A simple scenario: "As is" sale of a car to a stranger
In this simple case, you can follow these steps. (Be sure to review the "Tips" below.)
1. Buyer and Seller: Be sure the buyer understands that the sale is “as is.” In Maryland, an inspection is required before the buyer can register the car. This responsibility generally falls to the buyer, since the buyer is the one seeking to register the car. You may wish to state in writing that the car is being sold “as is.”
2. Buyer and Seller: The seller should park the car on the property of the buyer, or in some place where the buyer can legally keep it. (An unregistered car can be ticketed if it is parked in a public place.) The buyer can also have the car picked up by a tow truck.
3. Buyer and Seller: Sign over the title and receive cash.
4. Buyer and Seller: Bill of Sale options: (Required by law for newer cars being sold cheaply)
a. If the car is older than 7 years, OR if the car is being sold for the blue book value, or more, you are NOT required to use a notarized MVA Bill of Sale.
b. If the car is 7 years old or newer, AND the sale price is less than the blue book value, you must use notarized MVA Bill of Sale. (See link below)
c. Whether or not the MVA requires you to use its Bill of Sale, you may wish to use it, or to use your own contract. (See link below)
Seller’s Next Steps
5. Seller: Remove your license plates and registration certificate from the car when you hand over the keys.
6. Seller: If you recently registered or re-registered the car, you may be entitled to a partial refund when you turn in the plates. If you are seeking a registration refund, fill out and bring this form when your return your plates to MVA: http://www.mva.maryland.gov/_resources/docs/VR-021.pdf
7. Seller: Return the plates and registration certificate to the MVA. (There is no fee for returning license plates.)
8. Seller: Call and cancel the insurance on the car. (Canceling insurance before returning your license plates to MVA can result in a large fine. Be sure you get a receipt from the MVA for the license plates.)
Buyer’s Next Steps
9. Buyer: Do not leave the car unregistered on a public street or in a public place like a shopping center parking lot. This can result in a ticket.
10. Buyer: Do not drive the car without insurance or without being registered. This can result in a ticket.
11. Buyer: Have the car inspected and take an inspection report showing that the car passes inspection. You may have to perform repairs and have the car re-inspected to do this.
12. Buyer: Have the car insured.
13. Buyer: Register the car. You will need the title, signed over to you; the MVA Bill of Sale, if required; the passing inspection report; proof of insurance; and the titling fee.
Tips for the buyer and seller
Stay safe! Don’t be a theft target. Don’t show up with a large amount of cash in a place where you do not feel comfortable.
Tips for the seller:
- If you are selling the car “as is,” be careful not to promise that the car works any better than it does. You may wish to use a Bill of Sale or a written contract, even if not required, to state in writing that the sale is “as is.”
- You may also get more money for the car if you handle the inspection and repair process yourself. You may not want to pay for the inspection unless you have a contract with a buyer, however, because a passing inspection report only remains valid for a certain period of time.
- The easiest way to not be scammed is to deal only with cash. Some scams involve a buyer trying to overpay you with a bad check or other non-cash means, and having you pay back some in cash to the buyer or a third party. See other scam warnings at “Avoiding online car buying scams.”
Tips for the buyer:
- In order to register the car after buying it, you will need to prove to the Maryland Motor Vehicle Administration (MVA) that the car passes inspection. It can be hard to drive the car to the inspection after you buy it, because it is illegal to drive a car that is not registered and insured.
- It is also illegal to park an unregistered car in a publically accessible place like a street or a store parking lot.
- You may wish to arrange for the inspection and repairs before buying the car. If not, be sure you have a legal way to transport and store the car legally until it is registered.
The certificate of title
Before buying or selling a car, make sure the title is free of liens. (Liens will be stated on the front of the title.)
There is a place on the back of the title for the names and signatures of the seller(s) and the buyer(s), the sale price, the odometer reading, and the date.
The bill of sale or contract
The MVA provides a Bill of Sale form. If this form is required, fill it out and have the buyer(s) and seller(s) sign it in the presence of a Notary Public. (The Notary Public may charge a very small fee.) http://www.mva.maryland.gov/_resources/docs/VR-181.pdf
Even if you are not required to use the MVA Bill of Sale form, you may wish to use a Bill of Sale or a written contract anyway. You can use the MVA Bill of Sale, or you can write a simple contract, modeled on the MVA Bill of Sale.
If you write your own contract, you may wish to include things like those listed below.
- all of the information that appears in the MVA Bill of Sale form (Vehicle year, make, model, body style, VIN; Name of buyer; Sale Price; Odometer reading; Buyer's and Seller's names, signatures, and date of signatures);
- a statement that the car is being sold "as is," (or a statement listing any guarantees by the Seller);
- a statement of any agreement the seller makes about delivery;
- a statement that the Buyer is responsible for all liability and damages after the sale;
- a statement that the Seller owns the vehicle and has authority to sell it;
- a statement that the vehicle is free of all encumbrances, liens, taxes, and fees;
- a statement that the Seller will defend and beheld responsible for any encumbrance, lien, tax or fee owed because of the car, before the sale;
- anything else that is relevant.
This list contains some ideas, but you may not need each of these statements, and you may need other statements.
You can have the Bill of Sale or Contract notarized if you wish.