Can A Vehicle Title (lien Or No Lien) Be Used As Security Deposit For An Residental Rental Lease?

Q: Can a vehicle title (lien or no lien) be used as security deposit for an residental rental lease? This prospect has good credit but no money to pay deposit and he is willing to surrender the title. If he signs on the title and we keep a copy of the key and the original title, does it give us (the landlord) any protection? Or he can simply claim a title lost and get a replacement title? What if he drives away the vehicle still?

A: Whenever a vehicle is sold in Texas, state law requires the vehicle be titled and registered in the buyer's name within 20 working days. If you sell your vehicle but the title is not transferred out of your name, you could receive parking tickets, toll violations or possibly have your property seized if the vehicle was used to commit a crime. Simply signing the back of the title does not transfer ownership. When you sell a vehicle, the buyer must submit a vehicle title application [pdf, 2 pages, 358kb] to the county tax office. After the tax office processes the application, you will no longer be shown as the owner of the vehicle. If the buyer does not transfer the title, the vehicle will remain in your name, and you could be charged for parking tickets or toll road bills issued to that vehicle. For this reason, we encourage you to accompany the buyer to the tax office to ensure the title application is filed. If you sell or trade-in your vehicle to a licensed motor vehicle dealer, the dealer is not required to title the vehicle under the dealership's name. The vehicle stays in your name until it is sold to an individual, which may take months or even years. To protect yourself, file a vehicle transfer notification [pdf, 2 pages, 272kb]. Avoid unwanted surprises about your purchase by having the seller accompany you to the county tax office. Before you submit the title application, a tax office representative can tell you if the title being signed over to you is correct and if it has any legal or salvage issues. If you buy your vehicle from a dealer, the dealer is required to file the title papers on your behalf, so you will not have to visit the tax office. Make sure the dealer provides you with a receipt showing the vehicle has been titled in your name within 20 working days. If you sell your vehicle but the buyer is unwilling to go to the tax office, you should submit a vehicle transfer notification [pdf,

2 pages, 272kb]. The transfer notification is based on a state law that helps protect you. After we receive this notification, we will update your motor vehicle record to show you sold the vehicle and the date you sold it. Submitting this form is important even if you sold or traded your vehicle to a dealer. In addition to the title, ask the seller to provide you with the vehicle registration receipt, signed vehicle title application and any other supporting documents, such as a release of lien or power of attorney. Keep a written record that includes the name and address of the seller, date of sale and full vehicle information (including the vehicle identification number).