Selling a vehicle in Michigan involves more than simply exchanging a car for money. First-time sellers, in particular, may need clarification on adhering to state and county guidelines. Even experienced sellers need to familiarize themselves with the state's specific rules.
Michigan Vehicle Code Chapter II, Section 257.233 outlines the procedures and documentation required to transfer a vehicle title from one owner to another. The seller must sign and date the back of the vehicle's title, including the buyer's name and address, and promptly deliver it to the buyer.
Understanding and adhering to these specific provisions facilitate a seamless and legal transfer of ownership, safeguarding both the seller and buyer from potential legal complications and financial liabilities. Meanwhile, failing to adhere to these requirements could result in legal repercussions.
Legal Requirements Before Selling a Vehicle in Michigan
To legally sell a vehicle in Michigan, several mandatory steps must be completed beforehand to guarantee compliance with state regulations.
Title Preparation
When someone wants to sell their car in Michigan, they need to take a few important steps, especially regarding the vehicle's title. The title is a legal document that shows who owns the car.
If a person is selling their car to a friend, family member, or someone they found online, they have to make sure the title is ready for the new owner.
If the original title is lost or unavailable, the seller should apply for a duplicate title.
How To Order a Duplicate Title?
To order a duplicate title online, only the vehicle owner can initiate the request through the Secretary of State's Online Services. This requires:
- Driver's license or State ID
- Date of birth
- Debit/credit card or bank account information for payment
The process involves locating the "Request a Duplicate Title" link in the Vehicle Transactions section, creating or logging into an existing online account, and following the on-screen instructions.
Michigan residents living out of state and former residents who have lost their title can only apply for a duplicate title by mail. To do so, they must complete and sign the Duplicate Title Application. Applicants must also include a check or money order payable to the "State of Michigan."
The completed application and any supporting documents should be mailed to the following address:
Michigan Department of State (MDOS)
Internal Services Section
7064 Crowner Drive
Lansing, MI 48918
In addition to online and mail-in methods, vehicle owners can schedule an appointment to request a duplicate title at any MDOS office. During the appointment, they must present their driver's license or state ID, the vehicle identification number (VIN), and payment via debit/credit card or bank account.
Owners who cannot be present can authorize a representative to apply for a duplicate title using an Appointment of Agent Form (TR-128).
The duplicate title fee is $15 and is typically mailed within 14 days, but same-day service is available for an additional $5 fee.
For Vehicle Trade-Ins
Dealerships can also apply for a duplicate title on behalf of the owner by providing a copy of their dealer license, telephone number, a signed TR-128 designating them as the owner's agent, and a photocopy of the owner's driver's license or state ID.
Vehicle History Report
Prior to initiating the sale of a vehicle in Michigan, it is highly advisable for the seller to procure a comprehensive vehicle history report. This document serves as a crucial resource, providing a detailed chronicle of the vehicle's past experiences and conditions.
By obtaining this report, the seller demonstrates transparency and establishes a foundation of trust with prospective buyers.
The vehicle history report encompasses a broad spectrum of information, including but not limited to accident records, ownership transfers, title status, and exposure to severe environmental conditions such as floods or fires. Of particular importance is the title information, which verifies that the title is clear and unencumbered by liens or competing ownership claims.
To obtain a vehicle history report, one can visit the National Motor Vehicle Title Information System (NMVTIS) and provide the VIN to retrieve a report. Note that most vehicle history providers charge a fee for their services.
Essential Vehicle Records
In addition to the vehicle history report, gathering essential records is beneficial during a vehicle sale in Michigan.
Through the guidance of the seller, a buyer may obtain relevant vehicle records by completing either the Non-Account & Individual Record Request form (BDVR-154) or the Record Request for Account Holders form (BDVR-153), depending on whether they have a record lookup account. The completed form and payment by check or money order should be mailed to:
Michigan Department of State
Record Sales Section
7064 Crowner Drive
Lansing, MI 48918-1502
Another option is ordering records during a scheduled office visit. A valid driver's license or state ID and payment are required. Each vehicle record costs $15, with an additional $1 fee for certified records. Bulk record orders have varying costs based on the number of records requested.
Sellers may need to provide certain information to acquire a vehicle record. If the person requesting the record is not the vehicle's owner, they must provide a valid reason, known as a "permissible use," as outlined in 18 United States Code Section 2721. Permissible uses include insurance purposes, employment verification, or matters related to legal proceedings.
Does Michigan Require a Pre-Sale Inspection?
Most vehicle sales don't require a pre-sale inspection, but salvage vehicles are an exception. These vehicles are declared a total loss by insurers due to severe damage and must undergo a specific inspection before they can be registered and driven again.
A vehicle gets a salvage title when it's sold for scrap or to a salvage yard because the insurer determines the damage is extensive. However, these vehicles can still be driven on public roads after a trained police officer inspects them and issues a rebuilt title.
If the damage to a vehicle is too severe and the cost of repairs far exceeds its value before the damage, it receives a scrap title. Cars with this title cannot be legally driven or retitled.
For salvage vehicles, sellers need to complete the Application for Salvage Vehicle Inspection form (TR-13A) and have the car inspected. The inspection fee can be up to $100. If the vehicle passes, the police officer will issue the Salvage Recertification(TR-13B), which the seller can use to obtain a rebuilt salvage title.
Selling a Vehicle with a Lien in Michigan
A lien is a legal claim on a vehicle's title, typically due to an outstanding loan. In Michigan, the vehicle title must be free of liens before ownership can be transferred. If a loan exists on the vehicle, the seller must first satisfy the outstanding debt with their financial institution. Once the loan is fully paid, the lienholder will release the lien either by:
- Signing the designated area on the physical title, or
- Providing a separate lien termination statement.
The seller can then present the lien-free title and the lien termination statement (if applicable) to the buyer for transfer at an MDOS branch office.
Electronic Lien and Title (ELT) System
Michigan's ELT system allows for electronic lien addition and release. Lienholders participating in ELT are required to electronically release liens upon loan satisfaction. Once all electronic liens are cleared, the Michigan DOS will print and mail an updated title to the vehicle owner.
Is ELT Mandatory?
The Michigan DOS implemented the Electronic Lien and Title (ELT) program in March 2021, which was mandatory in October 2023. Any new vehicle title issued by a lienholder on or after this date must be electronic.
This program aims to:
- Improve efficiency: Streamline the process of handling vehicle titles with liens.
- Prevent fraud: Reduce the risk of fraudulent activities associated with paper titles.
- Reduce costs: Lower expenses for both the state and financial institutions.
To know more about Michigan's electronic liens, visit the ELT Program portal.
Paper Titles and Non-Participating Lienholders
For vehicles with paper titles or liens held by financial institutions not yet participating in ELT, the following documentation is required at an MDOS office to release the lien:
- Lien release document
- Original vehicle title
- Proof of identification
It's recommended that the specific lienholder and the state's office be contacted to confirm any additional requirements or documentation that may be needed.
Out-of-State Lienholders
If the lienholder is located out of state, the seller can still register the vehicle in Michigan with proof of the out-of-state title. Acceptable proof includes:
- A faxed copy or photocopy of the title
- A recently validated title application
- A memo title
- A vehicle record printed on the issuing state's Department of Motor Vehicles letterhead
Upon presentation of these documents and proof of Michigan No-Fault Insurance, Michigan will issue a "FOREIGN OWNERSHIP-REGISTRATION ONLY" registration for the vehicle. The out-of-state title remains the official ownership document until the lien is satisfied and the title is transferred to Michigan.
Motor Vehicle Sales Tax in Michigan
Michigan Compiled Laws (MCL) Section 205.52 mandates the collection of a 6% sales tax on the total purchase price of all new and used vehicles sold within the state. This includes lease termination penalties incorporated into the vehicle's purchase price.
Licensed dealers are responsible for collecting this tax at the time of sale and remitting it to the MDOS, along with the completed Michigan Application for Title and Registration Statement of Vehicle Sale (RD-108).
A use tax exemption may be available for a vehicle title transfer to a relative. To qualify, the seller and buyer must provide documentation verifying their relationship (birth certificates, marriage licenses, or court documents) to the MDOS or local tax authority, which can confirm any additional requirements.
Sales Tax for Out-of-State Buyers
When a vehicle is purchased in Michigan by a non-resident who intends to register and title it in another state, the sales tax calculation may differ. Generally, Michigan sales tax applies unless the vehicle is shipped directly out of state by a common carrier. If a special (60-day in-transit) registration is issued, dealers or sellers must note this on the RD-108 form.
Michigan sales tax is exempt if the vehicle will be titled and registered in Alaska, Delaware, Montana, New Hampshire, New Mexico, or Oregon.
Further, dealers or sellers are advised to consult the Sales Tax for Out-of-State Vehicle Buyers guidelines for detailed guidance and the Sales Tax Table for state-specific information.
Legal Requirements After Selling a Vehicle in Michigan
Michigan vehicle sellers are required to follow legal procedures during and after the sale to transfer ownership and protect all involved parties.
Below are key requirements during and after the sale:
Odometer Reading
In compliance with MCL Section 257.233a, the seller must accurately disclose the vehicle's mileage at the time of transfer of ownership. This disclosure is documented on the BDVR-108 MDOS Odometer Mileage Statement.
The seller must furnish the VIN, vehicle make, model, year, current odometer reading, and date of sale on the form. Signatures of both buyer and seller, along with their printed names, are required to certify the accuracy of the information.
A copy of the completed BDVR-108 is presented to the buyer during the sale, and the seller retains a copy for record-keeping. The Michigan DOS may request this documentation for verification. Misrepresenting the odometer reading or providing false information can lead to legal repercussions, such as civil liability, fines, or imprisonment.
Ownership Transfer
When selling a vehicle in Michigan, the seller must transfer ownership by filling out and giving the buyer the original vehicle title and the Application for Michigan Vehicle Title form (TR-11L). The seller's printed name, address, signature, date of sale, and the accurate odometer reading must be included on both forms.
If the title lacks space for the odometer reading, the seller must complete and submit a BDVR-108 form.
The buyer then completes their section on the title with their name, address, and signature. Subsequently, the buyer is responsible for submitting the completed title to any MDOS branch office to transfer ownership officially. Along with the title, the buyer must also provide the following:
- A title transfer fee
- A plate transfer fee
- Sales tax (unless the sale is to an immediate family member)
- Any optional fees
Note that failure to transfer the title within 15 days of the sale will result in a $15 late fee.
Sellers should go with buyers to the MDOS office to make the transfer easier. If this isn't possible, sellers should keep a copy of the title and proof of sale for at least 18 months to avoid problems if the buyer doesn't transfer the title on time.
This documentation safeguards the seller from liability for any damages or violations that may occur after the sale due to the buyer's failure to transfer the title promptly.
Ownership Transfer from a Deceased Owner
The process for transferring vehicle ownership after the previous owner's death depends on whether the estate is probated.
Non-Probate Estates
The surviving spouse or legal next-of-kin can transfer the vehicle title if the deceased owner's estate is not probated. This is done by visiting an MDOS office and presenting the following documents:
- The original vehicle title
- A certified copy of the death certificate
- A completed Certification from the Heir to a Vehicle form (TR-29)
- The next-of-kin's driver's license or state identification
- Provide proof of Michigan No-Fault insurance if the vehicle will be registered
Probate Estates
If the estate is probated, the personal representative appointed by the Probate Court must assign the title to the surviving spouse. The surviving spouse then applies for a new title at any MDOS office by submitting the assigned title and a copy of the personal representative's Letter of Authority.
Titles with "Full Rights to Survivor"
If the vehicle title includes both the deceased's and the surviving spouse's names with the "Full Rights to Survivor" designation, the transfer process is simplified. The surviving spouse only needs to provide the title and a copy of the death certificate to the MDOS office.
License Plate Removal
In Michigan, license plates are generally considered the property of the vehicle's registered owner. Upon the completion of a vehicle sale, unless the plate is transferred to an immediate family member (spouse, parent, child, sibling), the seller must remove the license plate from the vehicle by visiting an MDOS branch office with the plate and the following:
- The vehicle registration or the license plate number, if verifiable
- The title for the vehicle receiving the plate or an application copy if recently applied for
- The seller's Michigan driver's license or identification card
The seller will then need to complete an application for license plate transfer and pay the required fees, ranging from $10 to $15, depending on the situation and the vehicle receiving the plate. The plate transfer fee calculator can assist in determining the exact amount due.
Bill of Sale
A bill of sale is not legally mandated for vehicle transactions in Michigan. However, it is strongly recommended as a best practice to document the transfer of ownership and protect both the buyer and seller.
A comprehensive bill of sale for private vehicle transactions should include the date of sale, vehicle details (year, make, and model), VIN, agreed-upon purchase price, and the legal full names and signatures of both the seller and buyer.
While not obligatory, many private vehicle owners choose to notarize their bill of sale as an added precaution.
How To Notify the Michigan DOS of the Sold Car?
In Michigan, when someone sells their vehicle, they need to properly notify the MDOS about the transfer of ownership of the sold car. However, unlike other states, Michigan does not require a specific form or system for this notification.
The process is completed when the seller fills out the reverse side of the vehicle's title with the buyer's accurate details, including the buyer's name, address, signature, date of sale, and purchase price, and submitted it to a local DOS branch office, either in person or by mail.
In some cases, additional documentation may be required, such as a copy of the bill of sale.
It is important for the seller to keep a copy of the reassigned title or a record of the sale for 18 months. This protects them from any further liability related to the vehicle after the sale.