sellers, trade-ins, auctions and rental car agencies in some cases. These dealers sometimes also take shortcuts to speed along the process of securing and selling their cars that could cause complications for the buyer.

A used dealer isn't supposed to sell a car without having the title in possession. In fact, in most states, it's unlawful to do so. Until the dealer has the title, issued in the dealership's name, the company doesn't officially own the vehicle. Someone who doesn't have legal ownership over a piece of property doesn't yet have authorization to enter into an agreement for its sale, in this case, the car's bill of sale.

Though a used car dealer isn't technically supposed to sell a car without the title, it does happen. In some cases, a dealer simply takes possession of the car and displays it on the selling lot even though they're still waiting for the title to receive the title in the dealership's name.

After buying the car, whether it is from an auction or a rental car agency, the state department of motor vehicles must register the title to the dealer and send an updated title for the car. This could take weeks. Also, in some cases, the title gets lost in transit on its way to the dealership.

Although the lack of a title does not mean that the dealership is attempting to defraud you, and there are legitimate reasons why the dealership may not be in possession of title to the car, it is prudent to be leery of paying for a vehicle when its title isn't present.

If you find yourself in a situation where bought a used car from a dealer with no title, the first step is to stay in touch with your salesperson. It is the dealership's responsibility to resolve this matter by contacting the department of motor vehicle and seller. If the temporary tags expire on the car you technically cannot drive – the dealer can extend the temporary registration. In some states, the department of motor vehicles may accept what a certificate of origin, in lieu of the title to allow you to register the vehicle as the title paperwork is processed.

If your efforts to get the title from the dealership and register the car are unsuccessful after many attempts, or the dealership never sent registration, file a complaint with your state's department of motor vehicles and possibly seek a refund. You may also be able to sue the dealership for your inconveniences related to the transaction, especially if you've made payments on a car loan, but cannot drive the vehicle. Consult with a lawyer regarding your recovery options in an extreme case.