Title Washing: Understanding & Avoiding Title Floats for Vehicle Sales

Car dealerships often float titles to save money and time.

When a car or truck is sold, the title must be transferred from the original owner to the new owner. The Department of Motor Vehicles oversees title transfers and assesses the taxes and fees associated with changing ownership. If you are buying a car to then flip it for profit, you might not want to pay the taxes and fees, thus increasing your profit. "Floating the title" means you don't acknowledge your ownership for a period of time and transfer directly to the person to whom you sell the car. Floating is not permitted in consumer sales.

Step 1

Ask the auction house selling the car whether they have a float program. Many auction houses offer a float program for a nominal fee, giving you time to sell the vehicle.

Step 2

Obtain the Float Authorization Form from the auction house.

Step 3

Complete the form with the vehicle information and submit the signed paperwork to the auction house with the appropriate fee.

Step 4

Find a buyer for the car and obtain payment before the float period expires after 28 days, or another designed time frame.

Step 5

Complete the title registration in the new owner's name. Deliver the appropriate title transfer to the DMV.

Tip

Auctions and manufacturers can float a title with financier's approval to hold the title for a limited period of time. In most states, someone buying and selling more than five vehicles per year must have a dealer's license.

Warning

Consumers without a dealer licenses are not permitted to float titles, though it does happen. The middle buyer simply doesn't fill in his name on the title transfer and places the last buyer's name in upon resale.