To sell a used car, dealers are bound to a list of state and federal laws to ensure that the process is legal and that they offer full disclosure. Individuals who are looking to sell a vehicle do not have to abide by the same laws as dealers—unless they wish to become one. However, depending on the state in which you stay, there are some laws to be aware of. They may not all apply to your case, but being aware of the laws is helpful so can make an honest transaction.
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4 Laws to Know
The following 4 laws are applicable to individuals as well as dealers. Used vehicle dealers are subject to further regulation, but for the average seller of a used vehicle, these do not apply.
- State Lemon Laws: Not every state may make it a legal offense to consciously sell a vehicle with problems without disclosing them, but some do. In practice, when selling your used vehicle to a new buyer, you want the highest price possible. However, if you know of something wrong with the car and do not state it, you may be unwittingly breaking the law in your state. It is “buyer beware” when making a used vehicle purchase from a private party, but the seller should act in compliance with any regulation that applies in their state. Check with your state’s DMV for the appropriate laws.
- Car Title Laws: When a used vehicle is exchanged between private parties, by law the car’s title must be exchanged as well and sent in to the Department of Motor Vehicles. This law transfers legal ownership of the vehicle in the eyes of the state. Sellers must sign off on the backside of the title before handing it over to the new owner of the vehicle. Buyers usually have 30 days to re-register the title with the DMV. Of course, as the seller, you are not responsible for the buyer’s actions after you make the sale, but if the title is never switched and vehicle is involved in an accident or crime, investigators could come knocking at your door.
- Dealer License: As already state, individual sellers are not bound to the same laws and regulations as dealers. However, if an individual seller is in the practice of selling used cars they got in a privately, they are a de facto dealer and legally must obtain a license. One illegal practice is refered as curbstoning, in which individuals sell vehicles that are not found on a dealership lot. Sellers may do this to avoid obtaining the necessary license to sell used cars. Selling one vehicle is perfectly legal. Selling car after car requires a license.
- Bill of Sale: It may not be a legal necessity in your state, but giving a bill of sale or a receipt to the buyer of your car is good practice. It’s wise to do because it offers both you and the buyer a record of the transaction. It can literally be a printed Word document indicating the date of sale, agreed price, VIN and the names of the people involved.
Before you attempt to sell your used vehicle, familiarize yourself with any laws that may apply to your situation for your state. You are not bound to the same rules that dealers are, but you still may be needed to follow specific guidelines.