You can sell a car to an out-of-state buyer, and it is actually pretty common with online listings. The seller keeps the plates, the buyer pays their own state's sales tax, and both of you need to sign the title and a bill of sale. The seller should also file a release of liability with their own DMV so they are not on the hook for whatever happens after the car leaves the driveway.
Honestly, the out-of-state sale is one of those things that sounds complicated but really is not once you have done it once. I have watched plenty of private sales go sideways because the seller forgot to take the plates off, or the buyer assumed the seller would handle the tax. Do not be that person. The paperwork is simple if you know which pieces matter.
The first question everyone asks: Who pays the sales tax?
Here is the thing: in a private sale, the buyer always pays the sales tax when they register the car in their name. That is true whether the buyer lives next door or three states over. You, as the seller, do not collect sales tax unless you are a dealer or your state has a very unusual rule. Most states do not require private sellers to handle tax at all.
The buyer will pay tax based on the purchase price you write on the bill of sale and the title. Some states use the actual sale price, and some use a minimum value from a book. Either way, the buyer has to settle that with their own DMV before they can get plates. If the buyer tries to haggle you into writing a lower price to help them avoid tax, just say no. That is tax fraud, and it puts you at risk too. The DMV can come after both of you if they suspect the number is fake. Write the real price and move on.
One pattern we see from people using our bill of sale forms is that buyers often do not realize they will owe tax until they get to the DMV. Tell them upfront. It prevents a lot of angry text messages later.
What you actually sign when the car is going to another state
The stack of paper is not big, but every piece has a job. Skip one and you both end up with a headache. Here is what typically gets signed in a private out-of-state sale:
- Certificate of title: This is the big one. The seller signs the back of the title in the "seller" section. Some states also require the buyer to sign right then. The seller fills in the buyer's name and address, the sale date, the odometer reading, and the sale price. If the title has a separate odometer section, fill that too. Mess up the odometer and the buyer cannot register the car until it is fixed.
- Bill of sale: This is not the title, but it is just as important. It shows the terms of the deal: who bought what, for how much, on what date, with what odometer reading. A good bill of sale also says the car is sold "as is" and has a place for both signatures. Even if your state does not require one, the buyer's state probably does. Use a generic bill of sale that works across state lines.
- Odometer disclosure statement: On cars less than 10 years old, federal law requires an odometer disclosure. Most title forms include it, but some states have a separate form. If the car is older, you still want to write the odometer on the bill of sale so nobody later claims you rolled it back.
- Release of liability: This is a seller-only form. You fill it out and send it to your own state DMV, usually online or by mail. It tells the state "I sold this car to this person on this date. If they run a red light next week, do not send me the ticket." We will get into this more below.
Now, here is a realistic walkthrough so you can see how it actually goes. Sarah lives in Houston, Texas. She sells her 2016 Honda Civic to Mike, who lives in Columbus, Ohio. They agree on a price of $8,500. Mike flies down to Houston, looks at the car, and says yes. Here is the order they should follow:
- Sarah and Mike fill out the bill of sale together. They write the VIN, the odometer, the sale price, and the date. Both sign.
- Sarah signs the back of the Texas title. She fills in Mike's name and address as the buyer, writes the odometer, writes the sale price, and signs. If Texas requires a notary on the seller's signature, she does that now. (Texas does not require notarization for private sales, but some states do.)
- Sarah fills out a Texas Vehicle Transit Permit (Form VTR-67) online or at a county tax office so Mike can legally drive the car from Texas to Ohio without Texas plates. This gives Mike a temporary paper tag good for 30 days.
- Sarah removes the Texas license plates from the car. In Texas, plates stay with the seller. Mike drives away with the signed title, the bill of sale, and the transit permit.
- Sarah goes online to the Texas Department of Motor Vehicles and files a Vehicle Transfer Notification (Form VTR-346) within 30 days. That releases her from liability.
- Mike drives to Ohio. Within 30 days, he takes the signed Texas title, the bill of sale, and the transit permit to his local Ohio BMV office. He pays Ohio sales tax based on the $8,500 purchase price, pays registration fees, and gets Ohio plates. The Ohio BMV issues a new Ohio title in his name.
That is it. Both sides keep copies of the bill of sale and the signed title for their records.
The license plate problem nobody warns you about
This is the part that trips up more people than any other. In most states, license plates stay with the seller, not the car. That means when Mike buys Sarah's Honda in Texas, he cannot just keep the Texas plates on the car and drive to Ohio. Those plates are registered to Sarah, and if the car gets towed or runs a toll, the bill goes to her.
The buyer needs a temporary operating permit or a transporter plate to move the car legally. The type of permit depends on the state where the car is bought. Texas, California, and New York all issue temporary permits for out-of-state buyers, but the process is different in each one.
- Texas: The seller or buyer can get a Vehicle Transit Permit (Form VTR-67) from the Texas Department of Motor Vehicles or a county tax assessor-collector office. It costs about $5, and it lets the buyer drive the car for up to 30 days to get it out of Texas. The permit is printed on paper and goes in the rear window.
- California: California does not issue a paper temporary operating permit for private sales. The buyer must either get a one-trip permit from the California DMV to move the car, or they can have the car shipped. The California DMV also recommends the buyer register the car in their home state before picking it up if possible. That is a hassle, and a lot of buyers just ship the car instead.
- New York: New York has something called an in-transit permit for vehicles being moved out of state. The seller can get it from the New York DMV before the buyer arrives. It is good for 30 days and costs a small fee. The buyer also has to show proof of insurance.
The point is: do not let the buyer drive off with your plates. Take the plates off the car in front of them, and if they need a temporary tag, help them get one before they leave. If they refuse and want to risk it, that is on them, but do not sign anything that says the plates go with the car. You will end up with parking tickets from three states away.
Why the release of liability is the part you cannot skip
As the seller, the release of liability is your best friend. It is a short form that tells your state DMV "I no longer own this car, so stop sending me registration renewals, toll bills, and red light camera tickets." Most states have this form available online for free, and you should file it the same day you sell the car, or at least within the state deadline.
In Texas, it is called the Vehicle Transfer Notification and you file it online with the Texas Department of Motor Vehicles. You have 30 days. In California, it is the Notice of Transfer and Release of Liability (Form REG 138), and you must file it within 5 days of the sale. In New York, it is the Report of Sale (Form MV-104), and you file it with the New York DMV within 30 days. Each state has a different deadline, but the principle is the same: file it immediately.
Why does this matter? Because if the buyer gets in an accident, or abandons the car, or racks up tolls, and your name is still on the title as the owner, you are the one the police and collection agencies come after. Filing the release creates a paper trail that shows you were not the owner at the time of the incident. It also stops your old plates from being tied to you. I have seen sellers skip this step and then spend months fighting a $900 towing bill because the buyer never registered the car. Do not let that be you.
Edge cases that actually happen
There is still a lien on the title
If you owe money on the car and the title is held by the lender, selling out of state gets a little more complicated. You have to pay off the loan before you can sign over a clear title. Usually that means the buyer pays you, you pay the lender, the lender sends the title to you or the buyer, and then you sign it over. Some lenders will send the title directly to the buyer's DMV if you give them the buyer's information. The key is: do not hand over the car until the title is clear, and do not expect the buyer to trust you with their money while you wait for the title. Use an escrow service or a payment method that gives the buyer protection. This is a whole other article, but the short version is: handle the lien first.
The buyer wants to pay in installments
Selling a car with a payment plan to someone in another state is a terrible idea unless you keep the title until it is paid off. But then the buyer cannot register the car in their name, so they cannot legally drive it. The only real way to do this is to sign a written agreement that the title stays with you, the buyer gets a bill of sale and a temporary permit each month, and you both sign a promissory note. Honestly, if a buyer wants to make payments, just say no. Sell to someone who has the cash or gets a loan from a bank. That bank will handle the title properly.
It is a gift, not a sale
If you are giving the car to a family member who lives in another state, you still need to sign the title and a bill of sale, but you write the sale price as $0 or "gift" if your state allows it. The buyer still pays tax based on the fair market value of the car in most states, unless their state has a family gift exemption. Check the buyer's state rules before you fill out the price, because writing $0 when it is not allowed will cause a delay at the DMV.
Two people are selling the car
If the title has two owners with "and" between their names, both owners must sign the title. If it says "or", only one needs to sign. This becomes a problem when one owner is out of state. Make sure everyone who needs to sign is available before you schedule a meeting with the buyer.
Questions people ask after the sale
Can I sell a car to someone in another state without them being there?
Yes, but you have to ship the title and bill of sale separately. The buyer should send payment first, and you should sign the title and bill of sale and mail them to the buyer via a trackable method. The buyer cannot register the car until they have the signed title in hand. Some states require the seller's signature to be notarized, so do that before mailing anything.
Do I need a bill of sale for an out-of-state sale if my state does not require one?
Yes, because the buyer's state almost certainly requires one. The buyer needs a bill of sale to prove the purchase price for tax purposes and to register the car. Use a bill of sale that includes the VIN, year, make, model, sale date, sale price, odometer reading, and both signatures. Even if your state does not care, the buyer will.
What happens if the buyer never registers the car in their state?
That is the buyer's problem until something bad happens. If the car gets towed or abandoned and the buyer never transferred the title, the car is still in your name if you did not file a release of liability. That is why the release form is so important. File it the day of the sale, and you are protected. If you did not file it, you may have to prove to the buyer's DMV that you sold the car. Keep your copy of the bill of sale and the signed title forever.
How long does the whole process take for an out-of-state sale?
The actual transaction at the driveway takes about 30 minutes if you have the paperwork ready. The buyer then has to get the car back to their state and register it, which can take a few days to a few weeks depending on how far they travel and how backed up their DMV is. As the seller, you are done once you file the release of liability.
Should I let the buyer take the car before the payment clears?
Absolutely not. For an out-of-state buyer, you want the money in your account before the car leaves. If they pay by cashier's check, call the issuing bank to verify it. If they pay by wire transfer, wait until the funds actually land in your account. Do not accept a personal check from someone who lives five states away. Once that car crosses the state line, collecting a bad check becomes a legal nightmare.