Ok, you are in a very complicated position, and you MUST be careful to do everything right. I have done this before, and there are pitfalls. Every state has their own rules about salvage titles and what they mean. Some states will not license a salvage title, other states use the term Junk title for a restricted title. You need to call your secretary of state main office and verify both the definition of a salvage title, as well as have them run the VIN number and make sure that the title is clear. Some states (like IL) do not allow you to purchase a vehicle with a salvage title unless you are a licensed rebuilder. It is against the law for the common man and you could get into trouble, especially if you do not have receipts for all the parts that were used to make the vehicle functional again.
The way this is supposed to work is the seller is should apply for a rebuilt title. Anyone can purchase a vehicle with a rebuilt title. For a rebuilt title, it could lower the value 10% to 15%.
My story is this:
I bought a Jeep with salvage title. Before I purchased it, I called the local DMV, and they stated it would be no problem - First mistake - the local DMV is not the Secretary of State, even though it has their seal on the door. I applied for a title and got a plate form the local DMV. About 6 months went by, I did not received the title yet. I got a knock on my door from the Secretary of State police. They wanted to have a little chat with me, as well as take my plates away (I was planning to drive to work that day-not) I had purchased the vehicle across state lines, which would have been OK, except for the vehicle had originally been salvaged in my state. I was informed that my purchase was illegal, as I was not a licensed rebuilder. Fortunately they were somewhat understanding of my lack of knowledge of what I had done. He also understood the DIY nature of Jeep owners. What was agreed upon was that I needed to take the vehicle to a special Secretary of State vehicle inspection center. I had to bring an official letter with me to get in. Once in, I was met by an officer who took my keys and escorted me to a secure locked room. They then took my vehicle into a secure bay which no one is allowed to see, and did a special inspection, looking for any stolen parts. Once it passed, they brought it back around front, printed up some paperwork that would allow me to apply for a rebuilt title and purchase new plates. Just a side note, they were a little surprised that I did not have an escort following me, to take me back home if there was a problem with the vehicle. Apparently if they had found stolen parts, they would impound the vehicle and at best I would be on my own. At worst, which happened to someone else while I was there, he was placed under arrest, as he did was not able to produce receipts for the replaced parts. That aspect of the Secretary of State is serious business.
