Selling a car in California requires a comprehensive understanding of the state's specific regulations. Failure to comply with these regulations can have serious repercussions, including financial penalties and legal liability.
If the title transfer is incorrectly made, the seller is accountable for any incidents or activities involving the vehicle post-sale. Additionally, neglecting to acquire essential documentation can lead to disputes and potential legal entanglements.
Hence, it is of utmost importance for sellers to familiarize themselves with the legal requirements before and after selling a vehicle in California. From doing the necessary paperwork to notifying the California Department of Motor Vehicles (DMV) of the sale, the seller must adhere to regulations to ensure a smooth and successful transaction.
Legal Requirements Before Selling a Vehicle in California
To sell a vehicle in California, sellers must prioritize understanding and complying with the legal requirements established by the CA DMV. Here are some of the obligations that sellers need to be aware of before selling a vehicle in California:
Duplicating a Title
When selling a vehicle, transferring the title to the buyer is imperative. Thus, a valid certificate of title is essential to establish ownership.
Duplicating a title is necessary if the original title is stolen, mutilated, illegible, not received, or lost.
To obtain a replacement certificate of title, the registered/legal owner (or the individual listed on the DMV records if there is no designated legal owner) must complete an Application for Replacement or Paperless Title (REG 227) form and submit it to the local DMV office, along with the required replacement title fee.
In addition to obtaining a replacement title, it is important to rectify any errors present in the existing title. Even a simple spelling mistake can indicate potential inaccuracies in other information. A Statement of Error or Erasure (form REG 101) must be completed and submitted to address the discrepancies.
Duplicating a Registration
In California, obtaining a duplicate registration card if a registration card is lost, stolen, or damaged is critical when selling a vehicle. While the buyer can apply for their registration card, it is strongly advised that sellers possess an official card before the sale. This instills confidence and credibility in potential buyers and establishes the seller as the vehicle's rightful owner.
To acquire a duplicate registration card, sellers must complete the Application for Replacement Plates, Stickers, Documents (Form REG 156) and submit it to any DMV office. The application requires the plate number, the seller's full name, current address, driver's license number, and signature.
If available, the damaged registration card must also be included with the application. Additionally, sellers must be prepared to pay $27 to cover the duplicate registration services the DMV provides.
Smog Check the Vehicle
The state of California enforces rigorous laws regarding vehicle inspections. When selling a vehicle, sellers are legally obligated to provide buyers with a valid smog certificate at the time of sale.
These smog certifications are only valid for 90 days from the date of issuance. The vehicle must undergo another smog check if a sale does not occur within this timeframe. Also, if the car fails the smog check, the necessary repairs must be completed before the sale can proceed.
Note that there are certain exemptions to this law. Sellers who submit a biennial smog certificate to the CA DMV within 90 days of the transfer date may be exempted from providing a new one. Additionally, vehicles manufactured in 1975 or earlier and those four years old or less are exempted from this requirement.
The vehicle can be smog-checked at a DMV-authorized station.
Advertising the Vehicle
In accordance with the California Vehicle Code Section 11713, it is important to adhere to certain guidelines when advertising a vehicle for sale in California.
The code specifies that any statement made or disseminated to the public must be accurate and not misleading. Hence, the seller is responsible for ensuring that the information provided is correct and not intended to deceive potential buyers.
When advertising a specific vehicle for sale, essential details such as the model, model year, and either the license number or the vehicle identification number (VIN) must be included.
However, for current model-year vehicles, the model-year is not required to be mentioned. Keep in mind that a year model is no longer considered current when subsequent year models are available for purchase in California's retail market.
Obtaining a Vehicle History Report
Obtaining a Vehicle History Report (VHR) is paramount when selling a vehicle in California. Potential buyers often request this report to make an informed decision before purchasing.
A VHR provides a comprehensive overview of the vehicle's past. This report contains crucial information about the vehicle's history, including accident records, ownership details, and odometer readings.
To obtain a VHR in California, sellers must know the VIN. Then, they can visit private companies, which typically offer a free VIN check. Alternatively, they can utilize the Vehicle Record Request service the CA DMV provides for a $2 fee (a processing fee applies for credit/debit card transactions).
Selling a Vehicle with a Lien in California
Selling a vehicle with a lien in California involves several important steps to ensure a legal and smooth transaction.
Initially, the seller needs to contact the lienholder, typically the financial institution that provided the loan for the vehicle. Following this, the seller must request a payoff amount from the lienholder, which represents the remaining balance on the loan, including any interest or fees. Clearing this amount in full is essential before proceeding with the sale.
Once the payoff amount is obtained, the seller arranges to pay off the lien, usually through a certified check or electronic transfer. Subsequently, the lienholder issues a lien release document, confirming the lien's satisfaction.
Completing the necessary paperwork is also crucial to meet legal obligations. For the required documentation and other clarifications when selling a vehicle with a lien in California, contact the CA DMV or any local DMV office.
For those lienholders interested in selling abandoned vehicles, read the Lien Sale Procedure provided by the CA DMV.
Motor Vehicle Sales Tax in California
Motor vehicle sales tax is an important aspect of the automotive industry in California. This tax, levied on new and used vehicle purchases, generates significant revenue for the state.
The sales tax rate in California varies depending on the county where the vehicle is purchased. The current statewide base rate is 7.25%. However, additional district taxes are imposed in certain areas, which results in a total sales tax rate that can reach up to 10.25%.
While most vehicle purchases are subject to sales tax, California has certain exemptions. For instance, no sales tax is imposed if the vehicle is gifted or inherited or the transaction is made with family members. Additionally, a vehicle purchased through a government or non-profit organization may be exempt from sales tax.
These exemptions may vary depending on specific circumstances, so it is advisable to consult the CA DMV or the California Department of Tax and Fee Administration (CDTFA) for detailed information.
Who Pays Sales Tax When Selling a Car Privately in California?
In California, paying sales tax when privately selling a car falls on the buyer.
When purchasing a vehicle from a dealer, the sales tax is typically collected at the point of sale. However, in the case of a private-party sale, the buyer must pay the sales tax directly to the local CA DMV office or state DMV during the car registration process.
The sales tax amount is determined by calculating the car's purchase price percentage based on California's applicable sales tax rate.
Be mindful that a "use tax" may apply in addition to sales tax when buying a used car from a private party in California. The use tax is similar to a sales tax and is collected for personal property use, storage, or consumption, including vehicles.
Sales Tax for Vehicles Sold in California to Residents of Another State
California sales tax only applies to the sale of vehicles in the state. If the car is delivered outside California or in the location or state where the car will be registered, the buyer might be exempt from California sales tax obligations. Thus, when out-of-state residents purchase a vehicle in California, they are not required to pay the state motor sales tax.
However, the purchaser may still be responsible for paying taxes in their home state. To ensure compliance with their state's tax regulations, buyers should consult their respective state's tax authority.
Legal Requirements After Selling a Vehicle in California
During and after the vehicle sale in California, both sellers and buyers are obligated to adhere to specific legal requirements. These include:
Odometer Disclosure Requirement
The Odometer Disclosure Requirement, also known as Odometer Mileage Reporting, is vital when selling a vehicle in California. Its purpose is to document the agreed-upon mileage recorded by the vehicle at the time of sale. To comply with this requirement, both sellers and buyers must provide their original signatures and legibly hand-print their names in ink.
If the seller cannot be located for the purpose of disclosure, the buyer assumes certain responsibilities. These include accurately documenting the current mileage reading on the compliant title or a Vehicle/Vessel Transfer and Reassignment Form (REG 262).
Additionally, the buyer must complete a Statement of Facts (REG 256) form explaining the unavailability of the seller's odometer disclosure.
Failure to disclose the mileage reading during a private party sale can result in significant challenges. For example, delays or legal issues might arise as the CA DMV requires the original copy of the disclosure during the titling process.
Transferring the Title to the New Owner
To transfer the title after selling a vehicle in California, individuals must adhere to the guidelines set forth by the CA DMV.
As the seller, signing the certificate of title to release vehicle ownership is important. If the title is unavailable, completing an Application for Duplicate or Transfer of Title (REG 227) is necessary. The title should be signed by all sellers and lienholders, if applicable.
As the buyer, bring the signed title to a DMV office to initiate the ownership transfer. This process involves completing various forms, including the Application for Title or Registration (REG 343), where providing relevant information such as the driver's license number, vehicle plate number, VIN, legal owner's (or lienholder's) name and address, etc., is necessary.
Recording the odometer mileage reading on the title is also essential unless exempt. Finally, the required fees should be paid, including transfer, use tax (depending on the buyer's county of residence), registration, and any applicable penalties.
If the vehicle is financed, involving the lender to update the title or remove the lienholder's name may be necessary. If the vehicle is being sold or traded to a car dealership, having the title ready for presentation is advisable.
Moreover, if the vehicle is being transferred out of state, individuals should be prepared for additional paperwork and an out-of-state transfer fee.
Note that the title transfer process usually takes around 30 days from the time any CA DMV office receives the documents to be completed.
Do Both Parties Need To Be Present To Transfer a Title in California?
In California, it is not necessary for both parties to be present to transfer a title. The CA DMV allows for the transfer of vehicle titles through various methods, including mail, online, and in-person appointments. However, the specific requirements and documentation must be met to facilitate the title transfer process.
How To Notify the California DMV of the Sold Car?
Once the vehicle has been sold and all necessary documents have been provided to the buyer, the seller must complete the online Notice of Transfer and Release of Liability (NRL) within ten days of the sale to inform the CA DMV.
Completing an NRL informs the DMV that the individual or seller is no longer responsible for parking or traffic violations or civil or criminal actions associated with the vehicle after the date of sale.
During this process, the new owner's name and address must be on hand. Additionally, the seller should have the license plate number and the last five digits of the VIN readily available. It is also crucial to provide the vehicle's odometer reading as of the sale date.
After submitting the NRL, printing the received confirmation is recommended if a copy is desired for personal records.
Note that submission of an NRL does not signify a successful ownership transfer. The vehicle's record remains in the seller's name unless the new owner has completed the application for ownership transfer and paid the appropriate fees to any CA DMV office.