What documents are needed to sell a vehicle?

So if you’re selling a motor vehicle that belongs to you, what are the documents that you need to transfer that vehicle to a new owner? I’m going to go through a list of five or six documents that you will need to transfer that vehicle to the buyer.

Vehicle Title
First, you’re going to need the vehicle title. This is a legal document issued only by a government agency that declares that you are the vehicle owner and that it shows the vehicle identification number. This vehicle title is issued in most states by a division called Department of Motor Vehicles or Department of Transportation. It’s a state-issued government document. They’ll have your name printed on the front, the VIN number, year, make, and model, and it’ll have a place on the back of the title that you sign, indicating the name of the new owner. It’s very important that when you sell that vehicle, you sign that title in the correct location and put in the name of the buyer. Don’t just sign it blank; that’s called an open title. In many states, it’s actually illegal to issue an open title, and if you sign the back of the title, hand it to the buyer, and they show up at DMV or something happens improper with that title, you may have liability. So make sure that you sign the vehicle title over, you put the name of the buyer, you put the date. Many times the title for that state will have a place you need to put in the mileage of the vehicle at the time of transfer, and some of them even require that the buyer signs that title at the same time. We also recommend that when you transfer that title, you take a photo of that title front and back after you sign it so you can prove that you signed the title and put the buyer’s name on it. If possible, get a copy of the buyer’s ID. The title is the most important document.

Bill of Sale
Document number two that you’ll need is a bill of sale. A bill of sale will determine what are the terms of that sale. It’ll show you the date, the amount paid for the vehicle, if there’s any conditions: is there a warranty, is it as is, is it for parts only? Make sure that you write up a bill of sale for the transfer of a vehicle. Now, a bill of sale in some states requires it to be notarized; in some states, it can just be handwritten on the back of an envelope. The format of a bill of sale is determined by the rules of the state where the vehicle is being transferred. Make sure that you abide by those rules. In fact, even if your state doesn’t have specific requirements for a bill of sale, we recommend getting a generic bill of sale form that you can download from the internet, print it out, and make two copies: one for you, one for the buyer. The buyer will need that document when they go to put the title and registration in their name, but you also want to have a copy in case you need to prove how much was paid for the vehicle, what the buyer’s terms and conditions were. You don’t want to have a bill of sale only be one copy that the buyer has, and they handwrite in a 30-day warranty or write in something on the document. Make sure you have two copies that you retain, one for your records.

Odometer Statement
The third document is an odometer statement. At the time of transfer of a motor vehicle, the federal government normally requires that the mileage on the odometer be recorded at the time of sale. Some states require it to get a new title. Make sure that you properly execute an odometer statement. If there’s any question about the mileage on the odometer or what the reading is, if it’s over 100, over 200, that you notify or you note that on the document. There’ll be a place for TMU or true mileage unknown. That odometer statement becomes a record of that vehicle mileage history, and you want to make sure that’s done correctly.

Lien Release
Also, at the time of transfer, you may need a lien release. If there is or was a lien on the vehicle from a bank or from a financial institution, make sure that you have a release document from that lienholder. The title normally cannot transfer or not convey to the new owner unless you have that valid lien release. So if there’s any question about a lien, make sure you have that lien release so your buyer doesn’t come back looking for you later for paperwork.

New Title Application
The last document that we normally recommend doing at the time of sale is the new title application. This is the form that’s filled out by the buyer to submit to their DMV, their titling division, to get a new title issued in their name. Look, a vehicle title doesn’t stay the same throughout history; a new title is issued every time a new owner purchases a vehicle. So make sure that the proper title application is prepared. Even though the buyer could theoretically do that on their own, if you fill it out so it’s correct and you give it to the buyer, sometimes that’s helpful because the buyer will know what they need, and you might need to sign that document as well. So having that document prepared at the time of transfer can help speed up the process, and it will put you in a position of not having to deal with that buyer later if they run into problems.

Notice of Sale
Last but not least, as a bonus, some states have a notice of sale which is attached to the title where you can actually fill out a form and submit it to the DMV yourself to tell the government agency that you are no longer the owner of that vehicle. That could help you for liability purposes. Look, if something happens with that vehicle right after you sell it, two days later, it’s involved in a hit and run or goes through a stoplight or does something that’s illegal, you don’t want the DMV coming back and chasing you down thinking that you did something wrong. So make sure that you submit that ownership transfer. Don’t wait for the buyer to do it. Maybe they want to sit around for two months so they don’t have to pay the fees or sales tax or they’re going to work on it for two months. You want to make sure that vehicle gets out of your name as soon as possible so you don’t have liability purposes.

Conclusion
Remember, we are not attorneys. We’re not giving you legal advice. If you need more detailed information about the legalities of a title transfer, contact the DMV or a qualified automotive attorney. These are just things that you want to be aware of when you’re buying or selling a vehicle to make sure you get the paperwork right so you don’t run into problems later from a seller’s standpoint or a buyer’s standpoint.

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