I had something similar happen to me, but it involved a 1984 Toyota Tercel which I'd traded in. I was living in SoCal at the time, and bought the car from my first wife. It started having smog-test issues, and it was on it's third extension from the DMV. My Credit Union was having huge car sale, so I traded it in on a very nice Jeep Grand Cherokee, and life was good. Six months later, I get a letter from the Orange County (CA) Sheriff's department, informing me that the towing and impound fees were piling up, and what did I want to do about "my" car? A quick phone call cleared it up, but somebody had been driving the car on an open title, with expired plates, for six months!
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