The Vermont Department of Motor Vehicles (DMV) handles all vehicle-related transactions. These transactions include registration, transfer, and receipt of notification of any vehicle sale. It prescribes important forms and implements regulatory standards mandated by the Vermont motor vehicle laws.
The government agency can also verify lien over a vehicle and other historical data that residents may need with vehicle transactions.
The state has unique requirements and state-specific regulations when residents or owners sell a vehicle. Compliance with these regulations is a must for smooth transactions. It helps sellers avoid legal complications and benefits both sellers and buyers.
In Vermont, sellers must handle specific paperwork before, during, and after the sale. Notifying the state DMV about the sale is mandatory. These steps help protect the seller from future liabilities and assist the buyer in registering the vehicle without issues.
Legal Requirements Before Selling a Vehicle in Vermont
Sellers, whether vehicle dealers or residents, must follow all the rules. They must obtain the necessary legal requirements to effect a valid transaction. Here are the standard legal requirements before selling:
Prepare Vehicle Title
All vehicles in Vermont have a title, especially for 2011 and newer models. Thus, before selling a car, sellers must check if the title is in their name and free of liens. After this step, they must transfer ownership to the buyer.
Multiple ownership can happen, such as in the cases of married couples or one of the spouses who has recently died. Before effecting a sale, the title should reflect who the current owner is.
If a seller is a salvaged dealer, a written disclosure about the vehicle's condition for sale is mandatory. Moreover, the title must clearly disclose the salvage or rebuilt condition of the vehicle.
Additional or different paperwork may be required for vehicles sold as gifts, inherited, or transferred between family members.
For lost titles, sellers must request a replacement or duplicate copy online, in person, or by mail. If the last title issued to the owner/seller has a lien on it, they must also provide proof that a lien has been released.
Online Replacement of Lost Title
Using the registered myDMV account, the online request for a replacement of a lost title is only possible when a vehicle has no existing lien on it. Here are the things needed when requesting online:
- Type of vehicle
- Vehicle license plate number
- The last four characters of Vehicle Identification Number (VIN)
- Bank or credit card for payment
After a successful application, the requester can receive the replacement title within six business days.
In-Person or By Mail Request of Title Replacement
If the vehicle for sale has a lien, sellers can only request title replacement through mail or by visiting any local VT DMV offices. Furthermore, only the lienholder can apply for replacement and sign the Replacement Title Application Form VT-004. When submitting a request by mail or in person, sellers must include the appropriate fee of $42.
Sellers who opt to mail their request should use this address: Vermont DMV, 120 State Street, Montpelier, VT 05603.
Alternatively, sellers can visit the Vermont DMV website or call the nearest local office for more detailed information. The site provides comprehensive guidelines and downloadable forms to assist sellers and buyers.
Obtain Vehicle History Reports (VHR)
The VT DMV is a member of the National Motor Vehicle Title Information System (NMVTIS), where sellers can find accredited third-party providers. These reports enhance transparency between sellers and buyers. They increase confidence on the buyer's part because of the complete information presented to make an informed decision.
VHR includes vital information such as title status, history of loss claims, recall information, recorded mileage, previous owners, reported accidents, and more.
Sellers must obtain VHR from reputable and approved providers. The fees for generating these reports range from $25 to $40. Always be wary of free reports because these reports may not be reliable.
Provide Inspection Record
Vehicles must pass a safety inspection. Keeping an updated inspection record is a plus for sellers. An inspection record often includes an inspection certificate, vehicle inspection report (VIR), and the Automated Vehicle Inspection Program (AVIP) information.
Sellers can get a VIR from a Vermont-certified mechanic who works at an appointed station. There are more than 1,000 appointed inspection stations in Vermont, so it's not difficult to get one when selling a vehicle. Besides, it is a requirement to have a registered vehicle inspected once a year.
These records signify that the seller has complied with state regulations. They assure buyers that the vehicle is in good condition.
Furnish Copy of Emission Tests
Emission tests are part of the annual inspection. However, they are specifically geared towards testing a vehicle's harmful emissions. Part of the emission test is to check if the onboard diagnostic (OBD) system is still working as intended. The OBD system monitors engine performance and emission controls.
If the vehicle passes all tests, sellers can confidently offer it for sale. Otherwise, they must do the essential remedies to solve the problem.
Advertise Vehicle for Sale
Sellers can advertise a vehicle for sale. However, there are rules to follow when putting a vehicle up for sale.
Advertising copies must indicate the vehicle's prices, make, and model. Prints should be large enough for potential buyers to read. Using appropriate contrast can increase the advert's appeal.
Actual photos of the vehicle are preferred. Moreover, avoid using footnotes and asterisks, as these tactics can confuse potential buyers. Technical jargon must be explained or replaced with simpler words that buyers can understand.
If the vehicle is sold at a sales price, sellers must indicate the requirements for obtaining it. Lastly, advertisements can only last up to five days.
Selling a Vehicle with a Lien in Vermont
A lien is a legal claim against a vehicle by other parties. It can restrict sellers from freely disposing of vehicles unless they follow specific processes and complete proper documentation.
The seller must first inform the lienholder of their intent to sell the vehicle. The lienholder legally claims the vehicle until the loan or debt is fully paid.
The lien must be satisfied, or the lienholder must agree to the sale before transferring ownership to the buyer. Failure to do so can result in legal complications and the potential for the lienholder to repossess the vehicle.
Removing a Lien from a Car Title
The seller must follow several steps to remove a lien from a car title in Vermont.
Loan-Related Lien
First, the vehicle owner or seller must fully pay the outstanding debt associated with the lien. Once the debt is settled, the lienholder will issue a lien release document. This document confirms that the lien has been satisfied and that the lienholder no longer has a financial interest in the vehicle.
The seller must then submit the lien release document to the Vermont DMV. Every lien release costs $42, and an additional $14 for the lien fee.
The VT DMV will process the lien release and issue a clear title to the seller. With a clear title, the seller can proceed with the sale of the vehicle without any legal encumbrances.
The timing of a vehicle sale with a lien is crucial. Coordinate with the DMV, lienholder, and the buyer to establish that the lien is released and the title is transferred smoothly.
Some buyers may choose to complete the transaction at a bank or DMV office to facilitate the immediate release of the lien and transfer of title.
Artisan's Lien
Aside from the standard or loan-related lien, an artisan's lien may also prevent a seller from selling a vehicle, especially if there are outstanding repair costs valued at a reasonable amount. If the seller is the owner, they must pay off the repair costs.
As long as repairs are not paid and the vehicle is in the repairer's possession, the repairer has a lien over it. If the repairs remain unpaid for three months, the repairer may find a way to collect payment of repair costs by selling the vehicle in a public auction. Here are the steps that repairers can take.
First, they notify the owner about the intent to sell ten days before the public auction through the mail with a return receipt. The repairers can request the VT DMV for title search using the Record Request (Form VG-116) to check other liens.
If there are other liens, they notify the lienholder through mail with proof of receipt ten days or more before the auction sale. A lien release may not be necessary, but a notice of public auction to the lienholder is mandatory. The purpose, place, time, and date of the auction must be posted in two or more public places.
The repairers notify the owner by mail or publication about the amount due, time, date, and place. After meeting all the requirements and documents, they can proceed to sell the vehicle.
Motor Vehicle Sales Tax in Vermont
In Vermont, the vehicle sales tax rate is 6%. This tax applies to the purchase price of the vehicle or the fair market value, whichever is higher.
Who is Responsible for Paying Sales Tax in Private Car Sales?
When selling a car privately in Vermont, the buyer will pay the tax due at the time of vehicle registration.
The buyer must provide proof of the purchase price, typically through a bill of sale, and pay the corresponding sales tax to the Vermont DMV. Moreover, the buyer is also responsible for any fees when registering the vehicle.
If the vehicle is a gift or inherited, specific exemptions may apply, which the buyer must verify with the DMV.
Sales Tax for Out-of-State Buyers
When a Vermont resident sells a vehicle to a resident of another state, the sales tax rules vary depending on the buyer's home state. Vermont does not impose its sales tax on vehicles sold to out-of-state residents.
However, upon registering the vehicle, the buyer may be subjected to their home state's vehicle sales tax. Out-of-state buyers should check with their local DMV to understand their tax obligations.
Trade-ins and Sales Tax
Vermont allows a credit for trade-ins against the purchase price of a new vehicle.
If a buyer trades in their old vehicle, the sales tax applies only to the difference between the new vehicle's purchase price and the trade-in value. This can significantly reduce the amount of sales tax owed.
Tax Exemptions
Certain exemptions apply to the vehicle sales tax in Vermont. Vehicles transferred between immediate family members, such as spouses or parents to children, may be exempt from sales tax.
Additionally, vehicles purchased by non-profit organizations, government agencies, or for agricultural purposes might qualify for exemptions. The buyer must provide appropriate documentation to the DMV to claim any applicable exemption.
Legal Requirements After Selling a Vehicle in Vermont
During and after selling a vehicle in Vermont, sellers must fulfill several legal requirements to document the transaction properly and avoid future liabilities. Here are the key points:
Furnish an Odometer Disclosure Statement
In Vermont, state laws require an odometer disclosure statement for all vehicles under ten years old at the time of sale. This crucial document confirms the vehicle's mileage at the point of transfer and is part of transparency between buyer and seller.
The responsibility to complete this statement falls on the seller, who must accurately record the vehicle's current mileage. Once filled out, this statement is given to the buyer. The buyer, in turn, must submit the odometer disclosure statement to the relevant authorities during the vehicle registration process.
This step is essential for maintaining the integrity of the vehicle's mileage history, which can significantly impact the vehicle's value and future transactions. Compliance with this regulation helps to prevent odometer fraud as it vouches that the mileage reflects the proper usage of the vehicle.
Provide a Copy of Bill of Sale
A bill of sale must include specific details to be considered valid. It must list the vehicle's make, model, year, and VIN. These data provide an unambiguous identification of the vehicle being sold.
Additionally, the date of sale and the purchase price need to be clearly stated to establish the transaction terms. The buyer's and seller's full names and addresses must be included to identify all parties involved clearly and adequately.
To complete the document, both the buyer and seller must sign it. Their signatures signify their agreement to the terms of the sale. This bill of sale serves as legal proof of the transaction for the buyer when registering the vehicle.
If the vehicle is less than 15 years old, a bill of sale and a completed and signed title are required. For cars older than 15 years, only a bill of sale is necessary. However, if the last certificate of registration is available, the dealer or seller must obtain it.
Transfer Title to the Buyer
A vehicle title is proof of ownership and must reflect the owner's identity. The title has a section where sellers or owners can endorse the new owner's name, address, and date of sale.
To complete the transfer, the sellers must affix their signature and printed name as shown on the certificate. All liens must be released before the transfer.
For vehicles without a title and 2010 or older, the bill of sale and certificate of registration are enough proof to request a transfer of ownership.
Once sellers receive payment, they can hand over the title with the proper endorsement. They must also provide a death certificate or probate papers in cases of multiple owners where one recently died.
Notify the Vermont DMV of the Sold Car
After selling a vehicle in Vermont, the seller must notify the VT DMV to release liability. A letter addressed to the Commissioner with proof of the sale, such as a bill of sale or an application to transfer plate (form VD-119), can be sent to a DMV office through mail.
To notify the Vermont DMV of a sold vehicle, the seller must include the following required information:
- VIN
- Make and model of the vehicle
- Sale date
- Buyer's name and address
- Seller's signature
The seller must notify the Vermont DMV within five days of the sale. Failure to notify the VT DMV of the vehicle sale within the specified timeframe can result in penalties. The minimum penalty is $47, and the maximum is $1,197.
Upon sale, the seller must remove the license plates from the vehicle. Previous owners must complete form VD-119 within 24 hours to request the current plate number transfer to another vehicle. The transfer fee is $30.
If not transferred, the seller must surrender the plate to the Commissioner within five days. The seller may still be liable for any parking tickets, accidents, or other incidents involving the vehicle. Additionally, the DMV may impose fines or other administrative penalties for non-compliance.
Additional Steps Post-Sale
After notifying the VT DMV, a few steps remain to complete. These steps safeguard the seller from any potential legal issues or liabilities arising after the sale transaction.
Cancel Insurance
The seller should contact their insurance company to cancel the vehicle's insurance policy. Providing proof of sale to the insurer will ensure the policy is terminated correctly. The insurance becomes the buyer's responsibility as soon as the sale is complete.
Insurance coverage is not transferrable from one car to another. Sellers/owners must obtain new insurance coverage to remain compliant with state laws if they use the same registration plate for a different car they own.
Keep Copies of Documents
Retaining copies of the bill of sale, title transfer, and Notice of Sale or Transfer form greatly benefits both the buyer and the seller. These documents are essential records that can be referenced if any disputes or issues arise regarding the transaction. They can be helpful for tax purposes, warranty claims, or vehicle history verification.