The end of “The Vermont Loophole”
The party’s over. The State of Vermont has closed the too-good-to-be-true loophole that allowed you to register a motor vehicle there without living in the state and without physically making an appearance at a Vermont registry, without proof of insurance, and, if the vehicle is 15 years or older, without a title or a previous registration.
My knee-jerk reaction was that it was partially my fault.
To appreciate the utility of “The Vermont Loophole,” you have to understand how much registration laws vary state to state. My home state of Massachusetts requires a title for all cars no matter how old, so if you stumble upon your dream Jaguar E-Type barn find with no paperwork and it’s sold to you on just a bill of sale, you can’t register it. The state does, however, realize that many states don’t issue titles for cars that are over 15 years old, so if you buy an old car from out of state, Massachusetts will register it if you present a previous registration and a bill of sale both in the name of the seller. But if an old registration can’t be produced, you’re out of luck.
Such was the case when I bought “Louie,” the 1972 BMW 2002tii that was the subject of my book Ran When Parked. In it, I describe the previous owner finding that the title and prior registration, which had both been stored in the glove compartment, had been eaten by mice. I took the risk and bought the car anyway. I looked into vehicle title service companies and learned that what most of them do is run the car through the DMV of a state with lax registration laws, and that’s something you can do yourself. At the time, I had a good friend living in Maine, a state where you can register a car with only a handwritten bill of sale (no title or former registration), and where, as an added bonus, there’s no automotive sales tax, so I sold it to him. He did need to insure the car and make a physical trip to the registry, but once he did, he had a paper registration in his name. I paid all his expenses, and he then sold me back the car, thereby providing the prior registration and bill of sale in the same seller’s name I needed in Massachusetts. I then registered the car here and paid the sales tax and all fees.
But as part of this process, I stumbled upon a post on a motorcycle website about registering old barn-find bikes. It was there that I learned that, like Maine, the Vermont Department of Motor Vehicles will allow you to register a 15-year-old vehicle with only a bill of sale (no title or old registration required), but Vermont had an additional three-way twist that sounded too good to be true. First, you didn’t need to be a Vermont resident to register a car there. Second, you didn’t even need to show up at the DMV; the entire process could be handled by mail. Third, no proof of insurance was required. Since Vermont doesn’t issue titles for cars older than 15 years, the process didn’t result in a title, but it did give you that all-important registration in your name, which, in theory, allowed you to transfer the registration to your home state and title the vehicle there, as if you’d just moved there. Unlike Maine, Vermont assesses a 6 percent sales tax on the greater of the NADA low book value or the actual paid price, but what you were getting in return sounded very appealing. In 2019, I wrote about all this for Hagerty in “The Vermont Loophole.”
Not long after the piece was published, I had three reasons to try The Vermont Loophole myself. I owned a 1974 Lotus Europa Twin Cam Special that I’d spent six years resurrecting and had just gotten running. The first issue was that, although I had the title from the previous owner, there was a minor recording error. It probably could’ve been corrected via a notarized affidavit, but if it couldn’t, the consequence was unclear. The second issue was that the car had a cracked windshield that prevented it from passing Massachusetts state inspection, and at that time, no Europa windshields were available anywhere in the United States. The third was that my mother was dying, I wanted to be with her as much as possible, and spending an entire day at a Massachusetts registry wasn’t something I was willing to do.
So, since all I had to do was fill out a form, send a check, and wait for the time to pass, I tried using The Vermont Loophole as a temporary measure to register the car. Regarding the cracked windshield, Vermont (like Massachusetts) requires an annual inspection, so I’ll admit that my logic here was a bit suspect. I was banking on the idea that even though a Massachusetts State Police officer could pull me over and ticket me for driving a Vermont-plated car with no Vermont inspection sticker, he or she would be less likely to do so than if the car had Massachusetts plates.
To my surprise and delight, the whole thing worked. The by-mail Vermont registration process was a bit murky—it’s not as if the website had yellow-highlighted “THOSE TRYING TO REGISTER AN OUT-OF-STATE BARN-FIND CAR WITH NO DOCUMENTATION, CLICK HERE” banners on it. You needed to download Vermont VD-119 form, fill it out, print the NADA values for the car, circle the low value, calculate 6 percent of that and add it to the $76 registration fee, and send the form and a check for the total amount. Although I wasn’t certain whether or not it was required, the motorcycle-centric article I read talked about photographing the VIN plate, so I did that, printed it, and included it as well.
And then I waited. About three weeks later, my bank showed that the check had been cashed. About a week after that, an envelope arrived with a Vermont license plate and registration. Shortly after that, I received a sticker for the plate. I then wrote a second article detailing my specific experience using the loophole. Over the years, I fielded many emails helping people with the process, and I got to see the joy on their faces when they sent me selfies of them and their Vermont plate.
To be absolutely clear about this, it’s almost certainly against some rarely-enforced motor vehicle law to continue to drive a car that’s registered in “State A” when you legally reside in “State B”—you’d need to check with the laws of both states. Thus, people using The Vermont Loophole to deal with title-less barn-find cars were advised to get the Vermont registration and then immediately use it as proof of ownership to legally register the car in their home state. I never intended to continue driving on the Vermont plates, at least not for as long as I have, but the Lotus was in a perpetual state of being sorted out, it took me a few years to find a windshield to replace the Lotus’ cracked one, and when I did, it was via a group buy through a Europa enthusiast group. By the time all the orders were collected and the giant crate of windshields were delivered to Rhode Island, we were mired in the pandemic, during which my wife and I seriously considered moving to Vermont, so getting the Vermont tags off the Lotus dropped to the bottom of my priority list. I finally got the windshield installed this past spring, so now that the car is inspectable and my wife and I appear to be staying put, there’s nothing preventing me from transferring the registration to Massachusetts. I just haven’t gotten around to it. And, although I feel conspicuous as all get-out by driving this highly-visible little slot car around Massachusetts with no inspection sticker on it, I’ve never been stopped and ticketed for it.
Of course, I wasn’t the only one who had publicly used The Vermont Loophole. YouTuber Doug DeMuro telegraphed its existence in a video about buying and registering a tiny little European Mercedes A-class that’s proudly wearing Vermont plates. The writer, Mercedes Streeter, did a series of articles on Jalopnik about buying an International school bus and registering it in Vermont as an RV, as the state doesn’t have the RV requirements other states do. One of them was titled “My Bus Has Plates Because the Vermont DMV is Secretly America’s DMV.” And if you simply search YouTube for “The Vermont Loophole,” you’ll find dozens of videos, both from do-it-yourselfers and professional firms like Car Titles.
As usage of The Vermont Loophole became more widespread, certain states began to push back. Reportedly, Florida now refuses to transfer Vermont registrations to their states unless the Vermont registration address is actually in Vermont. People in Ohio also report problems transferring Vermont registrations there. But I didn’t expect a friend of mine to send me a link to this video, in which my Lotus had become the literal poster child for abuse of The Vermont Loophole. Specifically, the owner of Car Titles is taking me to task for continuing to drive the car on Vermont plates instead of using them as a stepping stone to register the car in my home state.
So, were automotive gadflies like me and Mercedes Streeter, writers who were quite public about using The Vermont Loophole, responsible for its closure?
I don’t think so.
It appears that the change may have had less to do with publicized individual car-nut cases like mine and more to do with for-profit businesses using the Vermont DMV as a turnstile to process large volumes of transactions. Streeter’s recent piece on The Autopian quotes a Vermont DMV official who said that the loophole was being abused by “runners” making in-person appearances at DMV locations several times a week to process multiple transactions. When there were hiccups with paperwork, “these runners became very hostile and belligerent to the staff,” requiring the DMV to “station sworn law enforcement officers at several branch offices.” The registry official also mentions multiple power-of-attorney forms bearing the same signature, stolen vehicles, salvage vehicles, and bogus ownership documents. In other words, they’re likely reacting to organized fraud, not to individuals registering a 50-year-old Lotus or a school bus camper conversion.
On June 26, 2023, the Vermont DMV issued a policy update that stated, “The Department will not process this/these transaction(s) unless or until the owner of the subject vehicle can establish a legitimate connection to the State of Vermont.”
The funny thing is that, just before this happened, I saw an ad for a pretty cool, unfinished Cobra replica project. It had a beat-up powder blue body, deep-dish rear wheels, side pipes, and an attractive asking price, and it spoke to me in that special way that gets your blood up. At the end of the description, it said, “This is a kit car and the buyer is required to do diligence with their local DMV, as the origin of the body is unknown.” My knee-jerk reaction was “No problem. I’ve got The Vermont Loophole in my back pocket.”
I’ve received my renewal for the Vermont registration for the Lotus, so it appears that existing registrations are not impacted. Nonetheless, I think that it’s best that I mark the end of the party by cleaning up my mess and taking the long-overdue step of registering the car in Massachusetts.
But I’m glad that I got the chance to have a beer at the Vermont Animal House Delta Tau Chi party before Dean Wormer shut it down.
Rob’s latest book, The Best of the Hack Mechanic™: 35 years of Hacks, Kluges, and Assorted Automotive Mayhem, is available on Amazon here. His other seven books are available here on Amazon, or you can order personally inscribed copies from Rob’s website, www.robsiegel.com.