Legal Responsibilities When Selling a Car Privately

Make the sales process easier by following a few simple guidelines.
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Shopping for a new car can be exciting, but selling one can be a headache. There are a couple of benefits to selling privately, including making a little more money off the sale and avoiding the negotiating pressure that often comes with selling to a dealership. Even with these benefits, the seller should be aware of her legal obligations when making the sale.

Verify the Title

The exact process of a private car sale differs from state to state. As a general rule, however, there are a few documents that you must prepare to sell your car, the first of which is the car title. The title indicates who owns the vehicle. For example, if you own the car outright, the title will be in your name. Make sure the car title contains an accurate description of the car. This information should include the year, make and model of the car, as well as its Vehicle Identification Number. When selling the vehicle, the title is signed over to the new owner. If your car is still being financed or shows a lien holder, you may be required to get what is called a "lien release" showing that you have either paid off the loan or the bank has released you from the lien. Some states may require the lien release to be notarized before you can transfer the title.

Create a Bill of Sale

The purpose of the bill of sale is to show that a transaction occurred between the buyer and seller. Each state has different requirements for a bill of sale, which is available from your local Department of Motor Vehicles. However, most states have the same basic requirements. These requirements include the date of the sale; the name, address and signatures of both the buyer and seller; as well as the purchase price, make, model and Vehicle Identification Number of the car.

Update Emissions and Safety Records

A private seller may be responsible for updating the emissions and safety records before selling his car. Some states require that the certificate be up-to-date with the annual inspection, while others require the inspection to have occurred within the past 60 days. If the buyer resides in a different state from the seller, the seller must follow the regulations that are in place in the buyer's state. The best way to confirm the policies are through the state Department of Motor Vehicles website.

Remove the License Plate

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When selling a car, the new owner is responsible for registering the car and getting a new license plate. Before completing the transaction, be sure to remove the old license plate from your car to avoid being responsible for any moving violations or parking infractions the new owner may incur. Additionally, when you get a new car, you can transfer your license plate to that vehicle as long as it hasn't expired. Depending on the state, you may be required to report to the Department of Motor Vehicles that your car has been sold and that you removed the license plate. In most cases, you will only need to turn in your license plate if it is expired or you are moving to a new state.

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