The Vermont Loophole has officially closed, but the game is unchanged

Well, the fun’s over guys: you’ve probably already heard about this from the usual suspects, but the Vermont DMV loophole is done. Like, really done. We still had an in back a few months ago, but that door has since shut. Even the mighty powerhouse that is Dirt Legal cannot bring it back.

Vermont really was the premier place to get a title or a transferable registration if your vehicle was missing one, or you were potentially having issues in your own state. Jalopnik aptly described the Vermont DMV as “America’s DMV”, but that is now officially done. Like, as in completely done. So, what can you do if you were one of those who needed this service and now you can’t use it?

Let’s take a look at this debacle and see where it stands, and where it can go from here, for all the car enthusiasts and regular drivers out there looking to get on the road. 

What was the Vermont Loophole?

This was a topic I specifically wrote about a lot in the past, with smash hits like “How To Renew Your Vermont Vehicle Registration Online” and “Why Would You Register Your Vehicle in Another State?” being read by thousands of people in the last year alone.

In a nutshell, the Vermont loophole was extremely simple: the Vermont DMV would register your car in their state regardless of whether or not you were a resident. There was no residency requirement at all. Too good to be true, you say? Take a gander at the official Vermont DMV website written by actual Vermonters:

It really was that awesome. The only thing that gave anyone any pause was the fact that it was still a state-run DMV, so you had to know the right wickets to push. This is where Dirl Legal came in. We knew how to make the magic happen, so all you had to do was press a button, sign some paperwork, and wait for your official title, registration, and license plate to show up in the mail. No need to watch a bunch of now-inaccurate YouTube videos giving you potentially misleading information (all of which are now completely wrong, by the way).

And it really was this easy. For one thing, Vermont was one of few states that did not require a title for older vehicles, instead opting for a transferable registration. And this piece of paperwork was viable for all vehicles that were only 15 years or older, so if you were struggling with finding a title for a vehicle you had purchased, or it didn’t have one for it at all, you could request one through the Vermont DMV and get something that you could either keep in Vermont or move to your home state using the transferable registration.

Very cool for car people and anyone in a pickle, and for Vermont’s budget as well.

And the Vermont DMV was cool with that?

That was what made this whole thing so perfect, maybe a little too perfect. Vermont was totally cool with it. For decades – until they weren’t.

So, let’s explore this a little further. Why in the world would they close this loophole? Certainly, a state with such a small population wouldn’t mind the additional tax revenue. And, it’s not like the money going to Vermont from those cars would’ve gone to other states in most cases. But, as we see it, a big part of the problem came in when the big states, namely, Florida, started putting pressure on them to enact change.

As far as anyone can tell, this was a political issue, not a monetary issue.

Why did the Vermont Loophole close?

Not to go back over the same things over and over again, but Vermont had no reason to close this down unless they were feeling political pressure from other states. Like it or not, Vermont is definitely a little brother compared to the much larger Florida, for example.

So, let’s sit back and do something we rarely do around here: speculate.

There might have been pressure from other states

Florida is the only state that we know of, but we can imagine that there are probably other states who got wind of this party and decided it was not in their best interest to allow another state to take a cut of their registration revenue. Even though we know that this revenue was a poultry amount, especially for a state with 20+ million people for example, and that ostensibly many of the vehicles being registered through Vermont were unregisterable anywhere else. (Or were they? More on that later.)

Some of the sources we’ve seen cited have mentioned:

• Stolen vehicles being processed through the Vermont DMV

• Extremely abrasive and rude people trying to register illegal things at the DMVs

• The old favorite of “X vehicle is definitely not street safe” as Vermont famously had no inspection requirements

Well, here’s my take on all that. I dare you to go to any state and not find one single vehicle that doesn’t belong on the road because it’s unsafe. I’m at a campground right now and I saw a truck that was missing its rear window so they had galvanized and corrugated metal over the window. Are you telling me that’s safe? Not at all.

This was a political game in my opinion, and it appears that Vermont simply didn’t want to risk stepping on the toes of much bigger states anymore. And that was surely a hard choice to make, one that impacted Vermont’s revenue significantly based on how many vehicles companies like ours registered through Vermont every year, and how many enterprising individuals did it themselves without anyone else’s help. But it really does seem like the big states put a stop to this whole thing from the outside.

We're looking at you, Florida

Yes, Florida definitely had a hand in this whole thing going south (pun intended and implied). But am I just throwing shade on an otherwise sunny state? Where’s my proof?

This is the original copy of the fraud alert issued by the State of Florida regarding Vermont registrations. This has not been altered at all. As the fraud alert clearly states, Florida is a title state, and any other means of transferring to obtain a title must be dealt with as an “alternate proof” transaction. Of course, this is not just a fraud alert. No, this is a signal. This is a political signal by a big state to a tiny state that they had better knock it off. And if we saw this big of a signal in the public eye, I’m sure other things were said that we were never party to.

Which leaves only one question. Why?

It’s tough to say, really. It might just be a pissing match from the Boss Bureaucrat in Florida, flexing his flab. Or, it might be because of missing revenue, although we hardly believe that is the case; the amount of revenue being missed out on is budget dust. I really think it is all about posturing. 

But whatever the reason is, it happened. 

With Vermont off the table, is there another way?

Nobody can say with a straight face that Vermont wasn’t the best deal on the road if you had a title or registration problem. Thankfully, they weren’t the only option on the road, and from my seat at the table of one of the largest title-related companies in the country, I can confidently tell you there are other ways to get your car, truck, barn find, UTV, or dirt bike on the road without needing Vermont’s help. There’s just one catch, and it doesn’t grow on trees.

Best Option: Montana LLC with a Bonded Title

This isn’t the only option out there, but the other alternatives are much more specific to the vehicle and situation in question. Most people can accomplish the same thing through Montana that was possible through Vermont, it just costs a little more upfront.

We have talked about bonded titles in the past, so make sure to read up on what they are and how they work. 

A bonded title proves that a person owns a vehicle that has a lost or missing title. The DMV will treat the bonded title as the vehicle’s legal title, allowing the owner to register the vehicle.

So, basically, a title bond, or surety bond, must be pulled out against the title at about 1 ½ to two times the value of the vehicle. This does not mean you must fund 1 ½ to 2 times out of pocket; no, you put a downpayment on the bond, and the bond agent covers the cost. It is kind of like a bail bond. Of course, you are in very deep trouble if you don’t keep your end of the bargain.

Of course, if you are ever in a position where you are purchasing a car with known title issues (almost every vehicle purchase has something, to be totally honest), you should run a VIN check first to reveal what you can. Make sure to check out my article on how a simple and cheap VIN check revealed a title issue on a truck I was about to purchase, saving me from a massive headache and a ton of money down the drain. 

With the Montana LLC with a bonded title, you will use a Montana LLC to establish legal residency in the great state of Montana. Once you have the LLC established, we can then hook you up with a bonded title. The beauty of this is that since you have an LLC that owns the vehicle, you are not compelled to ever change the registration to your home state. You can if you really want to, but the LLC owns the vehicle, not you.

In short, you end up with a vehicle registered in Montana without any inspections and without any DMV hassles or headaches. You never even have to go to Montana! Sounds familiar, doesn’t it? Vermont who?

The Dirt Legal Advantage

Dirt Legal has been in the business of getting vehicles back on the road for a long time now, and we have seen the ups and downs more than anyone. Sadly, it seems that more and more states are cracking down on this simple idea of getting a vehicle back on the road. 

And while the loss of Vermont is the biggest change we’ve ever seen in this industry, the impact for the everyman is subtle. You can still get your car back on the road if you have title problems, you’re just trading the familiar cold Northeastern weather for an even colder Rocky Mountain climate. Much has changed, but much has stayed the same.

So don’t panic, car enthusiasts and drivers of the world. Dirt bikers, military vehicle enthusiasts, even RVers and van lifers can all celebrate Montana for the same beautiful freedoms Vermont once offered to the world. We hear there’s more space for all of us there, too.

Check out our vehicle titling services to see how we can get almost anything with wheels on the road through Montana, and if you can’t find the answer there or in our sprawling blog archive, get ahold of us for more information!

Cover image: Wikimedia Commons x Dirt Legal