They have to send the titles in as junked, and the hassle of selling the entire bike after that is a nightmare.
When I worked an auto salvage yard a guy came in and wanted to buy a car that the body was in good shape but motor was crap. Wanted the entire car so they sold it to him and had him sign a paper that it was for parts only... About 3 months later the state is calling wondering where the title is on a car this guy is trying to register.. Yep he dropped an engine in and was putting it back on the road. Explained to state that the cars title was registered as junk and that it had been sold for parts only.
There statement was if you sold it off the lot it has to be title-able. The salvage yard had to spend big bucks and a lot of time getting the title for the guy.