Registering a CAR WITH NO TITLE -- BUY-102C
This question comes up occasionally (too often) in reference to MG cars. I am not an expert on the subject but I will give it my best shot. Rules and regulations vary somewhat among various governing bodies, and I am not going to attempt to cover the entire lot. I am also not going to recommend that anyone should do anything illegal. There is good reason why it is intentionally difficult to create a valid title for a car out of thin air. If your car was stolen you would certainly not want someone else to be able to obtain a title and clear registration.
There are of course cases where a car may be abandoned with no traceable paperwork. Some cars may be off the road and inactive for so long that the rightful owner may have simply lost the title and registration papers. The state DMV may wash the records occasionally, disposing of information for any car which has not been registered for a certain period of time. One of the more common cases is a car taken to a service shop for work, then abandoned by the owner who might refuse to pay the bill. For any of these reasons it is occasionally necessary to petition the local governing body (Department of Motor Vehicles) to produce a title for a car which may otherwise have no existing title or registration on record. Any DMV will have some prescribed procedure for doing this, possibly more than one way depending on the circumstances. Your first approach should be to contact your local DMV to inquire about the requirements and procedure. You may find this to be cumbersome, time consuming, difficult, and possibly expensive, but like I said, it's not supposed to be easy. If you have the time and patience and money and are willing to comply with all legal requirements, you should (eventually) be able to obtain a title for the car (assuming it wasn't stolen). Considering how inconvenient this may be, you would be well advised to investigate this thoroughly before taking possession of a car with no title.
As a resident of Illinois, one case that comes to mind is the application of a Mechanic's Lien which may be procured by a service shop, thereby allowing the shop to sell the car to recover the value of the service bill. The new owner of the car will then be given a valid title so the car may be legally registered. For this procedure it may be easier if you are the "buyer" of a car with no title rather than the current owner, so think about fixing this before you take it home. I cannot personally recommend that you do this, but I'm sure it has been done.
The proper way to expedite this process may be to have the current "holder" of the vehicle file a mechanic's lien with the state DMV (in his own state presumably). This is common procedure if a shop did some work on the car and the customer subsequently refused to pay the bill and abandoned the car. When properly processed, if the "previous owner" does not present himself with money to pay the bill for the service lien, the "mechanic" who filed the lien gets the right to sell the vehicle (usually with a public auction) to recover the balance of his bill (or at least part of what may be owed). Upon sale of the car the mechanic gives the buyer a bill of sale to show that it was actually sold (and paid for). The state then gives a perfectly clean new title to the buyer (with normal registration fees).
If the sale is done with auction the intended recipient of the vehicle must be the highest bidder (regardless of the final bid price). If this whole thing is just going through the motions to satisfy the state, the "auction" might be virtual, and the desired recipient is declared the winner of the auction (maybe even the only bidder). If the car is intended to change hands for free, the seller and buyer mutually agree that the bid price has been paid as shown on the bill of sale (without actually transferring cash). If the final sale price was higher than the amount of the lien, the "shop" could be required to return the excess to the prior owner of the car (if he could be found), or otherwise maybe even turn any excess cash over to the DMV. This may be a moot point if the lien (the mechanic's bill) is large enough exceed the final auction bid.
For other than a Mechanic's Lien, call up the DMV and ask them what you have to do to get a valid title for a car with no other documentation than a bill of sale. I wouldn't say it's impossible, but you may have a dozen people laugh at you before you finally get the correct story. I'm sure the hoops will be many, and the process time consuming, and maybe even expensive. Otherwise I have no idea how to do this, and I have no interest in discussing how to circumvent the law. But if you succeed going through any prescribed normal process with the DMV, do let me know how it works, and how much of a PITA it might be. Lots of people would like to know how to do the same thing, or have enough information about it to know when not to bother. It will of course not be simple, because the state would want to discourage it as a regular practice. They don't want to be in the business of issuing new titles to anyone who shows up with a possible stolen car and fake bill of sale.