Selling a vehicle in Minnesota is not a walk-in-the-park process. Once individuals venture into such a business, they are bound to acknowledge the legal parameters of their decision. The procedure is tedious, and sellers must adhere to regulations to protect themselves from potential liabilities.
The Minnesota Driver and Vehicle Services (MN DVS), under the Department of Public Safety (DPS), offers comprehensive guidelines for vehicle sellers that encompass the process and requirements before and after selling a vehicle.
These requirements protect the rights of sellers and buyers. They help sellers be informed of the proper documentation required. Meanwhile, these legal guidelines give buyers an overview of the vehicle sale or buying process.
Sellers should hold themselves accountable in case buyers file a dispute. Hence, a seller's good marketing strategy should not be the sole component of the vehicle-selling process. They should be well-versed in the legal standards set by MN DVS.
Legal Requirements Before Selling a Vehicle in Minnesota
Vehicle sellers in Minnesota should have a checklist of legal requirements before selling. This includes title preparation, vehicle history reports, emissions tests, etc.
Completing all these documents makes the selling process seamless. It's a good thing MN DVS has provided sellers with a list of guidelines named Just the Facts—Buying or Selling a Motor Vehicle, which enumerates the essential documents that vehicle sellers must prepare.
To give them an overview of these requirements, the following should be on their priority list:
Title Preparation
Preparing the title is a fundamental step to vehicle selling in Minnesota. This document proves the unit is legitimate and free of legal liabilities subject to the state's regulations.
Sellers should properly hand this paper to the buyer and complete the document correctly. Signing the title is of the utmost importance. With it, the title will be valid.
Sellers must also apply for a title duplication if it is mutilated, torn, or lost. In doing so, sellers may visit the nearest Deputy Registrar Office. Upon the visit, they need to show the following documents (if they are the owner of the unit):
- Driver's license/ID
- License plate number
- Verification identification number (VIN)
On the other hand, the Application for Duplicate Title form applies to applicants, not the vehicle's owner, provided the original owner duly signs the document.
Depending on the circumstances, a duplicate title can be printed with or without the lienholder listed. If the title shows a lien and the applicant desires a lien-free duplicate title, the original signed lien release card or a notarized lien release from the listed lender is required.
Otherwise, no action is necessary should the lien remain active or the applicant wishes to keep it on the duplicate title.
In case of application via mail, individuals may direct it to the address below:
Driver and Vehicle Services – Central Office
445 Minnesota Street, Suite187
Saint Paul, MN 55101-5187
The MN DVS also tries to make the process inclusive by providing technical assistance to applicants with hearing difficulties. In such cases, they may contact the customer assistance number (651) 282-6555.
As for the title duplication fee, $7.25 is collected. Applicants are advised to bring an additional budget for other expenses incurred.
Vehicle History Report
While not legally mandated, providing a vehicle history report when selling a vehicle in Minnesota can significantly enhance the transaction process. The DVS encourages sellers, particularly dealerships, to offer this report to potential buyers. This proactive approach demonstrates transparency and builds trust with prospective purchasers.
The report, obtainable through the National Motor Vehicle Title Information System (NMVTIS), offers a comprehensive overview of the vehicle's past. For a fee, an NMVTIS report covers five critical areas of the vehicle's history:
- The current title status and when it was last issued
- Any brand history
- The most recent odometer reading
- Records of total loss incidents
- Any salvage history
By presenting this information upfront, sellers can address any concerns buyers might have about the vehicle's history, potentially speeding up the sale process.
Emissions Test
Minnesota law does not mandate vehicle emissions testing. However, maintaining a car's emissions control systems in Minnesota offers numerous advantages beyond environmental benefits for responsible car owners.
Moreover, Minnesota law exempts personal vehicles from mandatory safety inspections. However, commercial vehicles exceeding 26,000 pounds, carrying 16 or more passengers, or transporting hazardous materials require regular safety checks.
Should sellers decide to let their vehicles undergo emissions testing, they may visit local emission testing centers to inquire further.
Safety Inspection
Sellers in Minnesota are advised to have their vehicles undergo a safety inspection to ensure a smooth transaction. This comprehensive evaluation, typically performed by authorized inspection stations, examines critical components like brakes, lights, and tires.
A safety inspection is not a mandatory practice in Minnesota. However, the Mandatory Inspection Program (MIP) stipulates specific types of vehicles, particularly commercial ones, that are subject to annual inspection.
Vehicle Advertisement
Vehicle sellers in Minnesota are governed by the Minnesota Automotive Advertising Standards, which seeks to provide sellers with legal guidelines when advertising their units.
These advertising codes safeguard buyers from sellers with fraudulent tendencies. The code also stipulates that vehicle sellers must use effective advertising to empower consumers to make informed decisions by highlighting factual product features and benefits.
In other words, honesty is the name of the game if sellers want to establish a clean reputation among their buyers.
Selling a Vehicle with a Lien in Minnesota
When selling a vehicle with a lien in Minnesota, sellers must initiate the selling process by contacting the lienholder, typically the bank that financed the car, to inform them of the intent to sell and discuss the payoff process. They will provide the payoff amount and any steps required to obtain a lien release.
Removing a lien from a vehicle title in Minnesota requires submitting the title itself along with either the Lien Notification card, properly signed by the lienholder, or a notarized Notification of Assignment – Release or Grant of Secured Interest (PS2017) form, also bearing the lienholder's signature.
The completed forms and required fees can be submitted at the nearest motor vehicle office. Alternatively, mail the forms along with a check made payable to "Driver and Vehicle Services" to the following address:
Driver and Vehicle Services
445 Minnesota Street
Suite 187
St. Paul, Minnesota 55101-5187
Once the lien is settled and the title is clear, the seller can negotiate the vehicle's sale price with the buyer. However, the seller must disclose the lien release to the buyer transparently. This ensures the buyer understands they are purchasing a vehicle without outstanding financial obligations.
Motor Vehicle Sales Tax in Minnesota
Most motor vehicle sales or transfers in Minnesota incur a Motor Vehicle Sales Tax (MVST) payment. This tax applies when a vehicle title is transferred, regardless of the seller (car dealer, leasing company, private seller, etc.).
The MVST is imposed on any vehicle requiring a license for road use, including cars, motorcycles, motor homes, trucks (commercial and non-commercial), trailers, vans, and even tractors and semi-trucks.
As of July 1, 2023, the tax rate is 6.875% of the taxable vehicle sales price (previously 6.5%). The tax is collected by a deputy registrar or the MN DPS during the title transfer process.
Note that most states impose a local sales tax. This means applicants should expect an increase in the overall tax they need to pay, which also varies per county.
Who Pays Sales Tax When Selling a Car Privately in Minnesota?
In Minnesota, registering a car purchased privately involves the buyer being responsible for paying sales tax. The sales tax amount is determined by the higher value between the actual purchase price of the vehicle and its fair market value.
The Minnesota Sales and Use Tax Business Guide offers a comprehensive overview and details on the sales tax regulations in the state. The Minnesota Department of Revenue also updates taxpayers on changes in tax payments as mandated by law.
For exemptions, individuals may refer to the sales tax booklets, which enumerate the specifications and circumstances of units exempted from sales tax.
Buyers must also remember that in addition to sales tax, each county charges local taxes, which means they must be ready for any additional charges that may incur.
Sales Tax for Vehicles Sold in Minnesota to Residents of Another State
In Minnesota, out-of-state residents typically do not pay Minnesota sales tax when buying a vehicle. This applies as long as they register the car in their home state. Minnesota only imposes sales tax on vehicles that will be registered within its borders.
The buyer can exempt themselves from Minnesota sales tax during the purchase by providing proof of out-of-state residency, typically through a driver's license address.
However, it is essential to consider that the buyer might still be responsible for paying sales tax in their home state when registering the vehicle. For a smooth registration process, it is always recommended that the buyer consult their home state's Department of Motor Vehicles (DMV) to confirm the specific tax requirements for out-of-state vehicle purchases.
Legal Requirements After Selling a Vehicle in Minnesota
Minnesota sellers must adhere to legal requirements during and after selling a vehicle to avoid liabilities. Following proper protocol is crucial for a smooth transition for both buyer and seller.
This involves adhering to regulations such as the odometer disclosure statement, damage disclosure, title transfer, notification of the sale to the MN DVS, and license plate detachment and insurance cancellation.
Odometer Disclosure Statement
In Minnesota, sellers must disclose a vehicle's odometer reading for all cars manufactured since 2011 and for the following 20 years. This requirement applies unless the vehicle weighs more than 16,000 pounds or is not self-propelled.
Disclosing the odometer statement prevents fraud and gives buyers an accurate mileage report during vehicle transfer.
Sellers must complete the odometer disclosure statement form with their signature. In case of errors on the odometer statement, individuals may complete the Application for Corrected Title/Odometer form.
Applicants can contact a deputy registrar or the DVS Division for help completing this form and determining the associated fees.
Damage Disclosure
Damage disclosure of the vehicle is an additional requirement for sellers during a vehicle sale in Minnesota. MN Motor Vehicle Damage Disclosure and Reporting Requirements state that sellers must disclose certain information to buyers regarding vehicle damage.
Specifically, if a seller discharges a motor vehicle less than six years old, they must disclose any prior damage exceeding 80% of the car's actual cash value before the incident.
Title Transfer
Minnesota law mandates sellers to finalize a vehicle sale by properly endorsing the title, which transfers ownership to the buyer. Transferring a vehicle title involves specific steps for sellers. They must first clearly print their name and sign within the designated area on the title.
Next, the seller must indicate the vehicle's sales price on the back of the certificate in the section dedicated to sales tax declaration. Finally, the seller is responsible for entering the date of sale and completing any relevant disclosure forms that may be attached to the title.
Sellers can conveniently transfer vehicle ownership at any of the nearly 200 deputy registrar offices scattered across the state. To find a nearby office and its operating hours, they may visit the online services provided by MN DVS or call (651) 297-2005.
Do Both Parties Need To Be Present To Transfer a Title in Minnesota?
According to Minnesota regulations, transferring a vehicle title must be completed within ten business days of the sale to avoid a penalty.
Transferring a vehicle title does not always require the buyer and seller to be present together. The seller can fill out and sign their designated area on the title in advance. The buyer can then complete their information and the Application for Title section.
However, there are advantages to both parties visiting a deputy registrar's office together. For the seller, it ensures the title transfer is completed correctly. For the buyer, it provides immediate access to the seller in case any issues arise with the title or vehicle record.
Applicants may use the Title Transfer Guide for more comprehensive details regarding the transfer process.
Notification of the Sale to the MN DVS
Minnesota law requires sellers to report the sale of a vehicle to the DVS. This notification records the ownership transfer, potentially shielding the seller from liability for any actions taken with the car after the sale.
Sellers must provide a sale report under the following conditions: When the unit was transferred or sold to an individual. The second is whether it was donated or the unit was junked or totaled.
Minnesota law mandates that sellers report the sale of a vehicle within ten days of the transaction. Sellers have two convenient methods for submitting this report: they can either report the sale online using the MN DPS services or use the "Record of Sale" stub found on most Minnesota titles. The stub should be completed and submitted to a local DVS office.
License Plate Detachment and Insurance Cancellation
In Minnesota, sellers have specific legal obligations after completing a vehicle sale.
One crucial requirement is the detachment of license plates from the sold vehicle. The seller must remove these plates immediately upon transferring ownership. This step is not merely a formality but a legal necessity to prevent any misuse of the plates or potential liability issues.
Following the sale, the seller should also cancel the insurance on the sold vehicle. This cancellation should be done promptly to avoid unnecessary premium payments and to ensure that the seller is no longer financially responsible for any incidents involving the vehicle post-sale.