Arizona 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 branded “Salvage”?
3. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title branded “Nonrepairable”?
4. 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?
5. What steps must an insurer take in Arizona to process an owner-retained vehicle?
6. 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?
   
    Pursuant to Arizona Transportation Code § 28-2091:
   
   
   If a vehicle that is subject to titling or registration pursuant to this chapter becomes a salvage vehicle or nonrepairable vehicle and is acquired by an insurance company as a result of a total loss insurance settlement, the insurance company or its authorized agent shall submit an application to the department within thirty days after the title is properly assigned by the owner to the insurance company, with all liens released, on a form prescribed by the department for a salvage certificate of title or nonrepairable vehicle certificate of title. [§ 28-2091 (A)]
   
   The department shall issue a certificate of title to a vehicle that has been issued a salvage certificate of title as a result of a total loss settlement by reason of theft if the vehicle is recovered and was not wrecked or stripped of essential parts. For the purposes of this subsection, "essential parts" means integral and body parts, the removal, alteration or substitution of which will tend to conceal the identity or substantially alter the appearance of the vehicle. [§ 28- 2091 (H)]
   
   "Nonrepairable vehicle" means a vehicle of a type that is otherwise subject to titling and registration pursuant to this chapter (Chapter 7 – Certificate of Title and Registration) and that either:
   
   
   1. Has no resale value except as a source of parts or scrap metal and the owner or insurer designates the vehicle solely as a source of parts or scrap metal.
      
      
   2. Is a completely stripped vehicle that is recovered from theft and that is missing the engine or motor, the transmission, all of the bolton sheet metal body panels, all of the doors and hatches, substantially all of the interior components and substantially all of the grill and light assemblies or that the owner designates has little or no resale value except its worth as a source of scrap metal or as a source of a vehicle identification number that could be used illegally.
      
      
   3. Is a completely burned vehicle that has been burned to the extent that there are no usable or repairable body or interior components, tires and wheels, engine or motor or transmission and that the owner irreversibly designates as having little or no resale value except as a source of scrap metal or as a source of a vehicle identification number that could be used illegally. [28-2091 T(2)]
      
      “Nonrepairable vehicle certificate of title" means a vehicle ownership document issued to the owner of a nonrepairable vehicle. [28-2091 T(3)]
      
      "Salvage vehicle" means a vehicle, other than a nonrepairable vehicle, of a type that is subject to titling and registration pursuant to this chapter (Chapter 7 – Certificate of Title and Registration) and that has been stolen, wrecked, destroyed, flood or water damaged or otherwise damaged to the extent that the owner, leasing company, financial institution or insurance company considers it uneconomical to repair the vehicle. [§ 28-2091 T(4)]
   
   Pursuant to Arizona Transportation Code § 28-2096(B):
   
   
   If the department determines that a flood or water damaged vehicle is actually a total loss insurance settlement vehicle, the department may issue: back to top
   
   
2. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title branded “Salvage”?
   
   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 and notarized or accompanied by a notarized 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 a Title Application and the appropriate fee to the Motor Vehicle Division for processing. Thereafter, the Motor Vehicle Division shall issue a Certificate of Title branded “Salvage” 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 branded “Salvage” to the purchaser. [See Arizona Transportation Code, §§ 28-2003, 28-2091] back to top
   
   
3. What documents must an insurer provide to Copart in order to sell a vehicle on a Certificate of Title branded “Nonrepairable”?
   
   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 and notarized or accompanied by a notarized 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 a Title Application and the appropriate fee to the Motor Vehicle Division for processing. Thereafter, the Motor Vehicle Division shall issue a Certificate of Title branded “Nonrepairable” 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 branded “Nonrepairable” to the purchaser. [See Arizona Transportation Code, §§ 28-2003, 28-2091] back to top
   
   
4. 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 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 a Title Application and the appropriate fee to the Motor Vehicle Division for processing.
   
   Thereafter, the Motor Vehicle Division shall issue Certificate of Title branded “Salvage” in the name of the insurer. Upon receipt, Copart will forward the Certificate of Title branded “Salvage” to the insurer for safekeeping.
   If the vehicle is recovered, the Certificate of Title branded “Salvage” 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.
   
   If the vehicle has no damage, and the insurer provides an affidavit stating that there has been no damage and requests a clean title, the following steps are required in the state of Arizona to return a recovered theft vehicle back to clean title status. This process called a Level III inspection. There are (3) steps that must be adhered to before the salvage brand on a title can be removed from a recovered theft vehicle:
   
   
   1. A representative from the State of Arizona must physically inspect every unit seeking this change. A licensed state inspector performs this inspection “off-site” and it involves inspection fee and tow fee to and from the state inspector’s facility.
      
      
   2. The seller will then forward an air bag affidavit form (AZ-Dot form # 96-0320) to Copart ensuring that the airbags in the vehicle have not been removed or altered.
      
      
   3. Once these two steps have been completed, Copart will then submit an application to the state of Arizona requesting a correction to “clean” title status for this particular vehicle. This takes about 3-6 weeks to receive back from the state. The vehicle will be titled as a Clean Title with Salvage History and will be represented as such when it is sold.
   
   Otherwise, the vehicle remains on a Certificate of Title branded “Salvage”. Specifically, Arizona Transportation Code § 28-2091(I) states that “the department shall issue a certificate of title to a vehicle that has been issued a salvage certificate of title as a result of a total loss settlement by reason of theft if the vehicle is recovered and was not wrecked or stripped of essential parts." For the purposes of this subsection, "essential parts" means "integral and body parts, the removal, alteration or substitution of which will tend to conceal the identity or substantially alter the appearance of the vehicle.”
   
   Thereafter, 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 to the purchaser. [See Arizona Transportation Code, §§ 28-2003, 28-2091] 
   back to top
   
   
5. What steps must an insurer take in Arizona to process an ownerretained vehicle?
   
   Pursuant to Arizona Transportation Code § 28-2091:
   
   
   3. Except for vehicles registered pursuant to § 28-2482, 28-2483 or 28-2484, if the owner retains possession of a salvage vehicle or nonrepairable vehicle, the owner shall comply with this section before receiving a total loss settlement from the insurance company or otherwise disposing of the vehicle.
      
      
   4. Any other owner of a vehicle that is a salvage vehicle or nonrepairable vehicle shall apply for a salvage certificate of title or nonrepairable vehicle certificate of title pursuant to this section.
      
      
   5. On receipt of a proper application, the department shall issue a salvage certificate of title or nonrepairable vehicle certificate of title for the vehicle.
      
      
   6. If the department issues a nonrepairable vehicle certificate of title for a vehicle, the registration of the vehicle is cancelled. The front of a nonrepairable vehicle certificate of title shall be branded with the word "nonrepairable". The ownership of a vehicle for which a nonrepairable vehicle certificate of title has been issued shall not be reassigned more than two times on that certificate of title. If a nonrepairable vehicle certificate of title is issued for a vehicle, the department shall not issue any further certificate of title for that vehicle. back to top
      
      
6. What legal duties are imposed upon a lienholder following satisfaction of the lien?
   
   
1. When a holder of a lien or encumbrance receives payment in full satisfying a lien or encumbrance recorded under this article, the holder of the lien or encumbrance shall release the lien or encumbrance and deliver the certificate of title to the next holder of a lien or encumbrance entitled to possession of the certificate of title or, if there is not another holder of a lien or encumbrance entitled to possession of the certificate of title, to the owner of the vehicle at the address shown on the certificate of title or, if the holder of the lien or encumbrance has been previously notified of sale or transfer of the vehicle, to the person who is legally entitled to possession.
   
   
2. If a holder of a lien or encumbrance assigns the obligation and the holder lawfully has possession of the certificate of title, the holder shall deliver the certificate of title at the time of assignment to the holder's assignee. If a holder of a lien or encumbrance is not entitled to possession of the certificate of title when the holder assigns the obligation, the holder shall immediately deliver the certificate of title to the assignee when the holder becomes lawfully entitled to and obtains lawful possession of the certificate of title. The holder's assignee is entitled to hold the certificate of title until the obligation is satisfied. When the obligation is satisfied, the assignee shall deliver the certificate of title to the next holder of a lien or encumbrance entitled to possession of the certificate of title or, if there is not another holder of a lien or encumbrance entitled to possession of the certificate of title, to the owner of the vehicle as prescribed in subsection A of this section.
   
   
3. If a holder of a lien or encumbrance who possesses a certificate of title as provided in this article refuses or fails to surrender the certificate of title to the person who is legally entitled to possession of the certificate of title on that person's request and within fifteen business days after the holder receives payment in full satisfaction of the holder's lien or encumbrance, after an opportunity for an administrative hearing, the department may impose and collect a civil penalty from the holder of the lien or encumbrance to be deposited in the state highway fund established by § 28- 6991 as follows:
   
   
1. Fifty dollars if the certificate of title is surrendered in accordance with this subsection within three additional business days.
   
   
2. The penalty provided for in paragraph 1 of this subsection plus fifty dollars for each additional day exceeding eighteen business days that the certificate of title is not surrendered in accordance with this subsection up to a maximum of five hundred dollars for each certificate of title. [See Arizona Transportation Code, § 28-2134] back to top