Selling a vehicle in Rhode Island requires adherence to numerous rules and regulations. Fortunately, the Rhode Island Division of Motor Vehicles (DMV) offers comprehensive resources and instructions to simplify this process for sellers.
The DMV provides sellers with detailed information on the required legal documents, such as the vehicle title and bill of sale. It also emphasizes the importance of correctly assigning the vehicle title to the buyer during the ownership transfer.
Moreover, the DMV mandates additional steps after the title transfer to protect sellers from further liability. These include removing the license plate, canceling insurance, and reporting the sale.
Complying with these regulations is crucial for sellers in Rhode Island. Failure to do so can result in penalties or delays in processing the sale, causing inconvenience for both parties involved.
Legal Requirements Before Selling a Vehicle in Rhode Island
Before selling a vehicle in Rhode Island, sellers must adhere to specific legal obligations for a smooth transaction. These include preparing the vehicle title and bill of sale, conducting a thorough vehicle inspection, and obtaining a vehicle history report.
Meeting these legal requirements not only complies with Rhode Island's laws but also enhances the seller's credibility.
Prepare the Vehicle Title
Preparing the vehicle title is essential when selling a vehicle in Rhode Island with a model year 2001 or newer.
The vehicle title is the primary legal document required for transferring ownership from the seller to the buyer. Without a properly executed title transfer, the sale cannot be legally recognized.
In addition to facilitating ownership transfer, the vehicle title acts as tangible evidence of ownership. It assures potential buyers that the vehicle being purchased has a clear title and is free from undisclosed debts or legal claims.
If sellers do not have the title readily available, they can obtain a replacement or duplicate.
To get a duplicate title, interested parties must complete the Application for Title (TR-2/TR-9) form and submit it to the DMV office in Cranston, along with the $52.50 duplicate title fee.
Note that duplicate titles can only be issued to active Rhode Island-titled vehicles. Furthermore, only the owner listed on the original title can request a duplicate. If there is a lien on the original title, the lienholder may request a duplicate.
It is advisable to initiate the process of obtaining a duplicate title as soon as possible, as it can take up to 90 days to complete.
Prepare a Bill of Sale
When selling a vehicle in Rhode Island that is a model year 2000 or older, it is imperative to prepare a bill of sale. This document serves as the primary proof of ownership, particularly for the original owner, since these older model vehicles do not have a title and only began to be titled on January 1, 2024.
In addition to establishing ownership, the bill of sale is vital in transferring the vehicle's ownership to the buyer. Without this document, the buyer will face difficulties registering the car under their name.
Sellers can utilize the Sample Bill of Sale provided by the DMV to create a bill of sale. They can also find a suitable template online. However, this template should include the following details:
- The year, make, and model of the vehicle
- The vehicle identification number (VIN)
- The color of the vehicle
- The sale date
- The purchase price
- The seller's address, printed legal name, and signature
- The buyer's address, printed legal name, and signature
- The odometer reading on the date of the sale, if applicable
Conduct a Vehicle Inspection
Though not legally mandatory for sellers, conducting a vehicle inspection is strongly recommended when preparing to sell a vehicle in Rhode Island.
The state's vehicle inspection program confirms that vehicles operated on state roads meet safety and environmental standards. Qualified inspectors from various inspection stations and locations conduct these inspections to check whether vehicles are equipped and maintained enough to operate safely and cleanly.
According to regulations, all registered cars, excluding new vehicles, must possess a valid inspection certificate or pass an emissions or safety inspection five days after registration. Non-adherence to these requirements can lead to suspension of registration until compliance is achieved.
By conducting a thorough vehicle inspection prior to selling, sellers can be assured that they are offering a vehicle in good condition. Additionally, since buyers will need to pass a similar inspection when they register the car under their name, this confirmation can minimize the chances of disputes arising after the sale.
Obtain Vehicle History Report
Sellers are encouraged to consider obtaining a vehicle history report (VHR) when selling a vehicle in Rhode Island. Although not required by law, this step is highly beneficial as it facilitates a transparent transaction.
A VHR provides extensive information about the vehicle's background, including its maintenance history, accident records, mileage verification, and any outstanding recalls.
This comprehensive report allows sellers to establish trust with potential buyers by providing them with detailed information and minimizing the chances of post-sale issues. Additionally, having a VHR enables sellers to price their vehicles accurately and set realistic expectations for interested buyers.
Conversely, prospective buyers can assess the car's condition and make informed decisions based on the information provided by the VHR.
The process of obtaining a VHR is relatively simple. Sellers can acquire these reports through reputable third-party services, which typically require a fee and the VIN. Alternatively, sellers can choose to visit or contact any DMV headquarters to seek assistance in obtaining a vehicle history report.
Selling a Vehicle with a Lien in Rhode Island
Selling a vehicle with a lien in Rhode Island is possible. However, key steps must be taken to confirm that the lien is adequately addressed and that the sale is legally completed.
Initially, sellers should contact the lienholder to inform them of their intent to sell the vehicle. They must then ask the lienholder about the sum needed to satisfy the loan and remove the lien.
After settling the lien, the next step is to acquire a lien release from the lienholder. This document confirms that the lienholder no longer has any legal claim over the vehicle. The DMV accepts a lien release in the form of a signed release on the vehicle's title or a separate document provided by the lienholder.
Once the seller obtains the lien release and possesses the vehicle title, they can proceed with the sale. This involves transferring the title to the new owner by completing the relevant sections on the back, including the odometer disclosure. Subsequently, the seller must prepare a bill of sale.
After completing the paperwork, the seller can accept the buyer's payment and provide them with the assigned title, the bill of sale, the lien release document, and an odometer disclosure.
Finally, the seller must remove the license plates from the vehicle, cancel the car's insurance, if applicable, and notify the DMV of the sale. These steps are crucial to releasing the seller from liability and allowing buyers to have a smooth ownership transition.
Motor Vehicle Sales Tax in Rhode Island
When a dealer sells a used or new vehicle, the sales tax is 7% of the selling price. However, specific allowances and trade-ins apply to transactions involving passenger cars and motor homes.
When a private party sells a vehicle, the sales tax calculation varies based on the vehicle's age:
- For vehicles seven years old or less: The sales tax is 7% of the higher value between the National Automobile Dealers Association (NADA) book value and the selling price.
- For vehicles between 8 and 29 years old: The sales tax is 7% of the selling price, provided the vehicle is not on the Cars of Particular Interest (CPI) list.
Vehicles on the CPI List
The sales tax calculation also varies if the vehicle is on the CPI list:
- Dealer transactions: The sales tax is 7% of the selling price, including applicable trade-ins and allowances.
- Private sales: The sales tax is 7% of the higher value between the NADA book value, Black Book CPI, and the selling price.
Vehicles 30 Years Old or Older
The tax rules for vehicles that are 30 years old or older also vary slightly:
- Dealer transactions: The sales tax is 7% of the selling price.
- Private sales: The sales tax is 7% of the higher value between the NADA book value, CPI Book value, and the selling price.
- Private sales for vehicles on the CPI list: The sales tax is based on the higher value between the book value and the purchase price.
This tax must be remitted to the state at the time of vehicle registration and titling, typically at the DMV. However, residents can also pay this tax in advance at the Rhode Island Division of Taxation.
The state emphasizes the importance of timely payment, setting a deadline of the 20th day of the month following the purchase. Failure to meet this deadline can result in additional costs due to interest and penalties. For instance, if a vehicle is purchased on July 26, the sales tax would be due by August 20.
Who Pays Sales Tax When Selling a Car Privately in Rhode Island?
In Rhode Island, the buyer is responsible for paying the sales tax. Typically, buyers are required to settle this tax with the DMV when they register and title the vehicle.
In addition to the sales tax, purchasers must be prepared to pay registration fees, title fees, and any other applicable fees that arise during the registration process.
Sales Tax for Vehicles Sold in Rhode Island to Residents of Another State
As mentioned, Rhode Island sales tax is settled at the time of registration and titling of the vehicle. Hence, if a non-resident purchases a vehicle in Rhode Island, they are only subject to the sales tax if they register the vehicle within the state.
If residents of another state buy a car in Rhode Island for use in their home state, they are generally exempt from Rhode Island sales tax. However, once they register the vehicle, they will need to pay the sales tax in their home state.
Legal Requirements After Selling a Vehicle in Rhode Island
After a private seller has found a potential buyer for a vehicle in Rhode Island, both parties must fulfill specific legal requirements to complete the sale. These obligations include:
Odometer Disclosure Requirement
Federal and state regulations require sellers to disclose a vehicle's odometer reading when it is being sold in Rhode Island.
This crucial requirement brings significant benefits to both parties. For sellers, they do not only comply with regulations, but they can also foster transparency and trust. As for the buyers, accurate odometer information can help them assess the vehicle's condition and value and safeguard themselves from odometer fraud.
Currently, the DMV does not provide an official form specifically for odometer disclosure. Sellers can fulfill this requirement by accurately recording the mileage on the car title during ownership transfer and documenting this information in the bill of sale that will be given to the buyer. Buyers, in turn, must acknowledge the odometer disclosure by signing and printing their names.
Per regulations, the odometer disclosure is required if a vehicle being sold is a model year 2011 or newer, self-propelled, and has a registered weight of 16,000 pounds or less. If the car does not meet any of these criteria, it is exempt from this requirement.
Title Transfer
When selling a vehicle in Rhode Island, transferring the title is a critical step the seller and buyer must follow.
For sellers, properly assigning a title to buyers facilitates a smooth and legal transfer of ownership. Until the title is properly transferred, the seller remains legally responsible for the vehicle.
Meanwhile, buyers will need a properly assigned title to claim ownership rights of the vehicle. Without a properly assigned title, the buyer may face difficulties registering the car in their name.
To correctly assign the title, the buyer and seller must complete the relevant sections on the back of the title. They must provide their legal names, addresses, and signatures, as well as note the date of the sale and the odometer reading.
In cases where multiple owners are listed on the title, the number of required signatures depends on the relationship between the names. If the connection is listed as "and," all persons must sign. If it is listed as "or," only one signature is required. If no connection is specified, it defaults to "and," necessitating the signatures of all owners.
If the vehicle being sold is a model year 2000 or older and does not have a title, a bill of sale can be used for transferring ownership.
Once properly assigned, the seller can receive payment and hand the title to the buyer along with a bill of sale and, if applicable, lien release documents. This signifies the transfer of ownership and enables the buyer to register the vehicle in their name.
Do Both Parties Need To Be Present To Transfer a Title in Rhode Island?
In Rhode Island, transferring a vehicle title does not always require both parties to be present. However, confirming that the title assignment is completed accurately is crucial.
Sellers must fill out the relevant sections on the title. After it is appropriately filled out, they can transfer it to buyers along with other necessary documents. Purchasers then need to complete the relevant section on the title and bring it, along with the required documents, to any DMV headquarters to register the purchased vehicle in their name.
License Plate Return and Cancel Vehicle Insurance
Per Rhode Island regulations, sellers must remove their license plates before transferring the vehicle to the buyer. This step protects the seller from being held responsible for any violations committed by the buyer after the transfer has taken place.
The removed plates can be returned to any DMV location or by mailing them to the following address:
Rhode Island Division of Motor Vehicles
Plate Department
600 New London Ave.
Cranston, RI 02920
If applicable, sellers need to cancel their vehicle insurance as soon as possible after removing the plates. This step will free them from paying for insurance coverage on a vehicle they no longer own.
How To Notify the Rhode Island DMV of the Sold Car?
In Rhode Island, sellers are not explicitly required to notify the DMV when they have sold a car. However, taking this step is highly recommended for several reasons.
By notifying the DMV of the sale, sellers can guarantee that they are no longer responsible for any future issues or violations associated with the vehicle. This notification also benefits buyers when they register the car in their name, as it helps avoid confusion regarding ownership.
While the DMV does not provide a specific form for notifying the sale, sellers can comply by submitting a written notice or the bill of sale to any DMV location. These documents should include essential information such as the buyer's and seller's name and address, VIN, the vehicle's make, model, and year, and the sale date.
For further assistance in notifying the DMV or completely releasing liability of the sold car, sellers are advised to inquire directly by visiting any DMV office or calling (401) 462-4368.