Each state has its own requirements of what a buyer and seller should do when a vehicle is sold through a private sale. Some states may require you to check that the buyer has both a valid license and is insured, while other states may not.

For example, in California it is require when selling a vehicle registered in CA the owner of record must:

• Release ownership by signing the title in the appropriate area.
• Provide the purchaser with evidence of a valid smog certification, unless the car is four or less years old.
• Provide the odometer mileage, if the vehicle is less than 10 years old. If the title does not have a designated space for this then a DMV form must be filled out and submitted.
• Complete a notice of transfer and release of liability and mail it to the DMV. This is to protect your liability by reporting the change of ownership and should be done within 5 days from the date of sale. Once the DMV updates its system from the information received on this form, you (the former owner of the vehicle) will be cleared from future liability on the vehicle.

Keep a copy of these records, or the records your state requires, for your own personal files. When the buyer of the vehicle provides the DMV with the proper documentation and fees, the vehicle record should be updated to reflect the change in ownership.

In Florida, it is recommended that the seller accompany the buyer to the tag office to complete the transfer. When the new owner transfers the title into their name and registers the vehicle, they will have to show both their license and proof of insurance.

You should check with your state's Department of Motor Vehicles to find out what your state requires so that the sale can be made according to state laws. You can contact your insurance agent after the sale has been made to find out if you can take the insurance off of the vehicle at that point or must wait for confirmation from the state of the ownership change before doing so.