Creative Consumer: Avoid Parking Tickets After Your Car Is Sold

Oct. 22, 2007 — -- Remember how I told you I wrecked my car a couple weeks ago? Ah, yes, I too am a consumer, and expensive experiences like this always remind me of good advice to share with you readers.

The insurance company wanted to total the car and sell it for scrap, and I reluctantly agreed. When I handed the vehicle over, one of the documents I had to sign was something alerting the DMV that the car is no longer mine. Turns out that is a very important step.

If the title isn't transferred out of your name, you could end up having a retro relationship with your old car for years to come. It's the buyer's responsibility to transfer the title at the DMV. But if you sell your car to a disorganized individual or a disreputable dealer, he may not bother. After all, it takes time and costs money.

In fact, some of the sketchier used car dealers never transfer titles because they sell a car to someone with bad credit, then repossess it, then sell it to another bad risk and repo it again and so on. The shadiest used car lots avoid putting titles in their own name because they don't want the car traced back to them when somebody discovers the odometer's been rolled back. When you sell your car, it's not uncommon to get stern mailings about unpaid parking tickets the new owner has racked up.

But it can be much worse than that. Tim C. was glad to get a little money for his used van. He sold it to a used car dealer and went on his way. Three months later, he received a registered letter saying the van had been towed and he owed a couple hundred dollars to get it back. Turns out the car dealer had sold the van to an inmate in a work release program and never bothered to transfer the title.

When I investigated, I discovered the inmate didn't even have a driver's license and may not have been insured. Somehow the used car dealer got the van back and sold it to another person. I learned that person then lent the van to a friend who was driving it when he got arrested for shoplifting. Once again Tim was on the police department's radar because of a vehicle he didn't even own anymore. It took him months to straighten it out.

Individual car buyers are generally required to transfer the title right away. In some states, dealers are allowed to leave the title in your name while the car sits on their lot. Some states even allow the dealer to leave it in your name for another month or two after it's been sold. And since not all states require dealers to ask the buyer for proof of insurance, that's scary in terms of liability.

Do Your Homework

If you sell your car to an individual, offer to complete the deal at the DMV. Stand in line with them and transfer the title together before you hand over the keys.

If you sell your car to a dealer, sign the back of the title. That's supposed to clear you of liability. Also ask the dealer to sign the title. In some states a dealer is required by law to sign it. Make a photocopy of the front and back of the title and keep it for several years.

Write up a formal bill of sale and keep a copy of it for several years.

Some DMVs offer a form you can fill out to alert the state that you have sold your car. This is an extra step in case the title doesn't get transferred. Turn in the form and keep a copy.

If your state doesn't offer such a form, consider writing a letter stating you have sold the vehicle and send it to the DMV return receipt requested.

Where to Complain

If this happens to you, you can complain to the DMV about individuals and dealers. Some states also have a motor vehicle dealer board you can contact.