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Car Insurance Question  When selling a motor vehicle to another person, you, the seller, should do what?

States will differ with what you have to do when selling a car but there are a few basic rules:

  • In many states the seller is required to contact the department of motor vehicles to inform it of the transfer of ownership; it's the buyer's responsibility to change the registration.
  • Notify your insurance company once the car sells, and after you have transferred the title to the new owner. Tell the company to remove it from your policy.
  • Don't take a personal check for payment. You should accept cash, a cashier's check or a money order.
  • Sign your car's title certificate to transfer ownership to the buyer. Federal law requires the seller to provide the buyer with:
    • the title certificate of the vehicle
    • an odometer statement showing the car's mileage.
    • certain states may require a smog certificate and other forms (call your department of motor vehicles to determine exactly what you'll need). Other documents, such as the car's warranty (if transferable) and service records, are not required but may be turned over to the buyer.

You need to sign the title, fill in an odometer statement and provide this to the buyer. It is always recommended to have a signed bill of sale.

Many states, such as Nevada, will require you to take the license plates off of the vehicle and either use them on another car (after letting the DMV know) or turn them in. California requires the seller to provide the purchaser with evidence of a valid smog certification and that the seller reports the change of ownership to the DMV within 5 days from the date of sale.

Always complete a bill of sale, which both you and the buyer should have a copy of. Some states have a specific form they want filled out or require such things as the VIN number, color, price and address on for this document. As you can see the laws differ so check with your DMV to see what your state requires. And always let your insurance company know about ownership changes.

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This car insurance question was asked on 1/4/2006
This auto insurance answer was last updated on 1/4/2006
Jason requested this car insurance solution.
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