The sale of vehicles in North Dakota is subject to the legal standards outlined in the North Dakota Century Code, specifically Title 39, Chapter 39-04, and Chapter 39-22. It is essential for individuals planning to sell a vehicle in North Dakota to familiarize themselves with these standards.
To maintain compliance with these standards, the North Dakota Department of Transportation (NDDOT) has delegated the responsibility of managing vehicle-related matters to the Motor Vehicles Division (MVD). The MVD is responsible for establishing and enforcing strict guidelines that vehicle sellers must adhere to.
By following these regulations, sellers can safeguard their interests and facilitate a fair and compliant transaction for themselves and the buyers. This adherence to the established guidelines promotes trust and confidence among potential buyers, enabling sellers to navigate the selling process smoothly and achieve favorable outcomes.
Legal Requirements Before Selling a Vehicle in North Dakota
Before selling a vehicle in North Dakota, sellers must consider the following key points:
Duplicate Title
Before selling a vehicle in North Dakota, the seller must possess the official title of the vehicle. The seller must acquire a duplicate title issued in their name, especially if it has been damaged, stolen, or lost. This duplicate title will then be transferred to the buyer during selling.
To get the duplicate title, the seller can apply in these ways:
- In person at any MVD local branch
- In person at any Kiosk location
By mail to:
Motor Vehicle Division
608 E. Boulevard Avenue
Bismarck, ND 58505-0700
When applying for a duplicate title, the seller must complete the Application for Certificate of Title & Registration of a Vehicle (SFN 2872) form. A duplicate title has a $5 fee. The seller must submit the form with their valid driver's license or state-issued ID. If requested in person, the processing is one week, while two weeks if requested by mail.
The seller must specify the reason for requesting the duplicate, i.e., lost, mutilated, or stolen. For further questions, sellers can contact the MVD at 701-328-2500.
Furthermore, the title will be mailed to the lienholder if there is a lien on the vehicle. The duplicate title will include a statement indicating that it is a duplicate certificate and subject to the same rights as the original certificate. They can only give the duplicate title to the buyer once the lien is cleared.
If the seller discovers the original title after the duplicate has been issued, they must surrender the original title to the NDDOT.
VIN Check
Typically, buyers take the initiative to conduct a vehicle identification number (VIN) check on vehicles they intend to purchase. However, sellers also have the option to perform this check on the vehicles they are selling.
In North Dakota, no specific online service is dedicated to conducting a VIN check. However, sellers can utilize the free tools provided by the National Highway Traffic Safety Administration (NHTSA) and the National Insurance Crime Bureau (NICB).
The NHTSA's VIN Decoder and NICB's VINCheck Lookup Tool are two online resources that sellers can access. These tools can assist in identifying various details about the vehicle, such as theft records, title status (clean, salvage, rebuilt), accident and damage history, and more.
Sellers can gain valuable information on the vehicle's history through these tools. It can greatly enhance transparency and facilitate a smoother transaction with buyers.
Vehicle History Report
Acquiring a vehicle history report is vital for buyers in North Dakota when considering a vehicle purchase. This report furnishes valuable insights into the vehicle's past, empowering buyers to make well-informed decisions.
Sellers, too, can benefit from obtaining these reports as supplementary documentation for the vehicles they are selling. This practice not only enhances transparency but also instills confidence in potential buyers.
For accuracy and adherence to legal requirements, sellers must exclusively obtain these reports from data providers approved by the National Motor Vehicle Title Information System (NMVTIS). It guarantees the reliability and up-to-date nature of the information provided.
These vehicle history reports encompass crucial details about the vehicle, including:
- Vehicle title information, encompassing the current status and previous ownership transfers.
- Date of the most recent title issuance, offering a timeline of the vehicle's ownership history.
- Official brands, designations, or remarks associated with the vehicle's title history, such as "salvage" or "rebuilt," which can significantly impact the vehicle's value and condition.
- Odometer reading, providing a comprehensive record of the vehicle's mileage over time.
- Documentation regarding any instances where the vehicle was declared a total loss or salvage due to substantial damage or other circumstances.
Vehicle Inspection
All used cars that must be re-titled require a vehicle inspection in North Dakota. For new passenger cars for sale, an inspection may not be necessary. However, it is still recommended. Sellers can have their vehicles inspected at any NDDOT service station. After the inspection, they will receive a Certificate of Vehicle Inspection (SFN 2486).
For specific questions about vehicle inspections, or if the seller believes their vehicle might require an inspection, they can contact the NDDOT at 701-328-2725.
Selling a Vehicle with a Lien in North Dakota
When a vehicle is subject to a lien, the lender or lienholder holds a legal claim to the vehicle until the loan is completely settled. To facilitate the sale of the vehicle, sellers must navigate the process of addressing the lien. The following steps outline the procedure involved in selling a vehicle with a lien:
Determine the Payoff Amount
To settle the lien on the vehicle and obtain a clear title, the seller should contact the lienholder to ascertain the exact payoff amount for the loan. This amount represents the total sum required to fully satisfy the outstanding loan balance and remove the lien from the vehicle's title.
Inform the Buyer
Maintaining open communication with the buyer is essential when there is an existing lien on the vehicle. Sellers should transparently disclose the presence of the lien and clearly explain to buyers that the sale will involve paying off the outstanding loan to release the. This level of transparency fosters trust and makes sure that potential buyers are well-informed.
Pay off the Lien
When selling a vehicle with an existing lien, the seller must address the outstanding amount owed to the lienholder. The seller should compare the lien payoff amount provided by the lienholder and the anticipated selling price of the vehicle. If the payoff is lower than the selling price, the seller can request a lien release letter from the lienholder.
This lien release letter confirms that the lienholder will remove the lien once the payoff amount is received. Armed with this document, the seller can utilize the proceeds from the vehicle sale to pay off the lienholder.
However, if the payoff exceeds the vehicle's selling price, the seller must cover the difference out-of-pocket and remit it to the lienholder. Once the lienholder receives the full payoff amount, they will release the lien, enabling the seller to legally transfer ownership of the vehicle to the buyer during the sale process.
The seller must clear all outstanding liens before proceeding with the transfer of ownership. This step is necessary for a legal and compliant transaction for both the seller and the buyer.
Obtain Lien Release
Upon the seller's complete payment of the lien payoff amount to the lienholder, the lienholder will release their legal interest and relinquish any claim over the vehicle. Subsequently, the lienholder will return the original title document to the seller, signifying the removal of the lien.
Once the lien is cleared, the seller must provide the new owner (buyer) with the Release of Lien by Legal Owner (SFN 2876) form. The registration application form also includes a dealer and lienholder information section, which must align with Form SFN 2876.
Get a Duplicate Title
The seller must acquire a duplicate title once the lienholder returns the original title. For detailed instructions on obtaining a duplicate title, please refer to this guide's "Duplicate Title" section.
Motor Vehicle Excise (Sales) Tax in North Dakota
The motor vehicle excise tax in North Dakota amounts to 5% of the vehicle's purchase price, regardless of whether it is new or used. The taxable amount includes the total purchase price, including any trade-in allowance, but excludes manufacturer rebates.
If buyers opt to purchase a vehicle from a licensed North Dakota dealer, they must pay the excise tax and purchase price directly to the dealer. Conversely, if they buy from a private seller, they must settle the excise tax when registering the vehicle in their name after the purchase.
Having a clear comprehension of North Dakota's motor vehicle sales tax empowers potential buyers to accurately calculate the total cost of their purchase and effectively plan their budget. This understanding enables buyers to be fully prepared for the financial responsibilities associated with their vehicle acquisition.
Tax Credit
Potential buyers should know that they may be eligible to claim a tax credit if they purchase a vehicle from an out-of-state dealer and have already paid the excise tax in that state. Generally, this credit is equivalent to the tax paid to the other state, up to the maximum of North Dakota's 5% tax rate.
To successfully claim the tax credit, buyers must provide documentation indicating the excise tax amount paid in the other state. Typically, this documentation includes a receipt or tax statement from the state where the tax was originally paid.
When registering the vehicle in North Dakota, buyers, as the new vehicle owners, must submit the required documentation to the NDDOT. In some cases, additional forms may need to be completed to properly claim the tax credit.
The NDDOT will review the provided documentation and apply the tax credit accordingly. Note that any remaining tax liability, if applicable, must be paid to complete the vehicle registration process.
Legal Requirements After Selling a Vehicle in North Dakota
For a smooth and legally sound transfer of ownership when selling a vehicle in North Dakota, sellers must fulfill specific responsibilities and diligently follow the prescribed transaction process. This process entails several crucial steps and encompasses the following essential components:
Proof of Purchase
To establish a valid sale transaction record, sellers must complete the purchase certificate section of the Application for Certificate of Title & Registration of a Vehicle (SFN 2872). This section declares the purchase details of the vehicle and serves as proof of the vehicle sale transaction.
Nevertheless, it is highly recommended for sellers to use a Seller's Certificate and Vehicle Bill of Sale (SFN 2888). It can provide comprehensive evidence of the buyer and seller transaction. This document plays a crucial role in resolving any potential disputes or issues related to ownership and the terms of sale.
This form includes pertinent details, such as:
- The date of sale
- Purchase price
- Signatures of both parties
- Comprehensive vehicle information
Odometer and Damage Disclosure Statements
Sellers must accurately document the vehicle's mileage. While the Vehicle Information section of Form SFN 2872 can be utilized for this purpose, sellers are strongly advised to obtain a separate Reassignment/Odometer Disclosure (SFN 18773) form. This form can be obtained from any NDDOT MVD local branch.
If an error is discovered in the recorded odometer reading, the seller can rectify the mistake by providing an Odometer Correction (SFN 60806) form. This form must be signed by both the seller and the individual responsible for the error.
Furthermore, when the buyer later submits their documents for vehicle registration, they must attach the original document containing the erroneous odometer reading to the correction form.
Moreover, if the vehicle is less than nine model years old, the seller must furnish the new owner (buyer) with a Damage/Salvage Disclosure Statement (SFN 18609). The new owner must include this document when submitting their registration documents for the vehicle.
Report the Sale to the NDDOT MVD
Upon completing a vehicle sale, the licensed dealers usually report the sale to the MVD since they collected the excise tax during the transaction. The tax is usually indicated in Form SFN 2872.
In North Dakota, licensed dealers can handle the buyer's vehicle registration. The buyer needs to complete all the required registration documents, including proof of insurance, proof of identity, and other documents.
After completion, the dealer will submit it to the MVD for registration. The buyer then receives their title and other registration documents by mail. However, if the seller is a private individual, they don't have to report the sale to the MVD as they don't collect the excise tax from buyers.
The seller also doesn't have to facilitate the buyer's registration. The buyer will pay the tax they are due directly to any MVD branch, Kiosk service, or online when they process their vehicle registration.
Title Transfer
The seller must diligently follow the instructions outlined in the title document to facilitate a seamless transfer of the vehicle's title to the buyer.
In cases where the vehicle was subject to an existing lien at the time of sale, the seller bears an additional responsibility. They must make sure that the buyer receives the lien release documentation from the lienholder or Form SFN 2876.
The lien release document is tangible evidence that the seller has fulfilled their obligation by settling the outstanding lien and paying off the remaining balance. It signifies that the lienholder relinquishes any claims to rights or ownership of the vehicle.
By providing the buyer with this crucial document, the seller helps the buyer proceed with the registration and ownership transfer process.
30-Day Registration
Suppose the vehicle was acquired from a dealer. In that case, the buyer may be granted a 30-day temporary permit for a nominal fee, which is a temporary solution until the official license plates are issued.
However, if the dealer does not provide this temporary permit, the vehicle owner can apply online through the NDDOT's convenient 30-Day Registration online tool.
Return License Plate
When selling a vehicle in North Dakota, sellers have specific responsibilities regarding the vehicle's license plates and registration. The North Dakota MVD requires sellers to remove the vehicle's license plates and registration certificates before transferring ownership to the buyer.
After removing these items, sellers must return them to the North Dakota MVD. This step is crucial as it allows the MVD to complete the necessary documentation associated with the vehicle's change of ownership. No fees are involved in returning the license plates to the MVD.
By returning the plates and registration, sellers protect themselves from potential liabilities associated with the vehicle after it's sold. This process also helps the MVD maintain accurate records of vehicle ownership and registration status in the state.
Cancel Vehicle Insurance
North Dakota's legislation takes a firm stance on the issue of uninsured motorists, imposing stringent penalties. Sellers must promptly contact their auto insurance provider and inform them about the sale of the vehicle connected to their insurance policy. The insurance company may require specific details such as:
- The date of sale
- Buyer Information
- Any other relevant information
Furthermore, the seller is responsible for requesting the cancellation of insurance coverage for the sold vehicle. They must specify that the cancellation date is the sale transaction date. By promptly canceling the insurance, the seller enables the buyer to include their newly purchased vehicle under their insurance coverage, avoiding potential penalties.
Buyers must comply with the following minimum liability requirements for vehicle insurance in North Dakota:
- $25,000 per person for bodily injury
- $50,000 per accident for bodily injury
- $25,000 per accident for property damage