The Expert Podcast

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.

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 shows the vehicle identification number. This vehicle title is issued in most states by a division called the Department of Motor Vehicles or the Department of Transportation. It’s a state-issued government document. It’ll have your name printed on the front, the VIN number, year, make, and model. On the back of the title, there’s a place for you to sign it, indicating the name of the new owner.

It's very important that when you sell that vehicle, you sign the 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. If you sign the back of the title, hand it to the buyer, and they show up at the DMV or something improper happens with that title, you may have liability. So, make sure that you sign the vehicle title over, put the name of the buyer, and the date. Many times, the title for that state will have a place where you need to put the mileage of the vehicle at the time of transfer, and some states even require the buyer to sign the title at the same time.

We also recommend that when you transfer that title, you take a photo of it—front and back—after you sign it. This will 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.

Document number two that you'll need is a bill of sale. A bill of sale will determine the terms of the sale. It’ll show the date, the amount paid for the vehicle, and any conditions—whether there’s a warranty, if it’s sold "as is," or if it’s for parts only. Make sure you write up a bill of sale for the transfer of the vehicle.

In some states, a bill of sale requires notarization. In others, 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, so make sure you abide by those rules. In fact, even if your state doesn’t have specific requirements for a bill of sale, we recommend downloading a generic bill of sale form from the internet, printing it out, and making two copies—one for you and 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 for your records. This way, you can prove how much was paid for the vehicle and the buyer’s terms and conditions. Make sure there are two copies, so the buyer doesn’t later add unauthorized details, such as a "30-day warranty."

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 this to issue a new title. Make sure you properly execute an odometer statement.

If there’s any question about the mileage on the odometer—such as whether it’s over 100,000 or 200,000—you should note that on the document. There will often be a place for "TMU" (True Mileage Unknown). This odometer statement becomes a record of the vehicle’s mileage history, and you want to make sure it’s done correctly.

At the time of transfer, you may also need a lien release if there is or was a lien on the vehicle from a bank or financial institution. Make sure you have a release document from the lienholder. A title normally cannot transfer or convey to the new owner unless you have that valid lien release. If there’s any question about a lien, make sure you have that lien release, so your buyer doesn’t come back to you later asking for additional paperwork.

The last document we recommend preparing at the time of sale is the new title application. This is the form the buyer fills out to submit to their DMV or titling division to get a new title issued in their name. A vehicle title doesn’t remain the same throughout its history—a new title is issued every time a new owner purchases a vehicle.

Even though the buyer could theoretically do this on their own, filling it out correctly at the time of sale can help speed up the process. It also ensures that you won’t have to deal with the buyer later if they run into problems.

As a bonus, some states have a notice of sale attached to the title. You can fill out this form and submit it to the DMV yourself to notify the government agency that you are no longer the owner of the vehicle.

This can protect you from liability. If something happens with the vehicle two days after the sale—like it’s involved in a hit-and-run or runs a stoplight—you don’t want the DMV coming back to you, thinking you did something wrong. Submitting this ownership transfer ensures you are no longer legally responsible for the vehicle.

Remember, we are not attorneys and are 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 steps to ensure you get the paperwork right and avoid problems later, whether you’re the buyer or the seller.