The Vermont Title Loophole & How It Works

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The Vermont title loophole, also known as the Vermont registration process, is a method for non-residents to obtain a title for a vehicle that is 15 years old or older using a bill of sale as proof of ownership. Vermont residents are able to use this method as well, but Vermont is the only state to allow non-residents to apply for a title in their state.

How does the Vermont title loophole work?

In Vermont (a non-titling jurisdiction), vehicles 15 years old or older are eligible only to receive a registration. In most US states, an owner cannot apply for a title without having the original title signed over to them. A vehicle’s title and registration are two separate documents. If the prior owner is unable to be found or has lost the title, this can present serious problems in your application process in your state. By using the Vermont title loophole, you can apply for registration in Vermont and use that registration as proof of ownership equivalent to a vehicle title and transfer it to a title in your state.

Requirements for the Vermont title loophole

The vehicle must be operable

To use the Vermont title loophole, you don’t have to ever take your vehicle physically to Vermont. However, this doesn’t mean that you can get a title for any vehicle or parts using this method. The vehicle must meet all of the qualifications of an operable on-road vehicle and cannot be in the NMVTIS database. The VIN verification process is used to assist with this requirement as the verifier can check the VIN against the NMVTIS database upon inspection.

Vermont Registration Tax & Title Application

According to the Vermont Department of Motor Vehicles (DMV), applicants often make mistakes when filling out the VD-119 form for vehicle registration. Many applicants select “New Title” rather than “New Registration” in Section 4 of the form, which is incorrect. Vermont is a non-titling jurisdiction for vehicles 15 years or older, so the title is not required at that time. For vehicles using the Vermont title loophole, the registration is equivalent to a title. We recommend that this form be typed and double-checked for accuracy and completeness before submitting it to the Vermont DMV. Applications that are typed and complete are more likely to be approved and processed quicker than handwritten applications.

Verification of VIN or HIN

A VIN verification is a process whereby an authorized agent physically inspects the vehicle’s Vehicle Identification Number (VIN) to confirm that the VIN on the vehicle matches the VIN on the application. If your vehicle is a motorcycle, then a VIN verification will always be required. A VIN verification can be performed by any state agency such as the state police, a DMV investigator, or another authorized agency. For non-motorcycle applications, we recommend that you include a VIN verification if you are able to do so. Motorcycles will always require VIN verification.

Bill of sale

A bill of sale is a written agreement on the sale of a vehicle. This document proves that you purchased the vehicle from a private seller, third party, or dealership. Your bill of sale does not have to be typed or notarized for the Vermont title loophole. 

Lien release

A vehicle lien release is a document that officially removes the lien on your vehicle title. This document declares that you are free to take action with your vehicle. If your vehicle has a lien, you’ll need to have it released before you are eligible for the Vermont title loophole.

NADA book value

The book value of your vehicle is an estimate of its current market value, which you can use to apply for the Vermont title loophole. The Vermont DMV first recommends using the NADA book value first in their statutes, but not all vehicles will be featured in this book. If your vehicle is not in the NADA book, there are some other comparable places you can find the book value such as Kelly Blue Book and Galves.

The book must be approved by the Vermont DMV and the value you assign your vehicle should be as close to its actual value as possible. The higher the value, the more you will pay in taxes. Attach a copy of the book value to your application. If the value is too high, the Vermont DMV will send you an invoice for the remaining balance. If it’s too low, they may simply agree with the value or may send you a refund depending on the difference in figures.

Calculating sales tax

The amount of sales tax owed on most vehicles is calculated using the clean trade-in book value of your vehicle multiplied by 6%. This might not sound like a high percentage, but if your vehicle’s value is high, the sales tax you owe could be higher than expected. For trucks over 10,100 lbs and for certain vehicles, the taxes are capped at $2,075. Taxes cannot be avoided. Vermont state statutes indicate that the act of simply applying for registration is evidence that you owe them taxes. 

Registration fees

Vermont state vehicle registration fees are $48 for motorcycles and $76 for most vehicles and trucks under 6,000 pounds. Heavier vehicles and some other types of vehicles may be subject to a higher registration fee that can be found here.

The Vermont title loophole, or Vermont registration, is a great way for vehicle owners to get a title for an older vehicle and a bill of sale. Every state recognizes this process as the equivalent of a certificate of title and should have no problem transferring the title to your state. If you own a car and want proof that it belongs to you, you should obtain a certificate of title.

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