1. Filing a Release of Liability Form After a Car Sale
2. How to Release Your Liability After a Car Sale
3. How to Protect Yourself When Selling a Vehicle

Most states require a release of liability form for a car sale. This form notifies the local Department of Motor Vehicles' office that you've sold the vehicle and releases you from any liability.

Filing a Release of Liability Form After a Car Sale

When you independently sell a vehicle, you're at risk if the person who purchased it keeps the car in your name. If they get into an accident and the vehicle is still titled and registered in your name, you can be responsible for the damages. As a seller, you must create a bill of sale and properly transfer the car's title. Once the car is sold, it's also important to cancel the auto insurance policy to cut all remaining ties to the vehicle.

Most importantly, you must notify the Department of Motor Vehicles (DMV), the county clerk's office, the secretary of state, the Department of Revenue (DOR), or the Motor Vehicle Administration (MVA) with a release of liability form or a notice of transfer. Which office you'll need to contact depends on where you live. When in doubt, contact your local DMV office and inquire about a notice of transfer or release of liability form.

You must file the proper form within a certain number of days after selling the vehicle, so be sure to complete the task in a timely manner. The last thing you want is to leave yourself open to damages if the buyer gets into an accident or has a traffic violation while the car is still in your name.

Even if your state doesn't require a post-sale notification, it's still a good idea to inform the county clerk's office or DMV. Depending on your state, you may also need to surrender your license plates after selling the vehicle.

How to Release Your Liability After a Car Sale

Submit a release of liability form before canceling your auto insurance on the car. Most states make it easy to submit the release of liability form online or via mail, but you may have to visit the office in person to complete the paperwork.

In general, you must provide the following information on a notice of transfer or release of liability form:

  • Your name and contact information
  • The name and contact information of the person who purchased the car
  • The car's license plate number
  • The car's make, model, year, and color
  • The vehicle identification number (VIN)
  • The reading on the odometer at the time of the sale
  • The date of the title transfer

Contact your local DMV office for specific details about what information you will need to provide. If your state requires you to submit a release of liability form, you can usually download it online from the DMV's website or pick it up in person.

How to Protect Yourself When Selling a Vehicle

It's important to protect yourself when selling a car, and that starts with screening potential buyers. Insist on only speaking to serious buyers over the phone before scheduling an in-person meeting and test drive. You'll be able to ask about payment options and whether they have financing squared away. This also gives the buyer a chance to ask questions.

Be wary of anyone offering to buy the car sight unseen. It's best to meet someone who is serious about purchasing a reliable vehicle in person. Cash, money orders, or bank financing are preferred methods of payment as a check can bounce, leaving you with no money or car.

Make sure your insurance coverage extends to other drivers before inviting anyone to test drive your car. It's also a good idea to see the potential buyer's driver's license before allowing them to take the car for a spin.

Only meet prospective buyers in a public area during the day, such as a grocery store parking lot or close to their bank. Always accompany them on the test drive no matter what sort of collateral they leave with you in exchange for driving it. If possible, ask a friend or relative to join you for the exchange.

Have all paperwork ready for the test drive in the case the buyer wishes to purchase the car. Keep the car's title out of sight until you receive payment.

If you need help with a release of liability form for a car sale, post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.