Today, ELT is available in 8 states – California, Florida, Idaho, New York, Massachusetts, Pennsylvania, Virginia, and Washington. Currently, there are more than 3 million electronic titles on file.

In 2003, Arizona will become the next state to begin accepting electronic liens and titles. Hawaii (Oahu) and New Hampshire are currently developing and testing ELT systems. In addition, legislation has been signed into law permitting the use of electronic vehicle titles in 10 other states, although they have yet to implement an ELT system.

For lien holders participating in an ELT system, a state will suppress the printing of a physical paper title. Instead of receiving a paper title by mail to store in its title vault, the lien holder, such as a fleet management company, will receive an electronic transaction stating its financial interest in the vehicle.

At the end of the vehicle's lease term, a paper title will be issued to it to transfer ownership to the secondary buyer of the off-lease fleet vehicle. It is important not to confuse ELT with electronic registration and title (ERT), which is a separate program.

The difference between the two is that ERT is the actual filing of the title and registration application. ELT is electronic notification that a lien is listed and replaces the issuance of a paper title. Dealers, fleet management companies, and lenders are the primary users of the electronic registration program.

Currently, there are 12 states that have ERT systems. The next state to conduct a pilot ERT program is Oregon, which will do so in October 2002. (It is also important to realize that a state motor vehicle agency may allow ERT but not ELT or vice versa. There are six states that allow both. Arizona will become the seventh state once it completes development of its ELT system.)

An ERT system provides lessors and rent-a-car companies the capability to remotely hard plate and register vehicles. While the functionality varies from state to state, a typical ERT system electronically connects a lessor to the state motor vehicle agency to register new vehicles; transfer, renew, or cancel registrations; inquire about taxes and violations; and report lost tags and issue replacements.

An Estimated 5% of All Paper Titles Are Lost

Lien holder participation in an ELT program is voluntary. But most lien holders are very receptive. One advantage is that electronic files offer a way to eliminate lost paper titles. Nationwide, among all lien holders, it is estimated that there is an average 5 percent loss of titles stored in lien holder vaults.

If you take a lien holder, such as a financial institution, that has a portfolio of 100,000 titles, that means that at any given time there is an average of 5,000 vehicle titles that are lost. Despite the advantages, that's not to say that there haven't been hiccups in using ELT systems.

In an embarrassing programming snafu, the California DMV inadvertently purged electronic title records with no activity for four-plus years. However, as of Jan. 1, 2002, the state now excludes ELT records from its regular four-year purge criteria, and it is restoring all ELT records purged since March 2002.

More Changes Still Needed

GE Capital Fleet Services is investigating the possibility of using an ELT program to secure its vehicle assets.

"It greatly reduces the exposure of title loss due to a catastrophic event," said Tim Duckworth of GE Capital Fleet Services. "However, until more states accept ELTs, we face difficulties and delays in moving vehicles from an ELT to a non-ELT state."

Other fleet management companies agree that additional changes need to be made to ELT programs. For instance, John Maher, VP of operations for CitiCapital Fleet, said there is the concern that ELT programs are still geared too much to financial institutions rather than fleet owners. Another concern is the time it takes to convert electronic titles to paper documents.

"It takes approximately two weeks to convert electronic titles into paper, which may delay the remarketing and relicensing of vehicles," said Steve Guertler, director of vehicle operations for Wheels Inc. Ultimately, these shortcomings will be addressed. "

Once this occurs, electronic titling will be a godsend to fleet management," said Tim Delaney, manager of license and title for ARI.

Let me know what you think.