Glossary

Introduction

This glossary provides definitions and explanations for key terms related to vehicle registration, titling, insurance, and other related processes. It is intended to help international visitors who are unfamiliar with how these things work in the in the US to understand these concepts.

We hope it’s helpful!

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An annual report for a Montana Limited Liability Company (LLC) is a simple filing made with the Montana Secretary of State’s office that permits the LLC to remain active for another 12 months.  The required elements are: confirmation of the LLC’s owners, address, and registered agent, as well as payment of the required fees.

An apostille is a certification used to authenticate documents for international use under the terms of the Hague Convention. It verifies that the notary that notarized the document is duly licensed by the authority that appointed the notary.  (The states, not the national government, appoint notaries in the United States.)

Title assignment refers to the process of signing the vehicle’s ownership documents (usually its title) in order to transfer ownership of the vehicle from one party to another.

An authorized agent is an individual or entity given authority to take certain actions on behalf of an organization.  Montana allows authorized agents to sign vehicle-related documents on behalf of a company, while it requires a power of attorney when the agent is signing on behalf of an individual. During visitor.us’ registration process, we capture our users’ authorizations to sign documents necessary to register the user’s vehicle to their LLC.

A bill of sale is a legal document that records the sale of a vehicle between a private seller to a buyer. It documents the ownership transfer and typically includes details such as the purchase price, date of sale, and key details (year, make, model, VIN, mileage, etc.) of the vehicle sold. Dealership sales are usually documented with a buyer’s order.

Title brands are labels assigned to vehicle titles that provide important information about the vehicle's history, such as whether it has been salvaged, rebuilt, or undergone other events that may affect its safety or reliability. These brands help inform potential buyers about the condition and past use of the vehicle.

A buyer’s order is a document used in vehicle sales that outlines the terms of the purchase agreement between the buyer and the seller. It typically includes details like the vehicle price, financing terms, and any additional fees or services, and is typically used when a vehicle is bought from or sold to a dealership. Purchases from and sales to private individuals are usually documented with a bill of sale.

Collision insurance covers the cost of repairing or replacing a vehicle in the event of an accident with another vehicle or object. This type of insurance is typically optional but may be required if the vehicle is financed or leased. Collision insurance is a type of coverage known as “first party” coverage in other parts of the world.

Comprehensive insurance provides coverage for damage to a vehicle that is not caused by a collision. This can include theft, vandalism, natural disasters, and other non-collision incidents. It is designed to offer broader protection than collision insurance alone. Comprehensive insurance is a type of coverage known as “first party” coverage in other parts of the world.

A registration decal is a sticker placed on a vehicle's license plate or windshield to indicate that the vehicle's registration is current. It must be renewed periodically, usually annually, and serves as proof of legal registration.

The Department of Motor Vehicles (DMV) is the generic term for the state-level government agency responsible for overseeing motor vehicle-related functions, such as vehicle registration, titling, and driver licensing.  Each US state has its own way of organizing DMV functions - some have a centralized department that handles all vehicle-related functions. Other states (like Montana) delegate vehicle licensing to the state’s counties, issue vehicle titles from the state capital, and have state offices distributed around the state for driver licensing.

In transactions that use an escrow agent, buyers send their funds to the escrow agent (which are deposited in escrow, a segregated account), and sellers send the vehicle’s title to the escrow agent.  The agent holds the funds and title until all the terms of the sale are met, ensuring that the buyer receives the vehicle in the agreed-upon condition and that the seller gets paid. This process helps prevent fraud and disputes, offering an added layer of security for all parties involved.

A lien is a legal claim or right against a property, typically used as collateral to secure a debt or obligation. In the context of vehicles, a lien written on the front of a vehicle’s title gives the lienholder the right to repossess the vehicle if the borrower fails to fulfill their financial obligations. A vehicle with a lien recorded on its title cannot be transferred to a new other without a lien release.

A lien release is a document issued by a lienholder that indicates the lien on a vehicle has been satisfied and the lienholder no longer has a legal claim to the vehicle. This is typically required to transfer clear ownership to a new buyer when a lien is recorded on a vehicle’s title.

Liability insurance provides coverage for damages or injuries that the policyholder may be responsible for causing to others in an accident. It is typically required by law and helps protect against financial losses due to legal claims. Liability insurance is a type of coverage known as “third party” coverage in other parts of the world.

A Limited Liability Company (LLC) is the most simple form of legal entity in the United States.  Formed at the US state level (not the federal, or national level), LLC’s can be used for complex purposes, like a business, or for simple purposes, like owning an asset (such as a vehicle). visitor.us forms LLC’s for its customers in Montana, which the best state to register vehicles for international visitors.

License plates are official identification tags attached to vehicles, issued by the government, that display a unique combination of letters and numbers. They correspond with a vehicle’s registration are required for legal operation on public roads and help identify the vehicle.

A Manufacturer’s Certificate of Origin (MCO) or Manufacturer’s Statement of Origin (MSO) is a document issued by the vehicle manufacturer that certifies the vehicle's origin and provides necessary information for initial registration and titling.

A notary (also called a notary public) is a public official authorized to witness and authenticate the signing of legal documents. Notarization helps prevent fraud by ensuring the signatures are genuine and the signers understand the contents of the documents.

Notarization is the process by which a notary public officially witnesses the signing of a document, verifies the identity of the signers, and ensures that they are signing voluntarily and understand the contents of the document. This process helps to prevent fraud and provides an added layer of authenticity and trust to important legal and financial documents.

An odometer disclosure is a statement required during the sale of a vehicle that provides the vehicle's mileage at the time of sale. This helps ensure transparency and prevents odometer fraud. Transfers of all vehicles model year 2011 and newer must document the buyer’s and the seller’s agreement of the odometer reading.

An open title is a vehicle title that has been signed by the seller but does not yet have the buyer's information filled in. Because anyone can fill in the buyer’s section of an open title and register the vehicle in their own name, leaving a title open can be risky, and should be avoided if possible.

A power of attorney is a legal document that grants one person (the agent) the authority to act on behalf of another on specific matters. Montana requires a power of attorney when the agent is signing on behalf of an individual, while an authorized agent may sign on behalf of a company.

A registered agent is a designated individual or entity responsible for receiving legal documents and official correspondence on behalf of a business. This ensures that important information is properly received and addressed.  Montana requires all Montana LLC’s to maintain a Montana-based registered agent.

A vehicle registration document is an official record that indicates a vehicle has been registered with the government (in the US - almost always a US state government). Registration documents typically include details about the vehicle, such as its make, model, and Vehicle Identification Number (VIN), as well as the owner's information. Registration documents, which must be kept in the vehicle at all times and furnished to law enforcement upon request, serve as proof that the vehicle is legally authorized to be operated on public roads and help ensure compliance with local regulations and laws.

Vehicle registration is the process of officially recording a vehicle with the government, typically through a state’s DMV. In order to register a vehicle, its authentic ownership documents (usually a title, but in some cases, a manufacturer’s statement of origin / manufacturer’s certificate of origin for new vehicles, or a registration document for older vehicles registered in certain states) must be submitted to the DMV, the registered owner must provide identity documents and other required items, and taxes and registration fees must be paid.  The submitted ownership documents are destroyed to avoid the existence of multiple ownership documents for a single vehicle, potentially confusing ownership of the vehicle. After the registration process is complete, license plates, a registration document, and a new title are issued by the DMV.

Title reassignment involves transferring ownership of a vehicle from one party to another, typically multiple times, without issuing a new title for each transfer. This is common in dealership transactions. Individuals without a dealer’s license cannot legally reassign a vehicle’s title.

A rebuilt title brand is assigned to a vehicle that was previously declared a total loss or salvage but has since been repaired and passed a state inspection to ensure it meets safety and operational standards. This brand indicates that while the vehicle was once significantly damaged, it has been restored to a condition suitable for use on public roads. Buyers should be aware that vehicles with rebuilt titles may have a lower market value and could be more challenging to insure.

Registration renewal is the process of extending the validity of a vehicle's registration, usually on an annual or biennial basis. This involves paying a fee and updating any necessary information with the DMV.

Salvage vehicles are those that have been damaged to the extent that the cost of repairs exceeds a certain percentage of the vehicle's value, often due to accidents, natural disasters, or other incidents. These vehicles are typically deemed a total loss by insurance companies and are issued a salvage title. Typically, vehicles with salvage titles cannot be registered until their title is converted to “rebuilt.” Converting a salvage title into a rebuilt title after the vehicle has been repaired often requires physical inspection by law enforcement in the state where the vehicle will be registered.

A shipping label is a tag or sticker attached to a package that provides information about the sender, recipient, and shipping method. This ensures the package is delivered accurately and efficiently.

A statement of fact is a written declaration that provides specific details or information about an event or transaction. In vehicle transactions, this can be used to provide additional context or clarification.

Temporary registration is a short-term authorization that allows a vehicle to be legally operated while the permanent registration is being processed. This is often used when a vehicle is newly purchased or in transit.

A vehicle title is a legal document that establishes ownership of a vehicle. It includes important information such as the owner's name, vehicle identification number (VIN), and any liens or brands associated with the vehicle.

The wholesale value of a vehicle refers to the estimated price at which a vehicle can be sold to a dealer or a wholesaler. This value is typically lower than the private party value and retail value, as it accounts for the dealer's need to recondition, market, and make a profit on the vehicle.  While the wholesale value is typically the lowest value, it is the value that can be achieved most quickly, as you don’t have to wait for the right buyer to come along.

The price at which a vehicle can be sold directly between individuals, without involving a dealership, is called its private party value.  Because the buyer doesn’t need to make a profit, a vehicle’s private party value is typically higher than its wholesale value.  But because private parties typically can’t offer financing, warrantees, and other value-added services that dealers can, the private party value is typically lower than the retail value.  While the private party value is typically higher than the wholesale value, it can take weeks or months for the right buyer to come along.

The retail value of a vehicle is the price at which it can be sold to a consumer by a dealer. This value is typically the highest of all the vehicle's values because it includes the dealer's added costs for reconditioning, marketing, and poviding services such as financing and warranties. The retail value reflects the amount a buyer is expected to pay when purchasing the vehicle from a dealership.

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