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LEGAL


Dealers Selling Cars With Title Defects — Te Need for Electronic Titles in Missouri By Keith Thornburg, Vice President and General Counsel


In the fall 2020 issue of The Missouri Banker, I addressed dealers selling cars without a title via a procedure that allows the legal delivery of a vehicle while an application for a duplicate title is pending. Tis process is intended to offer an alternative to the significant delays dealers experience with the state’s Division of Motor Vehicles, which are a symptom of Missouri’s antiquated paper title system.


A recent Missouri Court of Appeals decision, Tequea Fisher vs. H&H Motor Group, LLC, WD No. 83318, illustrates the legal risk associated with vehicle title defects. To summarize, Fisher was unable to license a vehicle because she could not obtain a clear title because of a missing signature from a previous owner. Fisher then accumulated parking fees and fines, incurred storage charges for off-street parking and, worse, was unable to use the vehicle. Although she attempted to return the vehicle to H&H, the dealer refused to undo the transaction, and litigation ensued.


Tree and half years later, Fisher prevailed at trial and in this appeal, with judgement affirmed for $3,258 in actual damages, $32,184 in punitive damages and $13,816 for attorney fees. Te appellate court sent the case back to the trial court with instructions to award additional attorney fees for appeal costs. Electronic titles would eliminate lost titles and reduce processing delays. In the case above, the title was assigned several times (with a defect) before Fisher’s attempt to register the change of ownership. Title assignments are used because the processing of a title application can take weeks. An electronic title system would allow real-time processing, even for the wholesale transactions presented here. Finally, real-time processing would allow for automated quality and security


controls, such as detection of missing signatures and title fraud. Te Missouri Bankers Association has worked with the Missouri Department of Revenue, which includes the DMV, and the Missouri Automobile Dealers Association to secure funding for electronic titles and technology solutions at the DMV. Tere is resistance for appropriating general revenue for the upfront cost of this technology, mostly because of recent shortfalls in the state budget. Implementing a dedicated fee for this purpose also faces resistance.


Generally, motor vehicle fees are directed to the state highway fund rather than the DMV. However, millions of dollars in registration fees and sales tax revenue that would help fund roads are not collected because of inefficiencies and break downs in the paper title system. Investments in automated titling technology will result in increased revenue for the highway fund.


Many states have implemented electronic title systems and automated motor vehicle transactions. Tey operate in real time and have quality controls to capture accurate names and signatures and perform other security checks. Many states also provide interactive customer service kiosks, similar to “virtual tellers” offered by many banks, that enable expanded hours and convenience. Ultimately, successful technology reduces errors, costs and fraud. Missouri could lower the cost to taxpayers while collecting more revenue by improving the capture of lawful fees and taxes.


Next time you talk with your state lawmakers, ask them to consider supporting funding for electronic titles and technology solutions for the DMV.


THE MISSOURI BANKER 9


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