Alabama State Title Processing Procedures

1. What form of title must an insurer obtain in connection with the sale of a vehicle that has been acquired through the settlement of a claim?
2. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title (aka “Clean Title”)?
3. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title with the legend “Salvage Title”?
4. What documents must an insurer provide to Copart in order to sell a vehicle on Certificate of Title with the legend “Salvage Title – Parts-Only – NonRebuildable”?
5. What documents must an insurer provide to Copart in order to sell a recovered theft vehicle recovered substantially intact with no substantial damage, where title is still in the name of the insured?
6. What steps must an insurer take in Alabama to process an owner-retained vehicle?
7. What legal duties are imposed upon a lienholder following satisfaction of the lien?

1. What form of title must an insurer obtain in connection with the sale of a vehicle that has been acquired through the settlement of a claim?
   
   Alabama Code § 32-8-87 provides that:
   
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   2. When the frame or engine is removed from a motor vehicle and not immediately replaced by another frame or engine, or when an insurance company has paid money or made other monetary settlement as compensation for a total loss of any motor vehicle, the motor vehicle shall be considered to be salvage. The owner of every motor vehicle in which total loss or salvage has occurred shall, within 72 hours after the total loss or salvage occurs, make application for a salvage certificate of title and forward to the department the certificate of origin or certificate of title to the motor vehicle, whereupon the department shall process the certificate of origin or certificate of title in a manner prescribed by law or regulation. An insurance company which pays money or makes other monetary settlement as compensation for total loss of a motor vehicle shall at the time of payment or monetary settlement obtain the vehicle's certificate of origin or certificate of title and, as soon as practicable after receiving them, shall forward them along with their application for a salvage certificate, to the department for processing. In the event the payment or monetary settlement was made because of the theft of the vehicle, which shall be considered a total loss as defined in this section, the insurance company shall forward the vehicle's properly assigned certificate of origin or certificate of title as provided herein, to the department as soon as practicable after the vehicle is recovered. When a stolen motor vehicle has been reported to the department in compliance with this section and is later recovered, and for which a salvage certificate has been issued, the owner recorded on the salvage certificate shall assign that certificate to the purchaser. A person who violates this subsection shall, upon conviction, be guilty of a Class C is demeanor and shall be punishable as required by law.
   3. If an insurance company acquires a motor vehicle in settlement of an insurance claim and holds the vehicle for resale and procures the certificate of origin or certificate of title from the owner or lienholder within 15 days after delivery of the vehicle to the insurance company, and if the vehicle was not a total loss as defined by this section, the insurance company need not send the certificate of origin or certificate of title to the department but, upon transferring the vehicle to another person, other than by the creation of a security interest, the insurance company shall complete an affidavit of acquisition and disposition of the motor vehicle on a form prescribed by the department and deliver the certificate of origin or certificate of title, affidavit, and any other documents required by the department to the transferee at the time of delivery of the motor vehicle.
   4. For the purposes of this section, a total loss shall occur when an insurance company or any other person pays or makes other monetary settlement to a person when a vehicle is damaged and the damage to the vehicle is greater than or equal to 75 percent of the fair retail value of the vehicle prior to damage as set forth in a current edition of a nationally recognized compilation of retail values, including automated data bases, as approved by the department. The compensation for total loss as defined in this subsection shall not include payments by an insurer or other person for medical care, bodily injury, vehicle rental, or for anything other than the amount paid for the actual damage to the motor vehicle. A vehicle that has sustained minor damage as a result of theft or vandalism shall not be considered a total loss. Any person acquiring ownership of a damaged motor vehicle that meets the definition of total loss for which a salvage title has not been issued shall apply for a salvage title, other than a scrap metal processor acquiring such vehicle for purposes of recycling into metallic scrap for remelting purposes only. This application shall be made before the vehicle is further transferred, but in any event, within 30 days after ownership is acquired.
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   7. The department is authorized to issue a salvage certificate of title for a fee of $15.00, on a form prescribed by the department which shall provide for assignments of this title. The salvage certificate of title is to replace a certificate of origin or certificate of title required to be surrendered by this section. The department shall prescribe necessary forms and procedures to comply with this subsection.
   8. It shall be unlawful for a person to sign as assignor or for a person to have in his or her possession a salvage certificate of title which has been signed by the owner as assignor without the name of the assignee and other information called for on the form prescribed by the department. A person who violates this subsection, upon conviction, shall be guilty of a Class C misdemeanor and shall be punishable as required by law.
   9. Every owner of a salvage or junk motor vehicle who sells or transfers the vehicle to any person other than to a scrap metal processor for purposes of recycling into metallic scrap for remelting purposes only, shall provide at the time of the sale or transfer a properly executed assignment and warranty of title to the transferee in the space provided therefor on the salvage certificate of title or junk certificate of title or as the department prescribes. A person who willfully violates this subsection shall, upon conviction, be guilty of a Class C misdemeanor and shall be punishable as required by law.
   10. The department may issue a certificate of title to any motor vehicle for which a salvage certificate has been issued by this or any other state, and the vehicle has, in this state, been completely restored to its operating condition which existed prior to the event which caused the salvage certificate of title to issue, provided that all requirements of this section have been met. No certificate of title shall be issued for any motor vehicle for which a "junk" certificate has been issued or for a vehicle which is sold "for parts only."
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   16. Each person who sells, exchanges, delivers, or otherwise transfers any interest in any vehicle for which a title bearing the designation "salvage" or "rebuilt" has been issued shall disclose in writing the existence of this title to the prospective purchaser, recipient in exchange, recipient by donation, or recipient by other act of transfer. The disclosure, which shall be made at the time of or prior to the completion of the sale, exchange, donation, or other act of transfer, shall contain the following information in no smaller than 10 point type: "This vehicle's title contains the designation 'salvage' or 'rebuilt'."
   Further, if the vehicle is a total loss vehicle and will not be rebuilt, the vehicle must be sold on a Certificate of Title with the legend “Salvage Title – Vehicle Sold for Parts Only – Nonrebuildable.” back to top
   
   
2. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title (aka “Clean Title”)?
   
   The insurer shall provide Copart with a Certificate of Title or a comparable ownership document issued by another state or jurisdiction (either endorsed over to the insurer or accompanied by a power of attorney), an odometer disclosure statement, a release of any liens, an ACV, a cost of repair, and an Affidavit of Acquisition and Disposition of a Nontotal Loss Vehicle by Insurance Company.
   
   Copart, acting under a power of attorney for the insurer, will then sell the vehicle at auction and reassign the insurer’s Certificate of Title to the purchaser. If the re-assignments on the Certificate of Title have been exhausted, Copart, acting under a power of attorney for the insurer, will fill out a Reassignment Supplement of Certificate of Title (MVT 8-3) to the new purchaser. [See Alabama Code § 32-8-44; Alabama Administrative Code §§ 810-5-75-46, 810-5-75-38] back to top
   
   
3. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title with the legend “Salvage Title”?
   
   The insurer shall provide Copart with a Certificate of Title or a comparable ownership document issued by another state or jurisdiction (either endorsed over to the insurer or accompanied by a power of attorney), an odometer disclosure statement, a release of any liens, an ACV, and a cost of repair. Copart will submit these documents along with an Application for Salvage Certificate of Title (MVT 41-1) and the appropriate fee to the Motor Vehicle Division for processing.
   
   Thereafter, the Motor Vehicle Division shall issue a Certificate of Title with the legend “Salvage Title” in the name of the insurer. Copart, acting under a power of attorney for the insurer, will then sell the vehicle at auction and reassign the insurer’s Certificate of Title with the legend “Salvage Title” to the purchaser. [See Alabama Code § 32-8- 87(b)&(c); Alabama Administrative Code §§ 810-5-17-01, 810-5-75-44] back to top
   
   
4. What documents must an insurer provide to Copart in order to sell a vehicle on Certificate of Title with the legend “Salvage Title - PartsOnly – Non-Rebuildable”?
   
   The insurer shall provide Copart with a Certificate of Title or a comparable ownership document issued by another state or jurisdiction (either endorsed over to the insurer or accompanied by a power of attorney), an odometer disclosure statement, a release of any liens, an ACV, and a cost of repair. Copart will submit these documents along with an Application for Salvage Certificate of Title (MVT 41-1) and the appropriate fee to the Motor Vehicle Division for processing.
   
   Thereafter, the Motor Vehicle Division shall issue a Certificate of Title with the legend “Salvage Title - Parts-Only - Non-Rebuildable” in the name of the insurer.
   
   Copart, acting under a power of attorney for the insurer, will then sell the vehicle at auction and reassign the insurer’s Certificate of Title with the legend “Salvage Title - Parts-Only - Non-Rebuildable” to the purchaser. [See Alabama Code § 32-8-87(b) & (c); Alabama Administrative Code § 810-5-17-01] back to top
   
   
5. What documents must an insurer provide to Copart in order to sell a recovered theft vehicle recovered substantially intact with no substantial damage, where title is still in the name of the insured?
   
   When a vehicle has been stolen, the insurer shall provide Copart with a Certificate of Title or a comparable ownership document issued by another state or jurisdiction (either endorsed over to the insurer or accompanied by a power of attorney), an odometer disclosure statement with last known mileage, and a release of any liens.
   After receipt of these documents, Copart will submit these documents along with an Application for Salvage Certificate of Title (MVT 41-1) and the appropriate fee to the Motor Vehicle Division for processing. Thereafter, the Motor Vehicle Division shall issue Certificate of Title with legend “Salvage Title” in the name of the insurer. Upon receipt, Copart will forward the Certificate of Title with the legend “Salvage Title” to the insurer for safekeeping.
   
   If the vehicle is recovered, the Certificate of Title with the legend “Salvage Title” along with an ACV and a cost of repair will be returned to Copart by the insurer in order to obtain the appropriate title depending upon the damage to the vehicle.
   
   Copart, acting upon a power of attorney for the insurer, will then sell the vehicle at auction and reassign the insurer’s Certificate of Title (with legend, where appropriate) to the purchaser. [See Alabama Code § 32-8- 87(b)&(c); Alabama Administrative Code § 810-5-17-01] back to top
   
   
6. What steps must an insurer take in Alabama to process an ownerretained vehicle? 
   
   Pursuant to Alabama Code § 32-8-87(d):
   
   For the purposes of this section, a total loss shall occur when an insurance company or any other person pays or makes other monetary settlement to a person when a vehicle is damaged and the damage to the vehicle is greater than or equal to 75 percent of the fair retail value of the vehicle prior to damage as set forth in a current edition of a nationally recognized compilation of retail values, including automated data bases, as approved by the department. The compensation for total loss as defined in this subsection shall not include payments by an insurer or other person for medical care, bodily injury, vehicle rental, or for anything other than the amount paid for the actual damage to the motor vehicle. A vehicle that has sustained minor damage as a result of theft or vandalism shall not be considered a total loss.
   
   Any person acquiring ownership of a damaged motor vehicle that meets the definition of total loss for which a salvage title has not been issued shall apply for a salvage title, other than a scrap metal processor acquiring such vehicle for purposes of recycling into metallic scrap for remelting purposes only. This application shall be made before the vehicle is further transferred, but in any event, within 30 days after ownership is acquired. back to top
   
   
7. What legal duties are imposed upon a lienholder following satisfaction of the lien?
   
   Following satisfaction of lien, the lienholder shall, within 10 days after demand, execute a release of lien in the space provided on the certificate of title and deliver the certificate and release to the next lienholder named therein, or if none, to the owner. The owner then mails or delivers the certificate to the Department. The Department will release the lienholder’s rights and issue a new certificate. A person convicted of a misdemeanor for the violation of the above provision is punishable by a fine of not more than $500.00 or by imprisonment for not more than six months, or by both such fine and imprisonment. [See Alabama. Code §§ 32-8-64; 32-8-14] back to top