Ohio’s Salvage Problem
Allison Harrison, Allison Harrison Law, LLC
Wendy Rinehart, OIADA
********** MOST RECENT UPDATE ***********
We scored a huge win with the passage of Senate Bill 263 in December 2018 (thanks to our friends at OADA for getting that done!). That statute placed a ban on the BMV using NMVTIS reports/data to brand titles as salvage. This ban is in place until January 1, 2021 while a study group looks at the effect and accuracy of using those reports. This means we’re off to a good start but it’s not over yet. Legislation will be needed to update Ohio laws and rules to ensure titles are processed correctly and consumers and dealers are protected. Please stay tuned for further updates and requests for action.
********** UPDATE ***********
In case you’ve been wondering what’s been happening with the salvage issue…… here’s the scoop.
On August 29, 2018, OIADA, along with three brave dealers, filed suit against the Ohio BMV in the U.S. District Court for the Southern District of Ohio for its practice of using NMVTIS reports to brand motor vehicle titles as salvage. Two weeks later OIADA filed a Motion for a temporary restraining order and temporary injunction to stop the BMV’s practice until the case was resolved.
The Court ordered a hearing on the Motion. Both the OIADA and the Ohio BMV appeared at the hearing on October 1st and 2nd to present its case. OIADA presented two dealer-plaintiffs, a former registrar, and an auction representative as witnesses in support of ending this harmful and illegal policy. The Judge appeared to understand that consumers and dealers were significantly harmed by this policy and no notice was provide whatsoever. The BMV presented only one witness, Registrar Don Petit. The BMV argued that the process of using the NMVTIS reports is a system update and has no effect on private rights.
Parties had until October 17th to submit post-hearing briefs. We are optimistic that the Judge will rule quickly and in our favor but we have no idea how long it will take. In order to keep this process going, we need your help. Any donation you can make to our non-profit trade association will assist in the legal fees incurred to prosecute this case. Donations can be made by calling (614) 863-5800 or YOU CAN DONATE TO THE SALVAGE LEGAL FEES FUND HERE.
********** Original Story ***********
Over the past year, you may have notice something funky happening with your titles. You purchase a clean title vehicle at the auction, sell it to a customer, attempt to transfer the title to the consumer only to learn the vehicle is salvage. In other instances, the vehicle becomes deemed salvage after the consumer pays off his/her loan and applies for a lien-free title. If this situation has happened to you, you are not alone. It is happening all over Ohio.
In July 2017 the BMV updated its computer software to pull new fields from the National Motor Vehicle Title Information System (“NMVTIS”) reports. The new fields show the vehicle’s entire history, including whether the vehicle incurred hail damage, was sold at a salvage-focused auction, or was reported by insurance as a total loss. The BMV is using this information to brand clean title vehicles as salvage. If any of the vehicle’s history is determined, by the sole discretion of the BMV, to be salvage, it is branding the vehicle salvage. This is done without ever looking at, let alone inspecting, the vehicle.
Ohio defines a “salvage motor vehicle” as a vehicle “which is in a wrecked, dismantled, or worn out condition, or unfit for operation as a motor vehicle.” R.C. 4738.01(B). Further, Ohio does not require a title to be branded until “the motor vehicle is dismantled, destroyed, or changed in such a manner that it loses its character as a motor vehicle, or changed in such a manner that it is not the motor vehicle described in the certificate of title.” R.C. 4505.11(A). The vehicle’s the BMV is branding as salvage have been driven on Ohio roadways safely for years. The vehicles are in no way are “unfit for operation” or “changed in such a manner that it is not the motor vehicle described in the certificate of title.” Frequently, the vehicle being branded as salvage is a really nice car!
As you can imagine, the BMV’s new policy is creating nightmare for OIADA members. Once a title is branded as salvage, the vehicle cannot be driven on the roadways. R.C. 4505.11(G). In order to legally operate the vehicle on Ohio’s roadways, the owner must obtain a rebuilt salvage title. R.C. 4505.11. To obtain a rebuilt title, the owner must provide proof of repairs to the Ohio State Highway Patrol. This cannot be done because the vehicle was never damaged while in the possession of the prior owner; the damage occurred years ago and several owners ago. And, unless you have a Salvage Dealer’s License, you are not permitted to resell this vehicle. R.C. 4738.02.
The BMV’s actions are affecting every dealer and consumer in the state of Ohio. It creates doubt that anyone who buys a car in Ohio will receive clean title. It creates significant economic loss by rendering thousands of vehicles valueless.
OIADA does not support the BMV’s positions and is working with key stakeholder to change it. OIADA has meet with the BMV several times in the last year to address this issue. As a result of those meetings, the BMV has refused to make any change to its current policy. OIADA has sent letters to the Governor, Lieutenant Governor, Attorney General, and lawmakers to elicit a change in policy. To date, none of OIADA’s efforts have yielded results. Without the typical avenues available, OIADA has consulted with legal counsel to pursue legal recourse against the BMV. If you are able to help OIADA in the fight to stop the BMV’s actions, please contact OIADA.