How Missouri Dealers Complete Titles
Completing a Title as a Licensed Missouri Motor Vehicle Dealer
Next I want to show you how to complete a title as a licensed Missouri motor vehicle dealer when you get your dealers license you're going to complete a title differently than you ever have in the past because Missouri law allows dealers to do what is called a reassignment so we're going to be able to buy a vehicle it'll bring that vehicle back to our lot and we sell the vehicle with the same title by doing what we call a reassignment and I want to show you how to do that right now.
Here you see a Missouri title. Now, when you buy vehicles at dealer auctions, they're going to stand in the big long line, and the title clerk will tell you, "Sign here, sign here, sign here." We'll show you exactly how to complete a title because that's just dealers with completing thousands of titles every day. So, what I'm going to do is a little bit different. I want to go through a scenario where we're going to buy a vehicle from an individual, and we're going to bring that vehicle back to our lot and resell it to another individual. Because I do believe there are going to be scenarios where you're buying vehicles directly from an individual. So, I'm going to go through this scenario so you'll know exactly how to complete a title when you're buying a vehicle from an individual and when you're selling the vehicle to another individual. Because a lot of times, I do believe it's going to be just you and the customer, down a drill, so you definitely need to know how to complete the title. Missouri titles have the small tear-off tag at the bottom. The tear-off tag that you see on the Missouri title is so an individual can report the sale of their vehicle to another individual. Well, you're not going to be an individual anymore; you're going to be a dealer, and dealers are required to do sales reports on the dealer portal, which I'm going to show you how to do here in just a little bit. So, that little tear-off tag doesn't really apply to a dealer. It's so an individual can report the sale of that vehicle to another individual. So, whenever you buy a vehicle that still has the tear-off tag, the Department of Revenue would like you to tear that tag off and put it into your records for five years. And I'm going to mail that little tear-off tag to them. Again, when you buy a vehicle that still has a tear-off tag on it, the Department of Revenue just wants you to tear that tag off and put it into your records for five years. You don't mail it in; you just hang on to it. And by the way, when we're buying vehicles at dealer auctions, those tear-off tags have already been removed.
The only legal party that can buy a vehicle and resell it without paying sales tax is going to be you, a licensed motor vehicle dealer. However, there are a lot of, of course, for the dealers, they need to verify the titles. We want to show you what is legal in all states and we call it an open blank or skipped title. The person that has bought this vehicle has asked the previous owner to sign the back, and now they're trying, and they have legally left the purchaser's information blank. And I want to magnify this a little bit so you will be able to identify these blank titles. As you can see here, the person trying to sell this vehicle has asked the previous owner to sign and print their name, but they have legally left all the purchaser's information blank. First title that you see is all over 50 states. The person trying to sell this vehicle wants to buy and sell vehicles without a dealer's license. How do you avoid this title? It's very, very easy. Before you buy a vehicle from an individual, ask the very important question: Is the title in your name? Ask that customer, is the title in your name? If they say yes, that's great, then I have to buy. But more often than not, that customer might say something like, "Well, no, I bought this car from my neighbor a couple of months ago. Please sign the back and you can come on over here and buy it from me." That's the illegal title that I just showed you. So, to ensure that you're buying a vehicle from the legal owner, you must always ensure that you're buying it from the person whose name is clearly printed on the front of the title. If you ask if the customer's name is on the title and they say something like, "I bought it for my brother-in-law, he signed the back and you can come on over here and buy it from me," that's the idea of a legal title. When you're buying the vehicle from an individual, it is imperative that you only buy that vehicle from the person whose name is clearly printed on the front of that title. Once you've established that the person selling the vehicle's name is on the title, let's go make the buy.
So, we're going to complete this title as the purchaser, and my best recommendation for you whenever you're completing a title, just read the title and it will tell you what to do. As you can see here, it says "purchaser's name." From here on out, the Department of Revenue would like you to put your first and last name and your dealership name. So, if you're Mary Smith and you are maybe C News, from here on out, you'll be Mary Smith DBA ABC Motors. Later on, you could have a salesperson completing this for you. They are allowed to put their first and last name and your dealership name. Believe it or not, a lot of times in my classes, I'll have someone ask me if they should just have a salesperson sign their name when completing a title. No, don't ever have a salesperson sign your name. They can sign their own name, but make sure they're doing business as your dealership. The address will be the actual address of where. Then you're going to put the date of the sale, the mileage, and you have to put the model of the vehicle there. And then, since you're the purchaser, we're going to sign it. And I want to bring your attention over to the right: see where it says "seller's signature of all sellers"? That means any person whose name is on the front of the title must sign the back of the title so they have given legal selling permission. So, for example, if you have a husband and wife's name on the front of the title, both of them must sign and print their name on the back so they have both given legal selling permission. Now, I want to bring your attention up to the very top right of the back of the title. See where the sales price information has been left blank? The Department of Revenue allows you, when you're a licensed motor vehicle dealer and you're purchasing a vehicle to resell, you do not have to enter the sales price on the back of the title. And this is why. And just a few moments, I'm going to show you how to sell the vehicle for a profit by completing the next box, which is the reassignment by registered dealer. Well, let's say, for example, you bought this car for $5000 and you write $5000 on the sales price next to your dealership. When you're selling the vehicle in the next box, and let's say we're selling it for $8000 to the person that's buying a vehicle from you, they will look at the very top of the title and they're going to realize that you've just made a $3000 profit off of them, and it makes them very angry, and then they start a dealership right across the street from you. So, when you get your dealer's license and you're buying a vehicle to resell, the Department of Revenue does not require that you write the sales price on the title.
When you're buying a vehicle to resell, we are not normally disclosing for our customers how much profit we just made off of them, so we've made our first buy. It is very important to be aware of this law, and I'm going to read it to you: Missouri law requires every motor vehicle sale to include a written document signed by the buyer and seller stating all the terms of the transaction. This is Missouri's motor vehicle contract law. So what that means is you must have a bill of sale every time you're buying a vehicle, and you must have a bill of sale every time you're selling the vehicle. I'm going to repeat that: you must have a bill of sale every time you're buying a vehicle, and you must have a bill of sale every time you're selling the vehicle.
And I want to show you a sample bill of sale, which you can use right now. I'll show you how to download this bill of sale here in just a few moments if you would like to use it. And it's pretty self-explanatory. You'll need to enter the buyer's name, address, and then if you're the seller, you'll enter your name and address of your dealership along with your dealership name and your dealership number. In the vehicle description box, you're going to put the date of the sale and the make, model, and year of the vehicle, as well as the title number and the vehicle identification number, which you're going to find on the title. If you did take a trade-in, then you can enter the trade-in information, but if you did not enter trade-in, then you can leave the trade-in information blank. Now, we're going to talk about the sales price, and it's very important to be aware, as a licensed motor vehicle dealer, once someone buys a vehicle from you and they've traded another vehicle, the customer gets what's called a trade-in allowance, and they only have to pay sales tax on the difference. I want to repeat that: when a person buys a vehicle from a licensed motor vehicle dealer and they've traded another vehicle, they will have to pay sales tax on the difference. That's called a trade-in allowance. An easy way to remember this: selling price minus trade-in equals the net price, and the net price will determine how much sales tax the customer pays on that motor vehicle.
Once again, sales price minus trade-in equals net price. And I'll show you how to download this PDF in just a moment, and it actually has the automatic math built right into it. Now, if you don't have a trade-in, then your sales price and net price will be exactly the same. But when you have a trade-in, you just enter your sales price and subtract the trade-in, and that will equal your net price. I want you to be very, very aware. I predict that you're going to have customers that are going to ask to write down a lower price on the bill of sale than the actual sales price. What am I talking about? If you write a lower price on the bill of sale, that will allow the customer to pay less sales tax. A few years ago, there was a dealer in Joplin, Missouri, who sold a vehicle and we had a young lady that asked him to write down a lower price on the bill of sale than the true sales price, and we did not think anyone was going to find out about it. Well, this young lady buying this vehicle just happened to be an undercover Missouri Highway Patrol trooper, and they were doing a sting operation on Joplin dealers that day to make sure they were complying with Missouri motor vehicle dealer laws. As soon as the Department of Revenue found out about this fraudulent transaction, they revoked that dealer's license permanently. So that person will never have a dealer's license in Missouri again. I have had customers on a regular shift that have demanded that I write down a lower price on the bill of sale. I've had customers literally tell me if I don't write a lower price on the bill of sale than the true selling price, then they're not going to buy the vehicle. And that's when I put the pen down and walk away. I'm not going to lose my license to save some creepy, unethical customer 50 bucks on their sales tax. So, always make sure that you record the correct information on the bill of sale. It's got to be the true selling price, and remember, sales price minus trade-in equals net price. It will not take a trade-in selling price and the net price will always be the exact same amount.
See the box to the left where it says "reassigned by registered dealer"?
When you get your dealer's license, you can resell the vehicle for profit on the same title. You're now required to mail this title in. As a dealer, you're able to do what's called a reassignment. So, let's say for example a person named Greg Jacobson walks onto your lot and wants to buy this vehicle. Well, you're going to sell it to Greg Jacobson on the first reassignment. Remember, we purchased the vehicle first on the top assignment box. Now you're reselling the vehicle, so in this scenario, Greg Jacobson becomes the purchaser because we're selling it to Greg Jacobson. So, we're going to put your customer's name, address, and date of the sale. You'll put the vehicle model to see that box that says "dealer number of seller." You must be a licensed motor vehicle dealer to reassign a title, so you'll have to put your dealer number in there. And then you're going to have the customer sign it, and then you're going to sign it. And I want to bring your attention over to the sales price. Remember when we were buying the vehicle to resell, we were not required to put the sales price at the top of the title. But when you're reselling the vehicle to this customer, Greg Jacobson, that customer must pay sales tax, so maybe we do write in the sales price. Remember, we're buying a vehicle to resell, you don't have to enter the sales price, but when you're selling to a retail customer, you will enter the sales price. And I want to bring your attention to that trade-in box. If you have not taken a trade-in, you can never leave a trade-in box blank.
You need to write the word "none" or "0". I want to repeat that: if a licensed motor vehicle dealer has not taken the trade-in, or cannot leave the trade-in box blank, you must write "none" or "0", because if you move the trade-in box by unethical customers, will write in a trade-in that didn't even exist in an attempt to lower their sales tax liability. So, writing "none" or "0" if you have not taken a trade-in, and this is exactly how you're going to make money in your new business. Any motor vehicle is just like a stock. You're going to buy it as low as you can and you're going to mark it up and sell it as high as you can. And I've often been asked in my training classes, can we mark it up to blue book value? Can we mark it up to NADA value? I always recommend marking your vehicle as high as you can and be willing to negotiate them down. A lot of times you'll have a customer come in and write a check for the full asking price, or they might only negotiate you down 2 or $300. I'm a big believer that you are taking a financial risk to start this new business, and I believe that you should reap the financial rewards. If your business is successful, there really is no limit on the markup of the vehicle. The only limit on the markup of the vehicle is what that retail customer is willing to pay you on the lot. Since there was no limit on the markup, I'm a big believer that this business you're getting ready to start is the world's greatest business, because there is no limit on the markup. The only limit is what the customer on the lot is willing to pay you for their vehicle.
The form on the screen is called the Missouri Reassignment of Ownership by Registered Dealer form 2447, commonly referred to as a title rider. This form allows you to sell a vehicle one more time with a full title. When would you use a title rider? It would be a common scenario for you to buy a vehicle from a dealer auction on the very last assignment, and when you bring that vehicle onto your lot, a customer might see it and want to buy it immediately. Instead of waiting to get a new title, you can sell that vehicle with a full title one more time using the title rider.
You can also use this form to sell a vehicle from another state that has no reassignment boxes on it whatsoever. Some states do not allow dealers to reassign titles. If you purchase a vehicle from a state that doesn't allow reassignments, you're still able to sell those vehicles one time with this title rider. However, you can only place one title rider into a title. If you have a full title plus this title rider, you cannot resell that vehicle until you get a brand new title. Obtaining a brand new title as a licensed motor vehicle dealer should be relatively easy. Just go to your local license bureau, tell them you're a dealer, and they'll help you apply for a brand new title in the quickest manner possible. As a licensed dealer, you'll receive your title in about four or five days, much faster than if you were not a dealer. It's crucial to avoid mistakes on titles, both for yourself and your customers. The most common mistake is when the buyer accidentally signs in the seller's box, or vice versa. Guide the transaction carefully to prevent these mistakes. Additionally, never cover a mistake with whiteout, as it voids every single title.
The title rider I showed you is a secure document that cannot be downloaded. However, once you get your dealer's license, you can request title riders from the dealer licensing section by visiting missouridealer.com. Scroll down on any page and click on "Missouri Dealer Forms," then select "Missouri Reassignment by Registered Dealer Form 2447" to order your dealer reassignment forms. I strongly encourage you to always have several title riders on hand because there may be scenarios where you buy a vehicle from a dealer auction on the last assignment, and a customer immediately wants to buy it when they see it on your lot. In such cases, you can sell it with a title rider instead of having the customer wait for you to order a new title for the vehicle. A title rider can only be used by a licensed Missouri motor vehicle dealer, and it allows for one additional sale on the full title. You can attach only one title rider per title. Additionally, title riders can be used for Missouri or out-of-state titles, they are issued in books of 50, and are downloadable and orderable as demonstrated earlier.
The possession of titles in Missouri has undergone recent changes. In the past, Missouri law required dealers to possess the title at the time of sale, which could be inconvenient, especially when buying vehicles at dealer auctions where titles may not be immediately available. However, the law has been amended, allowing dealers with a $100,000 dealer surety bond to sell a vehicle immediately upon possession, with the condition that they guarantee to deliver the title to the customer within 30 days. If the title is not delivered within this timeframe, the dealer must repurchase the vehicle. If you have a $50,000 bond or letter of credit, you cannot sell a vehicle until you have possession of the title. Dealers with a $100,000 dealer surety bond can sell a vehicle upon possession but must ensure title delivery within 30 days. It's crucial to adhere to these regulations to avoid license suspension or penalties. Additionally, if selling a vehicle without title possession, Form 5830 must be completed. After completing the training course, you'll receive an automated link to a bond quoting system to obtain a bond quote from various carriers, ensuring compliance with bonding requirements.
Completing the title application form is an essential part of the vehicle sale process in Missouri, especially if you've taken a trade-in. This form is typically completed at the local license bureau. While Missouri law mandates dealers to complete this form when taking a trade-in, some local license bureaus may require it for any dealer-involved transaction. Here's how to complete the title application form: Owner's Information: Fill in the customer's name, address, and other relevant details accurately. Ensure that the customer's name is spelled correctly to avoid any issues with the title. TOD Beneficiary: TOD stands for Transfer on Death beneficiary. Explain to the customer that if they designate a TOD beneficiary and pass away, the vehicle can transfer to the beneficiary without going through probate court or incurring probate taxes. Enter the beneficiary's information if applicable. Vehicle Information: Enter details about the vehicle sold, such as year, make, color, fuel type, and vehicle identification number (VIN). Double-check the VIN for accuracy, as even a single incorrect digit can cause rejection by the computer system. Also, enter the mileage and purchase date. Price and Trade-in: Enter the sale price of the vehicle. If there's a trade-in, enter its value as well. The form will automatically calculate the net price by subtracting the trade-in value from the sale price. Ensure all information on the form is accurate and complete before submission. Mistakes, especially with the VIN or customer's name, can lead to delays or complications in the titling process. Remember, completing this form is crucial for regulatory compliance and ensuring a smooth transaction for both you and the customer.
Taking personal property as a trade-in for vehicles is permitted by law in Missouri, making it unique among states. This means that as a licensed motor vehicle dealer, you have the legal authority to accept items such as TVs, appliances, watches, and even agricultural products like grain, cattle, or horses as trade-ins for vehicles on your lot. While you may not think you'll often utilize this option, it could prove beneficial in certain situations. For example, if a customer is unable to come up with a cash down payment, offering the option to trade personal property could help facilitate the sale. Additionally, in an agricultural state like Missouri, farmers may find it convenient to trade agricultural products for vehicles. However, it's important to ensure that the valuation of the personal property is accurate and not inflated. This is to prevent any manipulation of the trade-in value to reduce sales tax obligations. For instance, you cannot claim that a $500 TV is worth $5000 as a trade-in allowance. Let's consider a hypothetical scenario where an antique rifle is traded in for a vehicle, valued at $1000. In this case, you would need to complete a title application for the trade-in, just as you would for any other trade-in transaction. Remember, while this option may not be commonly utilized, it's important to be aware of it as it can provide flexibility in certain sales situations and cater to the diverse needs of your customers.
I am here to help you
start and run your Missouri Dealership!
Thank you very much, Delus Johnson-Missouri
Dealer Seminars