Code 3 is a car that was de-registered and then after the fact re-registered. De-registering a vehicle is incredibly simple but once it is done, your car is no longer road worthy and you also no longer receive those license payment notices. Therefore on the eNATIS database your car VIN is shown as de-registered. The only way to have it registered again is by putting it through the road test, after which the car will be code 3 (Built Up).
A car can be written of in a number of ways, the most popular is: 1) Insurance company, they write of a car if they believe the repair cost to be too much, then pay you.
Then there is: 2) Your car was stolen and recovered. The police will write off the vehicle and in the impound remove the engine number and stamp and case number on the engine block.
3) You decide to write off your own vehicle for whatever reason.
4) You are pulled over by the police and they deem your car un-roadworthy, car is impounded, you are charged and simultaneously the car is written off.
There is a whole list of reasons your car may be written off, at that point once you re-register the vehicle it will be code 3, provided you passed the road test.
There are only 3 types, Code 1 - New, Code 2 - Used, Code 3 - Built Up.
However, changing an engine for example does not require that your car be registered as Code 3, you just need to have the new engine number registered.