Picture it, you’re driving home right after buying your “new” used car and you’re absolutely giddy because you can’t believe you got such a great deal. The price was better than right, the seller was a really nice person, the car passed the mechanic’s inspection with flying colors, and now you’re out for your first cruise alone. Having just paid cash, you don’t have a care in the world.
Suddenly, your rear-view mirrors explode in an orgy of red and blue flashing lights.
Pulling over, you’re startled to hear the police officer’s voice over the loudspeaker, commanding you to get out of the car immediately—with your hands up.
Having done so, you’re absolutely stunned when the officer comes up and informs you your “new” car has been reported stolen and you’re about to be placed under arrest for grand theft auto. Shocked, you stammer it isn’t true, you just bought the car. But when the officer asks you to show either registration or proof of purchase you have nothing to show because you didn’t bother to transfer title right away.
So you call the number that’s worked every time you’ve tried to reach the seller before now, in an effort to get the seller to come down and vouch for your story to the police. There’s no answer. Suddenly, you realize that in addition to having been scammed out of your cash, you have no way to prove you shouldn’t be in jail.
Or conversely, let’s say you’re the seller, on the other side of the transaction.
You’re relaxing peacefully in your home, having just sold your car. Scanning the Internet, you’re reading the specs again of the terrific new home theater system and the 3D TV you’ve had your eye on which, you’re now going to buy with a portion of the proceeds from the sale.
Your phone rings. The caller is from the local police department asking you to come downtown and identify your car. It was just involved in a fatal accident, the driver was of your car was killed, and while the people in the other car survived, they have significant injuries. You were found through the registration papers in the car and the police department now needs your insurance information to make sure the injured parties are taken care of.
Dumbstruck, you tell the caller you sold the car, and are no longer responsible for anything that happens with it. They apologize for the inconvenience and tell you you’ll immediately be relieved of all responsibility—if you’ll just come down and show proof the car was sold.
But you can’t.
You relied on the buyer to go to the DMV to register the car in their name and now you’re on the hook for the cost of the accident.
It isn’t at all.
Unless you can legally show proof of the car title transfer you can be held liable for anything that happens with it, just as a duped buyer can be arrested for driving a stolen car—if they can’t prove the car was legally bought and paid for.
For these reasons, one of the most important aspects of the used car sales and buying process is the transfer of title.
If you’re buying a car, the car title change and registering it in your name immediately prevents an unscrupulous seller from taking your money and reporting the car stolen to the police. Or, selling you a car they know to be stolen and disappearing. Similarly, if you’re a seller, performing the vehicle title transfer to the buyer as soon as possible eliminates any potential liability you could incur in the event of an untoward incident involving the car.
For these reasons, we always recommend conducting the financial exchange aspect of your used car transaction at the DMV. That way, you can take care of all the paperwork before handing over—or accepting—the keys to the car.
The basic title transfer portion of the transaction can be accomplished between the two of you simply by signing the pertinent parts of the back of the title document. On the reverse side of the “pink slip” there is usually a section for transferring title. Once you sign it over to the new owner, title is transferred—but not necessarily recorded as such.
This only happens once the document is submitted to the DMV and they issue a new title document for the vehicle in the name of its new owner.
Once title is transferred you’ll need to make sure the registration reflects the change of ownership and is registered immediately to the new owner. To accomplish this you’ll need to show the DMV a bill of sale showing the purchase price, proof the title has been signed over, the vehicle identification number, and the current odometer reading.
While requirements vary from state to state, in general, to complete registration as a buyer, you’ll need to provide proof of insurance, a receipt for sales tax paid on the purchase, and certificates showing the car has passed smog and safety checks.