Selling a vehicle in Texas involves a high volume of transactions yearly due to the state's diverse population and expansive highway network. Regardless of the vehicle type, specific legal procedures and documentation must be followed.
Section 501.021 of the Texas Transportation Code outlines the requirements for motor vehicle certificates of title in Texas. In conjunction, 43 Texas Administrative Code Section 217.4 specifies the supporting documentation for transferring ownership during a vehicle sale.
These regulations are designed to safeguard the interests of both sellers and buyers for a transparent and secure transaction, minimizing the risk of disputes or complications.
The Texas Department of Motor Vehicles (TxDMV) is entrusted with enforcing proper documentation and robust security measures in the selling of vehicles to deter fraud. Non-compliance with these requirements can have serious legal consequences.
Legal Requirements Before Selling a Vehicle in Texas
Before selling a vehicle in Texas, there are specific legal requirements that sellers must meet to facilitate a smooth and lawful transfer of ownership. These requirements include:
Title Preparation
Thorough title preparation is the seller's first responsibility in any successful vehicle sale in Texas. Without a valid certificate of title, the seller cannot legally transfer ownership.
Under Texas Transportation Code Section 501.022, this document is essential to prove ownership, facilitating a seamless transition to the buyer. The title grants the new owner the legal right to register and operate the vehicle, making it a crucial step in the sales process that protects both buyer and seller.
Duplicating a Title
If the original title is lost, stolen, or damaged, a duplicate title must be acquired from the TxDMV prior to the vehicle's sale.
This duplicate title serves the same legal purpose as the original. To obtain a duplicate title, the seller must complete an Application for a Certified Copy of Title (Form VTR-34) and submit it either by mail or in person at a TxDMV Regional Service Center.
To submit the application via mail, send it along with the required documents to this address:
Texas Department of Motor Vehicles
1601 Southwest Parkway, Suite A
Wichita Falls, TX 76302
Regardless of the submission method, all recorded vehicle owners must sign the application and provide a copy of their photo identification. If the vehicle has a lien, the lienholder must either complete the application or provide the seller with an original release of the lien.
The seller can only apply for a certified copy of the title after a 30-day waiting period following the issuance of the last title. There is a $2 fee for mail-in applications and a $5.45 fee for in-person applications.
Vehicle Inspection Report
All vehicles in Texas must pass a state-mandated safety inspection annually. The Vehicle Inspection Report (VIR) is an official document issued by a licensed inspection station upon completion of the inspection. This report details the inspection results, indicating whether the vehicle passed or failed and specifying any issues that need to be addressed.
The VIR is a critical document for both vehicle sellers and buyers. It ensures that vehicles on Texas roads meet minimum safety standards, thus contributing to overall road safety. The VIR provides valuable information about the vehicle's condition to help buyers make informed decisions.
If a vehicle is being sold and does not have a current inspection record in the state database, the seller is obligated to provide the buyer with a copy of the VIR, which can be obtained from the Vehicle Inspection History portal.
Vehicle History Reports
While not a legal requirement, the TxDMV strongly recommends that sellers furnish potential buyers with a vehicle history report. These reports offer valuable insights into a vehicle's past, including records of accidents, title issues, and odometer readings.
Providing this information promotes transparency and builds trust with buyers. The TxDMV has approved a list of providers authorized to supply vehicle history reports from the National Motor Vehicle Title Information System.
Form 130-U
The seller must provide the buyer with a completed Application for Texas Title and/or Registration (Form 130-U). This form acts as a bill of sale and is essential for the buyer to register the vehicle in their name. The form should include the following information:
- Vehicle identification number (VIN)
- Make, model, and year
- Purchase price
- Signatures of both the buyer and seller
Selling a Vehicle with a Lien in Texas
Selling a vehicle with a lien requires specific steps to facilitate a smooth transaction and adhere to state regulations. A lien indicates that a lender or creditor has a financial interest in the vehicle, typically due to an outstanding loan.
Before selling a vehicle with a lien, the seller must obtain a lien release from the lienholder. This document, Prescribed Form for Release of Lien (Form VTR-266), confirms that the outstanding debt has been satisfied.
Once the lien is released, the lienholder has ten days to either mail the title to the seller (for paper titles) or notify the seller electronically that the lien has been removed (for electronic titles).
Removing a Lien
To remove a lien recorded on a paper title, the seller needs to visit their local county tax office. The following documents are required:
- Vehicle Title
- Release of Lien Letter and/or other notifications from the lienholder(s)
- Form 130-U
The title fee for this process is either $28 or $33, depending on the county.
If the lien was recorded electronically, the lienholder will coordinate with the Texas DMV to remove it from their records. The seller does not need to take any action in this case.
Note that selling a vehicle with a lien without disclosing the lien to the buyer is illegal. This not only mitigates the risk of legal disputes but also demonstrates the seller's commitment to conducting business transparently and responsibly.
Motor Vehicle Sales Tax in Texas
The buyer is responsible for paying the motor vehicle sales tax in Texas. Whether it's a private party sale or a purchase from a dealership, the buyer remits the tax to the state.
In the case of private party sales, the buyer is typically responsible for submitting the tax payment directly to their local county tax assessor-collector's office.
The State of Texas imposes a 6.25% motor vehicle sales tax on every retail sale of a motor vehicle within the state. This includes installment, credit sales, and property, services, or money exchanges.
Private Party Sales
When a private party sells a used vehicle, the tax rate is calculated based on the purchase price or the Standard Presumptive Value (SPV), whichever is higher. The SPV is a value the state assigns based on similar sales in the region, and it serves as a baseline to ensure fair taxation.
To determine the SPV for a specific vehicle, buyers can utilize the Standard Presumptive Value calculator. This online tool lets users input the VIN and mileage to estimate the SPV.
If a used vehicle is purchased from a private party for $12,000, and the SPV is $14,000, the sales tax will be calculated on the SPV of $14,000. Therefore, the sales tax due would be $875 (6.25% of $14,000).
For inquiries about whether a vehicle is subject to SPV, buyers can contact the TxDMV Call Center.
Out-of-State Sales
If a vehicle is purchased from an out-of-state Texas resident, the buyer must adhere to the tax laws of their home state, which may differ from Texas regulations.
It is crucial for both the seller and buyer to be aware of and comply with the tax requirements of the state where the vehicle will be registered to avoid any potential issues or penalties.
Sales to Dealerships
The sales tax is calculated differently when selling a vehicle to a licensed dealership. The dealership will only charge sales tax on the difference between the new vehicle's purchase price and the old vehicle's trade-in value.
If a buyer trades in their old vehicle for $8,000 and purchases a new vehicle for $25,000, they would only pay sales tax on the $17,000 difference. This can result in significant savings for the buyer.
To facilitate this process, the buyer must complete and submit Form 130-U to the county tax assessor-collector along with the corresponding tax payment.
For additional details or clarification, taxpayers are encouraged to contact the Texas Comptroller of Public Accounts at (800) 252-1382.
Legal Requirements After Selling a Vehicle in Texas
Aside from the preparation before selling a vehicle, sellers must adhere to the requirements during and after the sale to avoid potential liabilities. These include:
Odometer Reading
Accurate disclosure of a vehicle's odometer reading is crucial to the legal vehicle sale process. This requirement protects buyers from odometer fraud, which is the illegal act of tampering with a vehicle's odometer to misrepresent its mileage.
According to Texas Transportation Code Section 501.072, the seller of a motor vehicle must disclose the vehicle's odometer reading to the buyer at the time of transfer.
This can be done using the Federal Odometer Disclosure Statement (VTR-40). The seller must ensure the disclosure includes all required information, such as the VIN, date of transfer, odometer reading, and the seller's printed name and signature.
In cases where the odometer reading does not accurately reflect the vehicle's actual mileage, the Texas vehicle title may include an odometer brand. This designation indicates a discrepancy or issue with the odometer reading.
For more information on odometer brands and fraud prevention, sellers and buyers can refer to the resources provided by the TxDMV portal, including the Odometer Fraud guide.
Transferring the Title to the New Owner
The State of Texas mandates that a vehicle's title be transferred within 30 days from the date of sale. Failure to adhere to this timeframe can result in the seller being held liable for any future tickets or violations associated with the vehicle.
Title Requirements
When selling a car, the title must adhere to specific requirements for a valid transfer of ownership. This includes:
- The seller's signature, which signifies their agreement to relinquish ownership
- The buyer's full name and address to identify the new owner properly
- The exact date of sale
- The vehicle's odometer reading at the time of the sale
- The lienholder must also sign the title if there is an existing lien on the vehicle
The buyer must complete Form 130-U. This form, along with the signed title, can be submitted to the county tax office either in person or by mail to transfer the title into the buyer's name.
For a thorough explanation of how to apply for a Texas vehicle title, consult the Detailed Instructions for Application for Texas Title.
Do Both Parties Need To Be Present To Transfer a Title in Texas?
While it is helpful for both the seller and buyer to be present during a vehicle title transfer in Texas, it is not mandatory. The process can be completed even if one or both parties are absent.
The seller's primary responsibility is to complete and sign the title accurately. This includes filling in crucial details such as the buyer's name, the date of sale, and the current odometer reading. If there is an existing lien on the vehicle, the seller must also obtain the lienholder's signature on the title.
The buyer, on their part, must complete the Application for Texas Title and/or Registration (Form 130-U). They need to submit this form to the TxDMV along with the signed title. Additionally, the buyer is required to provide proof of insurance for the vehicle.
Although not required, having both parties present during the title transfer can be beneficial. It allows for immediate clarification of any questions, ensures accurate information is provided, and generally speeds up the process.
Copy of Documentation
Beyond the legal requirements, there are additional considerations when selling a vehicle in Texas.
The seller is advised to maintain comprehensive documentation of each transaction. This record should encompass the buyer's contact details, the precise date of the sale, and essential vehicle information.
Preserving a copy of these detailed records safeguards the seller's interests and promotes transparency throughout the sales process. Such documentation can be invaluable in resolving potential disputes or addressing inquiries that may arise in the future.
License Plates Removal
After the sale is finalized, the seller must remove the license plates. This is a crucial step in preventing fraudulent use of the plates. The seller has several options for the removed license plates.
If the seller owns another vehicle of the same classification, they may transfer the license plates to that vehicle. This option allows the seller to retain their existing registration and avoid acquiring new plates.
The seller can also keep the license plates for future use on another vehicle. However, the registration sticker cannot be transferred and must be discarded.
If the seller does not wish to transfer or retain the license plates, they must be disposed of properly. To prevent fraud, the front of the plates must be defaced using permanent black ink or another method approved by the relevant authorities.
How To Notify the Texas DMV of the Sold Car?
In Texas, when a car is sold, the seller is required to notify the TxDMV. This is achieved by completing a Vehicle Transfer Notification (VTR-346), which serves as an official sale record and helps protect the seller from potential liabilities associated with the vehicle after the sale date.
To facilitate the accurate processing of a Vehicle Transfer Notification, the TxDMV requires the submission of complete and accurate information regarding the vehicle, seller, and buyer.
Sellers have several options for submitting a Vehicle Transfer Notification. The most convenient method is to submit the notification online. Sellers can also submit the paper form in person at any TxDMV Regional Service Center. Alternatively, the completed VTR-346 can be mailed to TxDMV Vehicle Titles and Registration Division, P.O. Box 26417, Austin, TX 78755-041.
To benefit fully from the legal protection afforded by the VTRN, sellers must submit this notification to the TxDMV within 30 days of the vehicle sale.
This prompt action helps transfer the presumed ownership to the buyer, effectively shifting any potential liabilities associated with the vehicle, such as parking tickets, toll violations, or other penalties, to the new owner from the date of sale.
For further assistance or clarification regarding the sale of a vehicle in Texas, individuals are encouraged to contact the TxDMV customer service center for personalized assistance at 1-888-368-4689. Additionally, local county tax offices are available to assist with the vehicle title transfer process and provide information on motor vehicle sales tax.