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Slow Title or No Title When Selling a Car or at Trade-In

I just picked up a great car at auction and have a customer that is really interested in buying today.  Should I sell the car even though I have not received the title to the vehicle? The short answer is: don't do it! The Texas Department of Motor Vehicles has spoken when selling a vehicle without a title.....proceed at your own risk. There may be a $10,000 administrative penalty waiting for you if you choose to take a chance and hope the title shows up in the mail by the time the customer drives off the lot (and the title does not have a recorded lien). Dealers need to be extremely aware of the 30-day deadline to transfer a title (or 45 if seller financed).  Unfortunately, many dealers often exceed the allowable timeframes to register a vehicle. Remember that vehicle registrations timeframes are routinely audited by the Texas Department of Motor vehicles and any anomalies or complaints may end up as significant penalties.
In addition to vehicle sales, dealers should also take precaution when accepting a vehicle on trade in and make sure that the title is valid, clean, and without encumbrances or liens. Dealers need to keep abreast of the various laws and the changes that may occur by attending seminars and reading publications of the Texas Independent Automobile Dealers Association.
 
Curious about the exact language that could trigger DMV enforcement action or license revocation? See below:
 
The Texas Transportation Code. The Transportation Code is a large set oflaws involving everything from motor carriers, driver's licensing and traffic signals to titling of vehicles. The dealer law that the Motor Vehicle Division administers is Chapter 503. In this chapter, you will find the dealer licensing requirements and laws regarding dealer plates and temporary tags. Fines under this chapter can run from $50 to $5,000 if pled under the criminal penalty portion in §503.094, in addition to a civil penalty of $50 to $1000. However, for more serious violations of the Transportation Code, Section 2301.801 of the Texas Occupations Code allows a civil penalty of up to $10,000 for violations of §503.038(a) of the Transportation Code.
 
Section 503.038.  CANCELLATION OF GENERAL DISTINGUISHING NUMBER. 
 
(a)  The department may cancel a dealer's general distinguishing number if the dealer:
 
(1)  falsifies or forges a title document, including an affidavit making application for a certified copy of a title;
 
(2)  files a false or forged tax document, including a sales tax affidavit;
 
(3)  fails to take assignment of any basic evidence of ownership, including a certificate of title or manufacturer's certificate, for a vehicle the dealer acquires;
 
(4)  fails to assign any basic evidence of ownership, including a certificate of title or manufacturer's certificate, for a vehicle the dealer sells;
 
(5)  uses or permits the use of a metal dealer's license plate or a dealer's temporary tag on a vehicle that the dealer does not own or control or that is not in stock and offered for sale;
 
(6)  makes a material misrepresentation in an application or other information filed with the department;
 
(7)  fails to maintain the qualifications for a general distinguishing number;
 
(8)  fails to provide to the department within 30 days after the date of demand by the department satisfactory and reasonable evidence that the person is regularly and actively engaged in business as a wholesale or retail dealer;
 
(9)  has been licensed for at least 12 months and has not assigned at least five vehicles during the previous 12-month period;
 
(10)  has failed to demonstrate compliance with Sections 23.12, 23.121, and 23.122, Tax Code;
 
(11)  uses or allows the use of the dealer's general distinguishing number or the location for which the general distinguishing number is issued to avoid the requirements of this chapter;
 
(12)  misuses or allows the misuse of a temporary tag authorized under this chapter;
 
(13)  refuses to show on a buyer's temporary tag the date of sale or other reasonable information required by the department; or
 
(14)  otherwise violates this chapter or a rule adopted under this chapter.
 
(b)  The department shall cancel a dealer's general distinguishing number if the dealer obtains the number by submitting false or misleading information.
 
(c)  A person whose general distinguishing number is canceled under this chapter shall surrender to a representative of the department each license, license plate, temporary tag, sticker, and receipt issued under this chapter not later than the 10th day after the date the general distinguishing number is canceled.  The department shall direct any peace officer to secure and return to the department any plate, tag, sticker, or receipt of a person who does not comply with this subsection.
 
(d)  A person whose general distinguishing number is canceled automatically loses any benefits and privileges afforded under Chapter 501 to the person as a dealer.
 
Texas Occupations Code. The Texas Occupations Code (formerly the Texas Motor Vehicle Commission Code) historically has regulated the relationship between franchised dealers and their manufacturers. Since the Motor Vehicle Division acquired jurisdiction of the independent dealers and the general dealer law, the Occupations Code has evolved to also include independent dealers and is applied in transactions involving used vehicles. Leasing of vehicles and the licensing of Lessors and lessees is found in this Code, as is the direction to regulate advertising. Fines under the Occupations Code can range as high as $10,000 per violation, per day, of a continuing violation.
 
 
The DMV Rules. All the rules adopted by administrative agencies in Texas are compiled in a set of law books known as the Texas Administrative Code (TAC). All rules adopted by the Texas Department of Motor Vehicle Board along with the rules promulgated to administer Transportation Code Chapter 503 are found in Title 43, Chapter 215 of the TAC. These rules detail the requirements of getting a license, premises requirements and some general operation guidelines. They also set out under what circumstances metal plates and tags may be used and how to fill out temporary tags.
 
 
 
 

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