A Release of Liability form is one of the most crucial documents to complete when a used car is sold or transferred privately. This for accomplishes the following:
- Offers legal protection for both buyer and seller
- Updates your state Department of Motor Vehicles (DMV) about a transfer of ownership
- Updates your county tax records—if the buyer doesn’t pay the tax, it’s on them, not you
Read on to learn what exactly a Release of Liability does, when it’s required by law, and why you should complete one, even if it’s not mandatory in your state.
What Is a DMV Release of Liability?
A Notice of Release of Liability (NRL—also called a Notice of Transfer, or Notice of Transfer and Release of Liability) is a document used to update the DMV database when a person transfers ownership of a car to another individual. It’s the seller's or previous owner's responsibility to fill out and file this document with their local DMV in a "timely manner."
The amount of time transferors have to file this notice varies considerably from state to state. More lenient states allow up to 30 days from the date you surrender the vehicle to file the release, whereas others (like California) only allow five days between the time the transfer of ownership takes place and the time the DMV receives your release form.
When Will I Need to File a DMV Release of Liability?
If you are selling or gifting your car to someone, you should file a Release of Liability form with the Department of Motor Vehicles in your state. Different states have different paperwork requirements for a private vehicle sale, so check with your state to see an NRL is required. If your state requires this form, there are no private party exemptions to the rule.
However, transfers between lenders do not require a Release of Liability. That means, if your car was originally financed with Bank X and you refinance with Bank Y, no form is necessary. Likewise, if you're paying off your car and a lienholder is being removed altogether, that also doesn't require an NRL, according to the DMV.
What Should I Do Before Filing a Release of Liability?
Before filing a Release of Liability, you should first ensure that your sticker is up-to-date if your state requires annual vehicle inspections. You can find a detailed list of inspection procedures and the states that conduct them here. Before the vehicle sale, you should also:
- Check with your DMV to see if you need liability insurance at the time of sale. In many states, selling a car without an auto insurance policy may result in you having to pay hefty penalties for lapsed insurance. If you don’t have car insurance, get a quick quote here.
- Draw up the bill of sale. You can find free printable templates for this here; just select your state from the list and you’ll be directed to the file. Note that PrivateAuto automates the bill of sale process by allowing buyer and seller to e-sign the document from their phones with our mobile app.
- You may need to fill out a separate Odometer Disclosure form stating the odometer reading at the time of sale. Like all official forms, you'll need to write down the vehicle identification number (VIN) to identify your car.
- You may also need to fill out a separator Damage Disclosure form, according to your state’s regulations. New York State requires private sellers to complete both an Odometer and Damage Disclosure form before vehicle transfer. Failure to provide this document can result in fines and/or imprisonment, according to the NYDMV website.
- Complete a Notice of Title Transfer or Release of Liability form. This form goes by slightly different names in each state. The Texas Department of Motor Vehicles, for instance, has a Vehicle Transfer Notification form that releases your liability when you transfer your car to any party (including a dealer).
With these steps completed, you can confidently sign the vehicle title over to its new owner. Depending on your state, you may also need to get the vehicle license plates and turn them into the DMV. Alternatively, you might be able to keep and transfer your plates to your next car.
Note that the buyer will need to register the car under their name and address, and may be required to pay sales taxes on the sale of the vehicle, depending on the state.
What Information Is Required to Complete an NRL?
Release of Liability form requirements differ from state to state. Generally, you’ll be required to input the following information:
- The previous owner's name AND the new owner’s name. Both should be entered according to what their driver's licenses state (i.e., "Nathaniel" instead of "Nathan").
- Contact information for the previous owner AND new owner. This would include an address and phone number, at minimum.
- License plate number currently assigned to the vehicle. In most states, you'll want to remove and keep the license plates.
- Vehicle description. In addition to make, model, and year, the form may ask for body style and color.
- Vehicle Identification Number (VIN). This can typically be found on the dashboard through the windshield, in the inner door jamb, and elsewhere on the vehicle.
- Exact mileage at the time of sale. Remember, you may also need to fill out a separate form confirming the odometer reading. It is illegal in every state to lie about a car's mileage.
- Date of title transfer, which is the date you both sign the vehicle title and other forms and the new owner leaves with the vehicle.
If you have any questions regarding the sale or your responsibilities, you should get in touch with your local DMV far in advance. Here's a tip: If you can't get a hold of your own county's DMV, you can contact a smaller county's DMV in your state. Since DMVs are managed at the state level, they all must follow the same rules and regulations so they'll all be able to answer your questions.
What’s the Difference Between a Title Transfer Notice and a Release of Liability?
If you look at a Title Transfer Notice and Release of Liability side-by-side, you’ll see they require the same information, so what’s the difference? Well, in some states, there isn’t one. Both Texas and California DMVs have combined these two forms into a single application, often called the "Notice of Transfer and Release of Liability."
Some states only require sellers to submit a Title Transfer Notice. These states typically reserve Release of Liability notices for former owners who are still receiving tax documents or tickets associated with the car after they’ve filed a title transfer. Check out AAA’s list of Title Transfer requirements for each state.
Do You Need a Release of Liability to Sell Your Car?
Most states require sellers to file a notice soon after the transaction takes place. Even if your DMV doesn’t have a Release of Liability requirement, your county may still use them for tax purposes.
Legal experts recommend all former owners submit a Release of Liability as a precautionary measure when selling or gifting a car to another individual. The filing fee for a Release of Liability is less than $5 in most places, so you’re not losing much if you don’t need it after all. Think of it as paying for peace of mind.
What Happens If You Don’t Get a DMV Release of Liability?
In some states, you may be fine without filing an NRL. In other states, you could get into one or more of the following types of trouble.
You could face delinquent notice fines
In many states, private sellers are required by law to submit a Release of Liability within a certain number of days after the car is sold. Typically, sellers have 30 days to file with their state DMV before they face fines or other repercussions.
You could be unjustly charged for violations
Legality aside, failure to submit a Release of Liability document on time can result in the seller being held accountable for traffic violations, parking tickets, and unpaid toll fees accumulated by the new owner. When you file a Release of Liability, the DMV updates their records with the new owner’s info and releases you from responsibility if an incident arises.
California’s DMV website states that, when filled out correctly, “liability for parking and/or traffic violations and civil litigation, resulting from operation after the date of sale, becomes the responsibility of the subsequent purchaser.”
You might still receive tax and registration renewal notices for the car
The article goes on to say, “When the NRL information is received by DMV, and the vehicle record is marked, no further vehicle registration renewal notices will be mailed to you for the reported vehicle.”
In many states, this form is also used to update local tax databases. Failure to submit this form to the county tax collector could cause you to be taxed for personal property that you no longer own.
According to the California DMV website, registration renewal notices are automatically mailed about two months before the registration is set to expire. The site states “renewal notices are generated within days of the sale of your vehicle and the documents may cross in the mail.” If you receive one of these within 60 days after you sell the vehicle, you should check with the DMV just to be on the safe side.
How Can You Get a DMV Release of Liability Form?
There are a few different ways you can acquire this form. If you’re patient enough to withstand your local DMV’s wait time, you can obtain and file your notice there. Alternatively, you can print off an application from your state’s DMV website and drop it off once you’ve completed it.
Most DMV websites allow users to submit this form directly through the site, which for many is the most convenient option. You can submit your notice by mail, though it is the riskiest option. When using the postal service, there’s always the chance your document could get lost during processing or arrive past the deadline, which could result in costly fines.
Legal experts recommend following up with your local office 2-3 days after you submit your notice online or by mail. This’ll ensure the information was received and entered into the system, which may prevent you from being fined.
What Are the Fees Associated with Filing a Release of Liability?
The fees for filing range from $3 to $5 and are due at the time of submission. DMV offices accept payment in the form of cash, check, money orders, debit cards, and major credit cards. Those who file online will only be able to use credit or debit cards. If you choose to submit your form by mail, you’ll need to include a check or money order.
What Happens Next?
If you’ve gotten to the point where you need a Release of Liability, the hard part of the sales process is over. You’ve already found a buyer, drafted a bill of sale, submitted a title transfer application, and handed over the keys and title. Now you must sever the remaining ties to the car.
- Cancel the auto insurance policy on the vehicle.
- Take copies of the bill of sale, title transfer, and release of liability notice to your county tax collector so they can update their system.
- Check with the DMV within 30 days after the vehicle transfer to make sure the new owner registered the car in their name.
- From there, you'll just need to focus on getting into a new ride.
Steps for Selling Your Vehicle through PrivateAuto
Steps for Selling Your Vehicle through PrivateAuto
PrivateAuto makes selling your used vehicle easy. The sales process consists of a few simple steps:
- Gather necessary documentation
You’ll need your vehicle title and other documentation discussed above. Have it handy, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition. Get started here.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified to your preference.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a test drive
The buyer will want to test drive your car. No more back and forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to coordinate a time and place for a test drive. (Oh, and you’ll be able to finalize the transaction instantly at the test drive location, FYI.)
6. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the Bill of Sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
7. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
8. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the title transfer document.
9. Cancel car insurance
You don’t want to pay for insurance on a car you no longer own, so be sure to remove the sold vehicle from your insurance plan.
Interested in buying a used car privately? Check out our listings of used cars for sale!
FAQ on Private Car Sales
What does a release of liability do in California?
Similarly to other states, a California Notice of Transfer and Release of Liability lets the California Department of Motor Vehicles (DMV) know that you’re no longer responsible for the vehicle—or for any actions taken by its driver. We recommend you submit an NRL any time you’re selling a used car in California.
How do I replace a lost title?
If you’ve misplaced a vehicle title, or if it’s been stolen or damaged, you can replace the title by requesting a duplicate title. You can usually do this in a few simple steps:
- Identify your state’s motor vehicle authority
It’s usually called the Department of Motor Vehicles or DMV. Some states may call it by a different name, such as the Registry of Motor Vehicles or the Bureau of Motor Vehicles. In some states, motor vehicle authority falls under another department, such as the Department of Revenue or the Secretary of State.
- Complete the proper form
You’ll likely find the forms in a PDF format on your state’s website. They’re usually formatted so that you can fill it out on your computer or device before printing.
- Submit the form and pay the fee
You might be able to submit the form and pay for the fee online if you live in:
- District of Columbia
- New York
- South Carolina
In other states, you will need to submit the form and the payment by mail or in person.
Who pays the sales tax on a used car?
The buyer is responsible for paying for the used car sales tax once they purchase the vehicle. As a seller, once you transfer the title to the new owner, you are no longer responsible for paying any taxes for the vehicle.
What is the safest method of payment when selling a car?
Typically, the safest payment method when selling a car is cash. Since PrivateAuto came on the scene, the safest way to buy or sell a car—and transfer money instantaneously—is via the PrivateAuto platform. PrivateAuto users can send and receive unlimited funds through our secure PrivateAuto Pay integrated banking system.
Should you accept a cashier’s check when selling a car?
While cashier’s checks can be safe to accept when selling a car, they are quite prone to fraud. Getting your payment in cash or via a secure banking system (such as PrivateAuto Pay) is much safer.
How to protect yourself when selling a car privately?
To protect yourself when selling a car privately, we recommend the following practices:
- Don’t give out your contact information
- Verify that the buyer has the funds to purchase the vehicle
- Deal with verified buyers only
- Receive the payment through PrivateAuto Pay
The best way to protect yourself when selling a car privately is by selling on a secure website that offers these features (such as PrivateAuto).
How does PrivateAuto vet buyers and sellers?
Both buyers and sellers get verified using the latest facial recognition technology to create a safe experience. Buyers must provide drivers license information, an email address, and a phone number. This personal information is hidden from sellers and other buyers, and is only used to verify the user's identity.
Sellers must enter the VIN for the vehicle and create a profile before listing. A VIN is critical to investigating the ownership of a vehicle and determining whether the title is clean. Buyers and sellers can enjoy peace of mind on PrivateAuto knowing that both parties have been thoroughly vetted.
How to sell a car quickly?
If you want to sell your car quickly, you may think going the dealership route is your best option. However, by doing so, you’ll likely receive less money than your car is truly worth, as dealerships need to buy a vehicle for less money in order to make a profit. With PrivateAuto, you can sell your car just as quickly, and set your own price.
Is selling a car privately for cash a good idea?
Selling a car privately for cash can be a good idea, but only if you’re selling to a verified buyer. Though the chances of cash being counterfeit are low, it can still happen, and you won’t know that it did until it’s too late to do anything about it.
PrivateAuto offers the immediacy of a cash payment without the risk. Our PrivateAuto Pay feature is a full banking integration; when the buyer authorizes the funds transfer through our app, money instantly moves from their PrivateAuto account into yours—24 hours a day, 365 days a year.