Adhering to New Jersey's specific laws when selling a vehicle offers significant benefits throughout the pre and post-sale processes.
For example, sellers must conduct emissions testing before selling as required by New Jersey Statutes Annotated (NJSA) 26:2C-8.1. This demonstrates their commitment to environmental responsibility and compliance with state standards for cleaner air and sustainability.
During the sale, sellers must disclose accurate mileage information on the certificate of ownership under NJSA 13:21-5.8 to prevent odometer fraud and guarantee vehicle history transparency.
Additionally, adhering to the transfer of vehicle title under NJSA 39:10-11 secures a clear transfer of ownership, which protects both parties from potential disputes or liabilities. Following guidelines such as these contributes to smoother and fairer vehicle transactions in New Jersey.
Legal Requirements Before Selling a Vehicle in New Jersey
Selling a vehicle in New Jersey involves several crucial steps to uphold legality and transparency, particularly in the pre-sale phase. These include obtaining a valid vehicle title, completing vehicle inspections to meet state standards, and adhering to strict advertising regulations governed by the Consumer Fraud Act.
By following these requirements diligently before finalizing the sale, sellers can facilitate a smooth and trustworthy transaction process, fostering confidence and clarity for all parties involved.
Title Replacement
A valid vehicle title is crucial for any owner intending to sell a vehicle in New Jersey. The title is legal proof of ownership, detailing essential information such as the vehicle identification number (VIN), make, model, and current owner's details.
Before selling a vehicle, the owner must ensure the title is in their possession. If the original title is lost, stolen, or damaged, obtaining a duplicate or replacement title from the New Jersey Motor Vehicle Commission (MVC) is necessary.
For a lost or stolen title, the owner must complete an Application for Duplicate Certificate of Ownership (Form OS/SS-52) and provide current registration papers, proof of auto insurance, and a $60 duplicate title fee. If the vehicle is financed or leased, a statement from the lien holder confirming the original title is not in their possession is also required.
In cases of a damaged title, the owner must submit a statement explaining the damage, along with their name, address, vehicle description, and the damaged title itself. The fee for replacing a damaged title is also $60.
Vehicle Inspection for Safety and Emission Standards
Sellers in New Jersey must have a valid emissions inspection sticker to legally sell vehicles. Before listing a car for sale, owners should meet the state's emissions standards.
For non-commercial vehicles, emissions inspections are required before registration and every two years after that. This applies to diesel, bi-fuel, and gasoline vehicles that are five model years or older and registered as commuter vans, passenger vehicles, governmental vehicles, or vehicles belonging to not-for-profit organizations.
Commercial vehicles, such as diesel vehicles manufactured in 1996 or later with a weight of 8,500 lbs or less, as well as buses and taxis, are required to undergo annual safety and emissions inspections.
Vehicle owners can have their vehicles inspected at any state-operated, private, or diesel-private inspection location. They must bring their vehicle registration, driver's license, proof of insurance, and payment for any applicable fees.
Once a vehicle passes its inspection, the NJ MVC inspection station will issue a sticker and vehicle inspection report. Failure vehicles must be repaired and retested within the time specified on the vehicle inspection report.
For more information about New Jersey vehicle inspection, check the Vehicle Inspection FAQS document prepared by the NJ MVC.
Advertising
The New Jersey Consumer Fraud Act governs the advertising of vehicles for sale (NJSA 56:8-1 et seq.) and the New Jersey Administrative Code ( NJSA 13:45A-26A.5). These regulations mandate truthful advertising and prohibit deceptive practices or misrepresentations.
Sellers must disclose specific information, including the total selling price or monthly payment amount, with all consumer costs except licensing, registration, and taxes. Any terms, conditions, or restrictions must be clearly stated. If the vehicle is available in limited quantities, this must be disclosed along with a specific stock number.
Prohibited practices include "bait and switch" tactics, where a vehicle is advertised at a specified price without intending to sell it at that price or without reasonable inventory. They falsely claim that the price is available only for a limited time.
The advertised price must include all consumer-incurred charges except taxes, licensing, and registration fees, with any additional fees prominently disclosed. Advertisements must accurately describe the vehicle, specifying the make, model, year, and other significant details.
Selling a Vehicle with a Lien in New Jersey
When selling a vehicle with a lien on the title in New Jersey, specific legal procedures and regulations must be followed to ensure compliance with state laws. The NJ MVC outlines these steps to protect the seller and the buyer.
Firstly, sellers must inform buyers about the existing lien on the vehicle. According to NJSA 39:10-11, it is illegal to sell a car without disclosing any liens on the title.
As per state law, the lienholder must be paid off before the title can be transferred to the new owner. Typically, the sale proceeds are used to pay off the loan, and the lienholder will then release the lien.
Removing a Lien on a Vehicle Title
Once the loan is paid off, the lienholder must issue a lien satisfaction letter. The letter must be on official company letterhead, signed, and dated. It should include the vehicle's VIN, year, make, the names of all owners, and contact information for the lienholder.
Furthermore, lien satisfaction letters from individual lienholders who are not financial institutions must be notarized. The lienholder typically has 30 days from the satisfaction date or the last payment received to send this document to the seller/owner.
The vehicle owner must submit the lien satisfaction letter to the NJ MVC and the title to remove the lien and transfer ownership to the buyer.
Documentation Requirements
Moreover, specific documents must be provided to the NJ MVC to prove ownership and final loan payment. One of the following documents is needed for proof of ownership:
- Vehicle title
- Vehicle registration, insurance card, or declaration page
- Bill of sale
- Certified Title/Lien Search Request (Form DO-22)
- Certified Vehicle Registration Application Request(Form DO-11A)
Other than the lien satisfaction letter, several documents can be utilized to prove the final payment of a lien on a vehicle title.
A wire transfer statement from a motor vehicle dealer accompanied by a transaction number processed by the Title Records Unit can be accepted as evidence of payment.
Another acceptable document is a retail installment agreement corresponding to the vehicle's VIN, which includes the financial institution's and customer's names and is stamped with the bank's name and date.
Once the MVC receives and processes the lien release information, they will update their records to reflect that the vehicle's title no longer has a lien attached. This clears the way for the vehicle owner to receive a new title that shows them as the sole owner, free from any liens.
Motor Vehicle Sales Tax in New Jersey
New Jersey imposes a 6.625% sales tax on new and used vehicle purchases. This tax is calculated by multiplying the vehicle's price by 0.06625. In addition to state tax, county and local taxes also apply, with Cumberland County having the highest combined rate at 8.625%.
In New Jersey, the buyer, not the seller, is responsible for paying the motor vehicle sales tax when purchasing a vehicle.
Private and Dealership Transactions
When purchasing a vehicle from a private seller in New Jersey, buyers do not directly pay sales tax to the seller. Instead, taxes are settled when the buyer registers and transfers the vehicle title at the NJ MVC.
For out-of-state dealers authorized to collect New Jersey sales tax, the tax is collected at the time of purchase. Buyers must pay the state sales tax when titling the vehicle if the dealer is not authorized to do so.
Trade-Ins
Trading in a vehicle at a dealership can lower sales tax costs. For instance, if a buyer trades in a $4,000 vehicle toward an $18,000 purchase, tax is calculated on the $14,000 difference.
To qualify for the trade-in, the vehicle must meet the criteria set forth by the NJ Sales and Use Tax Act for motor vehicles. Additionally, the trade-in must be conducted with a registered motor vehicle dealership that accepts the vehicle for resale.
Finally, the purchase agreement for the new vehicle and the trade-in agreement must be completed simultaneously.
Rebates and Dealer Incentives
New Jersey dealerships offer discounts like a $1,500 rebate on a $22,000 car. However, sales tax is calculated on the original price before incentives. For example, with a $1,500 rebate on a $22,000 vehicle, tax applies to the initial $22,000 amount.
Sales Tax Exemption for Non-Residents
Non-residents without a New Jersey abode are exempt from state sales tax on vehicle purchases. They must complete the Motor Vehicle Sales and Use Tax Exemption Report (Form ST-10), which the dealership or seller submits to the New Jersey Division of Taxation.
Zero-Emissions Vehicle Exemption
Residents purchasing zero-emissions vehicles (like battery electric cars, not plug-in hybrids) in New Jersey are exempt from state sales tax. Buyers must complete a Sales Tax Exempt Use Certificate (Form ST-4) to qualify for this exemption.
Legal Requirements After Selling a Vehicle in New Jersey
In New Jersey, stringent legal requirements must be followed both during and after selling a vehicle, as governed by the state statutes. A critical aspect of these regulations is the accurate disclosure of odometer readings for eligible vehicles.
Sellers must personally visit an NJ MVC office to complete the ownership transfer, providing a signed title and comprehensive bill of sale within ten business days of the sale.
Documentation requirements vary based on the vehicle's origin—whether from states with or without titles or acquired at auction.
After the sale, sellers must surrender license plates at an MVC office drop box or by mail, cancel the insurance of the sold vehicle, and notify the NJ MVC about the sale.
Odometer Disclosure
New Jersey complies with the Truth in Mileage Act, which mandates accurate odometer readings for vehicle ownership transfers. The NJ MVC requires that the odometer reading be recorded on the back of the vehicle title.
If there is inadequate space or a discrepancy, an Odometer Disclosure Statement(Form OS/SS-2) must be completed. Odometer disclosure is necessary for motor vehicles with a 2011 model year or newer, weighing under 16,000 pounds, and self-propelled.
Vehicles exempt from odometer disclosure include those from the 2010 model year or older, over 16,000 pounds, low-speed vehicles, non-motorized vehicles, and mopeds or scooters.
Under state law, tampering with or misrepresenting a vehicle's odometer reading is illegal and subject to severe penalties, including fines and imprisonment.
Ownership Transfer
To transfer vehicle ownership in New Jersey, sellers must visit a motor vehicle agency in person, as mail-in options are unavailable. The seller must sign the back of the title and provide it to the buyer, along with a completed bill of sale.
This bill of sale should include the buyer's name and address, the date of sale, the mileage odometer reading, and the sale price. They must complete the title transfer within ten business days of the sale date.
When dealing with pre-owned or used vehicles from states that issue titles, sellers must include necessary dealer reassignment documents and a purchase order if the assigned title lacks a New Jersey Dealer Tax Stamp.
For used vehicles coming from states that do not issue titles, sellers must provide a notarized statement with details such as the vehicle's year, make, VIN, sale date, and purchase price.
Both the seller and the buyer must sign this statement before notarization. Additionally, the seller must provide their last registration card for the vehicle and either a pencil tracing or a photograph of the VIN plate.
In cases where the pre-owned vehicles are purchased at an auction, sellers need to supply the current title with a sales tax stamp if applicable. The last-issued registration document and a bill of sale are required for non-titled vehicles.
License Plates Surrender
When a vehicle owner sells a vehicle without transferring its plates to another vehicle, they must surrender the old plates using one of two methods. One option is to visit a local NJ MVC office and deposit the plates into a designated "drop box" outside the office.
The owner will receive a receipt, which is essential documentation in case there are any discrepancies or incorrect charges related to the surrendered plates in the future.
Alternatively, the plates can be mailed to:
New Jersey Motor Vehicle Commission
P.O. Box 129
Trenton, New Jersey 08666-0129
When choosing this method, the vehicle owner should include a self-addressed, stamped envelope with the plates to ensure they receive a receipt by mail confirming the plate surrender.
Insurance Cancellation
The seller should not cancel their insurance until after the sale is complete and they have transferred the title to the new owner. Once the sale is finalized, they should contact their insurance company right away to cancel the policy for that vehicle.
It is important to provide proof of the sale to the insurer. If the seller has other vehicles, they may want to adjust their policy rather than cancel it entirely.
Effective cancellation prevents the seller from being liable for any post-sale claims and could lead to a reimbursement of unused premiums.
How To Notify the New Jersey MVC of the Sold Car?
Notifying the NJ MVC of a sold vehicle is essential, even though New Jersey does not use a notice of transfer or release of liability form like some other states.
Instead, the notification happens when the seller completes the back of the vehicle title with the buyer's information and submits the required documentation.
Informing the NJ MVC in this manner provides specific benefits. It ensures the transfer of ownership is legally recognized, protecting both the seller and the buyer from potential liabilities and disputes. Moreover, it helps update the MVC's records accurately, preventing issues related to registration, taxes, and fines.
Lastly, it allows the seller to avoid being held accountable for any violations or incidents involving the vehicle after the sale.