You find a buyer for your car, create a bill of sale, and hand over the title. Everything is going smoothly. You head to the DMV to turn in your tag, only to learn you have even more paperwork to complete. Avoid this predicament by following these simple steps when signing over your old ride.
Transferring a car title over to another party isn’t easy.
A title transfer document isn’t difficult to come by, but it’s a lot of work for both buyers and sellers. Officiating a vehicle transfer is more time-consuming than expensive, involving plenty of paperwork and running around to make sure the documents get to where they need to be.
What makes this process even more frustrating, especially for folks who move frequently, is that every state has different requirements. Some states mandate that all vehicles must pass an inspection and emissions test before being put on the market.
Signing over a car title in any state requires the following:
- Certificate of Title
- Bill of Sale
- Odometer Disclosure
- Filing fees
*Certain states have additional requirements, including but not limited to, insurance coverage, emissions findings, vehicle history reports, and a damage disclosure form.
Here’s how to sign over a car title, step by step.
Locate the current title or apply for a duplicate
When signing over ownership of your old car, you must hand over the current title to the buyer. This is crucial, particularly for the new owner, since they’re required to have it for insurance and registration purposes.
Misplaced or destroyed titles MUST BE REPLACED before a title transfer can be honored. It may sound silly to order a copy of a misplaced title when you’re planning on transferring the title anyway, but it's the law.
You can obtain a duplicate title through the DMV, either in-office or by mail. Applications are also available for download on all DMV websites. Please note that it may take longer to receive your title if you choose to mail it.
Draft a Bill of Sale
According to Nolo, an online legal encyclopedia, “The bill of sale is a hybrid legal document with two purposes: it confirms transfer of title to (ownership of) the property and, in doing so, serves as evidence of a contract.”
Since the bill of sale states the transaction date, it can offer protection to the seller from being accused of violations they didn’t commit. This document is also very important for tax purposes, especially if the vehicle is considered a capital gain. Even if you took a loss on the sale, you should still keep a copy of this information just in case.
The bill of sale should include the following:
- Purchase date
- Legal name and physical address of the seller and buyer
- The EXACT purchase price*
- Vehicle description (make, model, year, body style)
- Vehicle mileage (and/or odometer disclosure form)
- Vehicle Identification Number (VIN)
- A formal statement that the vehicle is free of any claims, liens, and offsets.
- Warranty information
- Signatures of the seller and buyer
- Additionally, many states require a signature from either a notary public or two witnesses.
*Sellers can face legal action if the sales price listed on the bill of sale is less the amount paid. Putting a fraudulent price tag on the bill of sale is a common scam used by crooked sellers to evade steep tax rates.
Many states are cracking down on “sales-tax shortcuts” like this by comparing vehicle sales prices to the book values. It’s a good idea to keep any bank statements that prove the price is genuine, especially if you’re selling the vehicle for less than it’s worth.
This may seem commonsensical, but do not hand over the title or complete the title transfer documentation until the car is completely paid off. Once the title transfer is complete, the buyer is the legal owner of the car, regardless of if you received payment or not.
Upon receiving payment for the car, the seller should contact any lienholders to settle the outstanding debt on the vehicle.
The lending institution should also give you a lien release document, upon paying off your balance due. The seller should receive the title in between 10-30 days after the debt is settled, depending on how the information is submitted.
Obtain the title from the seller
The seller must relinquish the current title to the buyer at the time of purchase. The buyer will need this document for registration and insurance purposes. In some states, cars more than 20 years old are exempt from the title requirements. Check with your local DMV to see if this exemption applies to your vehicle.
You may need to provide proof of insurance for the vehicle
Some states require the owner to have active insurance coverage at the time of title transfer. Before beginning the process, check with your state’s DMV website or call the local office process to make sure all your bases are covered.
Notice of Release of Liability
Some states, like California, require that sellers file a Notice of Release of Liability (NRL) after a car is sold. In most states, this document is an optional precautionary measure. An NRL offers the seller protection from being unjustly charged for traffic offenses that occur after the vehicle changes hands.
NRL documents alert the DMV that the owner and person responsible for the vehicle has changed. According to the DMV website, this document’s only needed, “when ownership of the vehicle or vessel has changed. Legal owner transfers (transfers between lenders or removal of a lienholder from the title) do not require an NRL.”
Fill out a Notice of Title Transfer
Aside from the bill of sale, Notice of Title Transfer (sometimes called a Motor Vehicle Transfer Notification) is the single most important document for signing over a car. Both parties must be present to fill out and sign their respective portions of this notice.
The following information is required on the title transfer form:
- Make, model, year, and body style of the vehicle
- Title document number
- License plate number
- Date of transaction
- Legal names, addresses, telephone numbers, and email addresses of both parties
At the bottom of this form, you’ll find a certification portion where the transferor and the new owner must sign and date.
This section will read something like this:
“I, the above-listed transferor, am notifying the department of motor vehicles that I have transferred the above vehicle, which was legally owned by me and had a title issued in my name.
I understand the department will notate the transfer on the vehicle record, and under law, the vehicle will remain in my name until the new owner(s) transfers the title into their name.”
File paperwork with the DMV
Don’t wait to submit the paperwork to the DMV since many states have costly penalties for filing a Title Transfer Notice after the deadline. Every state’s different, with some allowing up to 60 days and others allowing buyers only 5 days to complete the title transfer process.
Remove the License Plate
After finalizing the transaction, you’ll need to remove the vehicle tag before handing the car over to its new owner. From there you can either surrender the tag to the DMV or have them transfer the plate number to another automobile you own.
The buyer will need a temporary tag. If the new owner has yet to get a permanent license plate, they’ll need a temporary tag or vehicle transport permit from the DMV or county tax office to legally drive the car.
Vehicle transport permit laws differ from state to state. In Texas, drivers can either pay for a 72-hour or 144-hour permit, whereas in some other states, drivers are allowed 30 days before they have to get a permanent plate. Fees for these permits range substantially, so check with your local DMV to see how much you’ll need to cover the cost.
Register the car
New owners should head to the DMV as soon as possible to register the vehicle under their name. In addition to the Application for Registration form, the DMV will request an identification, proof of address, proof of insurance, and the bill of sale.
Tips for filling out a Title Transfer Notice
- Stick with blue or black ink and refrain from using correction tape or liquid on the form. Otherwise, you could risk nullifying the document.
- Sign your name on the title transfer as it appears on the original title. This is especially significant for those who’ve had their name changed.
- Ensure the lienholder has filed the paperwork on their end to relinquish rights to the vehicle before you transfer ownership.