Selling a vehicle in Delaware involves navigating through numerous paperwork. However, with the proper knowledge and understanding of the state-specific regulations, the process can be made much more straightforward and less daunting.
The Delaware Division of Motor Vehicles (DMV) plays a central role in the vehicle-selling process. Tasked with overseeing motor vehicle-related matters in the state, the DE DMV provides guidance and resources for individuals selling their vehicles. It outlines the necessary documentation, transfer of ownership process, and other post-sale obligations.
By being aware of the specific paperwork and processes mandated by the DMV, sellers can confidently navigate the selling process and provide buyers with the required documentation to complete the transaction.
Legal Requirements Before Selling a Vehicle in Delaware
Sellers must meet specific legal requirements before selling a vehicle in Delaware. These include preparing the vehicle title, conducting a thorough vehicle inspection, advertising the car, and obtaining a comprehensive vehicle history report.
Adhering to these requirements guarantees compliance with regulations and provides clarity to potential buyers.
Preparing the Vehicle Title
A title is crucial when selling a vehicle in Delaware. It establishes the seller as the legal owner and ensures transparency for potential buyers. Without a title, the sale cannot proceed legally, and the transfer of ownership cannot be completed.
If the seller doesn't have the original title, obtaining a duplicate is necessary.
One must complete a Duplicate Title Application Form to get a duplicate title in Delaware. The application requires the vehicle's identification number (VIN), owner's name and address, owner's signature, driver's license/ID number, license plate number, and tag/registration expiration.
If the request is made by an individual other than the owner, lienholder, or dealer, a power of attorney can be used to sign on behalf of the owner. A copy of the owner's driver's license or other identification with the owner's signature must also be provided.
In cases where the vehicle has a lien, the lienholder must complete the relevant section on the application form. Alternatively, a separate lien release from the lienholder on their letterhead can be submitted. The application for a duplicate title must accompany a fee of $50.
To complete the application process, the documents and payment mentioned can be submitted to any DMV location. Mailing the request is also possible, but sending it in a self-addressed envelope is recommended.
Performing Vehicle Inspection
Another legal requirement sellers must be mindful of when selling a vehicle in Delaware is performing a vehicle inspection. This requirement assures that the cars being sold meet safety and emissions standards, promoting public safety and environmental protection.
A vehicle inspection in Delaware consists of two main components: the safety inspection and the emissions inspection.
The safety inspection focuses on critical safety components such as brakes, tires, lights, seat belts, steering, suspension, and other safety-related items. On the other hand, the emissions inspection tests the vehicle's emissions to confirm they meet the state's environmental standards.
To conduct a vehicle inspection in Delaware, sellers must follow several steps. First, they must prepare the vehicle by confirming it is in good working condition and addressing any known issues. Then, they must schedule a free inspection appointment at any DMV facility.
During the inspection process at the DMV facility, the car undergoes both safety and emissions checks. If the vehicle passes, the seller receives an inspection certificate, which is necessary for the buyer to register the vehicle in their name.
While most vehicles being titled for the first time in Delaware must undergo inspection, there are exceptions to this requirement.
New vehicles sold by dealers who provide the buyer with a Delaware Application for Title are exempt from inspection. Additionally, cars of the newest seven model years that weigh 10,000 pounds or less and are being titled for the first time in Delaware may only require a VIN verification rather than a full inspection.
Advertising the Vehicle
When advertising a vehicle for sale in Delaware, sellers must diligently adhere to state laws for a licit and transparent transaction.
The Delaware Consumer Fraud Act, found in Delaware Code Title 6, Chapter 25, Subchapter II, and the Delaware Deceptive Trade Practices Act, found in Delaware Code Title 6, Chapter 25, Subchapter III, outline the proper way of advertising for sellers.
Under the Delaware Consumer Fraud Act, sellers must refrain from making false or misleading advertising statements. This includes providing precise information about the vehicle's condition, mileage, and history, avoiding exaggerating the vehicle's features, and concealing any known defects.
Similarly, the Delaware Deceptive Trade Practices Act prohibits sellers from engaging in unfair or deceptive practices. This act requires sellers to provide potential buyers with accurate and truthful information, such as bait-and-switch advertising or false claims about the vehicle's performance or value.
Compliance with these laws allows sellers to maintain their integrity, avoid legal troubles, and build trust with potential buyers.
Obtaining Vehicle History Report
Sellers in Delaware are advised to obtain a vehicle history report (VHR) before selling a vehicle. This step fosters trust and confidence in potential buyers in the transaction.
A VHR details the vehicle's past. It includes information about the vehicle's title history, odometer readings, accident records, etc.
In Delaware, individuals can obtain a vehicle history report by utilizing various third-party sources that offer this service. Additionally, they can request vehicle records directly from the DE DMV.
When requesting from the DE DMV, interested parties must complete the Personal Information Release Form, have it notarized, and present it at any local DMV office.
One can also submit the form and payment by mail to the following address:
Division of Motor Vehicles
ATTN: Correspondence Section
P.O. Box 698, Dover, DE 19903
Note that information like VIN or license plate number is typically required when obtaining a VHR.
Selling a Vehicle with a Lien in Delaware
In Delaware, selling a vehicle with a lien necessitates adherence to specific procedures and regulations.
The first important step is to confirm that the lienholder releases their interest in the vehicle. This can be accomplished by either paying off the car loan or obtaining a letter of lien release from the lienholder.
When the lienholder holds the title, the Title From Lienholder Request form must be completed and mailed to the lienholder. Upon receipt, the lienholder will send the title to the designated DMV location specified in the form.
The DMV will subsequently notify the seller via postcard once the title is received. The postcard will also include instructions on the necessary documents to complete the transaction.
Once the title is obtained, the seller must complete the assignment section on the back portion of the title. This section requires providing the buyer's name and address, date of sale, purchase price, and odometer disclosure.
The buyer(s) must also fill out the purchaser's application on the back side of the title, provide their information, and sign the application to finalize the title transfer process.
If the title transfer has been completed, the seller must inform the DMV about the sale to ensure all necessary records are updated accordingly.
Motor Vehicle Sales Tax in Delaware
Delaware does not impose a sales tax on motor vehicle sales, making it a unique state for purchasing motor vehicles.
Instead, a documentation fee of 4.25% applies to all car transactions. This fee is calculated based on the purchase price or the National Automobile Dealers Association (NADA) book value, whichever is greater.
While spared from the burden of traditional sales tax, this documentation fee assures that revenue is generated to support various state functions.
Who Pays Sales Tax When Selling a Car Privately in Delaware?
As mentioned, private car sales in Delaware are not subject to sales tax. This means neither the seller nor the buyer must pay sales tax when selling a car privately.
Instead, a documentation fee is applicable, which is generally paid by the buyer. This fee covers the costs associated with processing the necessary paperwork and documentation for the transfer of ownership.
Sales Tax for Vehicles Sold in Delaware to Residents of Another State
When a vehicle is sold in Delaware to a resident of another state, the sales tax implications can vary depending on the buyer's location.
Generally, Delaware does not impose a sales tax on vehicle purchases. However, if the resident of another state intends to register the vehicle within Delaware, the relevant documentation fee must be settled.
If the resident of another state buyer plans to register the vehicle in their home state, they might be subject to that state's sales tax laws. Each state has its rules regarding sales tax on vehicle purchases; hence, it is advisable to check with the local DMV or tax authority to determine any sales tax owed.
Legal Requirements After Selling a Vehicle in Delaware
During and after the vehicle sale in Delaware, both parties involved in the transaction must adhere to legal obligations. These typically include disclosing the odometer, transferring the tile, removing license plates, and notifying the DVM.
Fulfilling these obligations maintains legal clarity and accountability in the selling process.
Odometer Disclosure Requirement
The Odometer Disclosure Requirement is a legal obligation when selling a vehicle in Delaware, as stipulated by the Federal Truth in Mileage Act of 1986 and the Delaware Code Title 21 Section 6407. These regulations mandate that the title include the seller's disclosed mileage upon transfer of ownership and provide a space for the required disclosure information.
The odometer disclosure is crucial for several purposes. It aids buyers in detecting any potential tampering and provides consumers with an accurate mileage record, which directly impacts the vehicle's retail value. It is also required by the DMV when the buyer or new owner registers the newly purchased vehicle.
To comply with the requirement, the seller must sign the title and print their name in the appropriate sections, certifying the sale of the vehicle and the odometer disclosure. The buyer, in turn, acknowledges the disclosure by signing and printing their name in the designated buyer's blocks.
While odometer disclosure is mandatory, certain vehicles are exempt from this requirement. These include:
- Vehicles 10 years old or older
- Commercial vehicles with a gross vehicle weight above 16,000 pounds
- Non-motorized vehicles.
Transferring the Title to the New Owner
Transferring the title of a vehicle is an essential step in selling a car in Delaware. It confirms that the buyer officially becomes the new vehicle owner and that the sale is legally complete.
To transfer the title, the seller must fill out the assignment section on the back part of the title. The seller must input the buyer's name and address, date of sale, purchase price, and odometer disclosure.
All sellers should sign and print their names in the appropriate spaces if the ownership is listed as "AND" on the front of the title. However, if the ownership is listed as "AND/OR," only one owner must complete the seller's section.
On the other hand, the buyer must fill out the Purchaser's Application section on the back side of the title, with their driver's license number and birth date. It is also mandatory for all buyers to sign this section. If the vehicle is financed, buyers must also fill out the Lien Section, which is also located on the back portion of the title.
Once all the necessary information is filled out, the seller can hand the certificate of title to the buyer. The purchaser can then use this title to apply for a new one in their name.
Do Both Parties Need To Be Present To Transfer a Title in Delaware?
The DMV strongly advises that the seller and buyer be present when completing a title transfer since both parties are required to fill out specific sections on the title document. By doing so, both individuals can review and guarantee the information's accuracy. This practice helps prevent errors or discrepancies that could delay the transfer process or lead to complications.
Removing the License Plates and Cancelling Vehicle Insurance
After a vehicle sale in Delaware, the seller must remove their license plates before transferring the vehicle to the buyer and return them to the DMV. Failing to do so may result in the seller being held liable for any violations incurred by the new vehicle owner.
Soon after removing the license plates, it is crucial to cancel the vehicle insurance. This helps sellers avoid the unnecessary expense of continuing to insure a vehicle they no longer own.
How To Notify the Delaware DMV of the Sold Car?
To notify the Delaware DMV of a sold car, the seller must furnish a Seller's Report of Sale. This form is attached to the bottom of the Delaware title and can be obtained from any DMV office.
The form requires the seller to provide specific information, including the buyer's name and address, the date and hour of the sale, and the seller's signature. It is crucial to satisfy all the requested details, as incomplete reports will be returned for proper completion.
Once the Seller's Report of Sale is adequately filled out, it must be submitted to the DMV. Sellers can submit the report in person at a DMV office or by mailing it to the appropriate DMV address.