Registering an Automobile in Texas - Recording the Transfer of Custody of Automobiles in Texas
In the State of Texas, vehicles are required be titled and registered in the purchasers name within 20 days from the date of sale or transfer. If you sell your vehicle but the new owner does not transfer the title out of your name, you could get accused of red light camera violations, parking violations, failure to pay tolls, liability if the vehicle is involved in an accident and even falsely accused in a situation where the vehicle is involved in criminal act such as burglary, robbery or hit and run.

Transferring Vehicle Ownership
Advice for Sellers: It is not only necessary to sign the back of the title. The title must be processed at the County Tax Office before transfer of ownership is fully documented. Documentation requires that both parties’ sign a Joint Statement called a Title Application also known as Vehicle Title and Registration Form 130-U. When you sell a vehicle, the buyer must submit a Form VTR130-U Title Application to one of the local County Tax Collector Offices. Once the clerk processes the application, the vehicle will be shown in the name of the new owner. You will be shown as the previous owner. Note: Depending upon the circumstances, other forms might be needed. Click Here for a list of commonly used forms for registering an automobile in Texas.

The Buyer must go to the Tax Office to Complete the Registration
The aforementioned problems arise if the buyer doesn’t complete the transfer process by going to the Tax Office to complete the transfer by submitting the application and paying the required registration fees and taxes. In such case, the vehicle will still appear to be in your name therefore you can be charged for traffic violations or other incidents involving the vehicle. In order to avoid false accusations after you've sold your automobile, it is highly recommended that you meet the buyer at the Tax Office to make certain the transfer process has been completed. (Advice for Sellers: If you cannot accompany the buyer to the tax office to complete the transaction, you should submit a VTR Form 346 as mentioned below.)

Lost Titles
Note: Do not go to the county tax office for a lost title! If a person has lost their title, they must obtain a new one at their regional Vehicle Titles and Regisrtation (VTR) Office as the County Tax Office Does Not Issue Titles.

Trade-Ins or Selling to a Licensed Dealer:
In Texas, when a vehicle is traded-in or sold to a licensed motor vehicle dealer, the new or used car dealer isn’t required to title the vehicle under the name of the automobile dealership. That being mentioned, the dealer is in fact obligated to “take assignment” of the vehicle meaning the dealer must put the Dealership Name on the Back of the Title in the space where the Buyer would normally sign and print their name and address. (The aforementioned assignment should be completed in ink and should be done at the time of trade-in or sale.) However, TxDOT will not yet know you no longer have the vehicle. Their records will indicate the vehicle still belongs to you. At least until the dealer sells it and transfers it into the name of the new purchaser. Even though both you and the dealer have made a legal transaction and completed the paperwork necessary to transfer ownership, as you can easily see, problems can arise in cases where the vehicle sits on the dealer’s lot for a period of time or if the dealer sells the vehicle for export to Mexico. Since vehicles that are exported are not required to be registered with the Vehicle Titles and Registration Section, in such cases, the department will not immediately know the vehicle no longer belongs to you. In other words, if the foreign purchaser doesn’t immediately ship the vehicle out of the country and allows someone to drive it until exported, the license plates will still be in your name. For this reason, consumers that trade-in or sell to a license dealer should make certain the dealer imprints his dealership name on the back of the title and ask the dealer for a photocopy of the front and back of the title showing he has taken assignment by printing his dealership name on the back of the title in the Purchaser’s section. (Advice for Sellers: You can record the transfer of custody by submitting a Form VTR-346 as mentioned below.) (It should be mentioned that legislation was recently passed whereby Dealers will be able to Electronically Register Transfer of Custody. Although the Electronic Registration Program is in the process of being implemented, in the mean time, it is still necessary to file a Form VTR-346 to make certain Transfer of Custody is recorded and in order that law enforcement will have real time data and will know who is in custody of the subject vehicle and when the transfer of custody took place.)

Record Transfer of Automobile Possession:
Whether you trade-in your car at a dealer or sell your car to a private party, just to be safe and have peace of mind, you can make certain the recording of the trade-in or sale is expedited by filing a Form VTR -346. This downloadable form is also called a “Texas Motor Vehicle Transfer Notification”. It should be noted this process doesn’t actually transfer ownership. It is merely a means of “recording” the transfer of vehicle custody to the dealer or buyer. In other words, it's a Record to help prove the vehicle is no longer in your possession! Before going further on this subject it should be menitoned that filing the Form VTR-346 does not elimnate or delay the requirement for the Buyer to register the vehicle in their name at the County Tax Office. The purpose of this form is merely to notify TxDOT that custody of the vehicle has taken place. Note: Some of the newer styled Texas Titles have the aforementioned transfer notification form attached to the top of the title. Although it may look different than the downloadable form, you can still use it to send notification of transfer. However, if your title does not have the form attached or if your car is registered in Texas but you have an out of state title, you can download the form by clicking the above link. Once downloaded, print the form, complete the information and send the form to the Vehicle Titles and Registration Department at the address provided on the form. Once the form has been processed by the department, you will no longer be shown as the current owner. Note: The fee for filing a Notification of Transfer was eliminated. As of June 14, 2007, Consumers can file a Form VTR-346 for Free!

About the Paperwork
Buyers: The first rule for dealing with paperwork is to make certain everything matches. This fundamental task can easily be performed by comparing all of the information to make certain it matches. Make certain the Vehicle Identification Number (VIN) on the Vehicle matches the VIN on the Title. Further make certain the VIN is correct on all supporting documents such as a Lien Release, Odometer Statement, Power of Attorney. Be certain to verify the VIN is the same on each document! If even one digit or letter is wrong on any of the required documents, you will not be able to complete the registration and transfer of ownership until the problem is resolved. (Buyers Beware: You may have a hard time in finding or contacting the seller after the fact so why risk making a mistake by hurrying through such an important process of verifying the data. It should also be mentioned to make certain to write down the current mileage of the subject vehicle. Buyers should also make certain the Odometer is actually working by driving the vehicle a couple of miles to make certain the odometer advances. (Never buy a car without test driving it at least a mile or more!)

Make Certain the Names Match:
The name on the title should be the same as the name on the seller's driver's license or government issued identification card. As an example, if the title is registered in the name of John Doe, Sr. make certain you aren’t buying from John Doe, Jr. as you don’t want to get accused of being a party to fraud if Junior sells his Daddy’s car without permission. Likewise, Dad can not sell Junior’s car. Further, in a case where the vehicle is titled in the name of more than one party such as husband and wife. Make certain that you deal with both parties! You should also request to see the identification of both parties. Never purchase a vehicle from one party as you can end up being liable to the party that wasn't present during the transaction. Problems of this type are especially common in cases involving divorce. If you are purchasing a vehicle that is titled in the name of a company, make certain the person you are dealing with is the owner of the company, the president, vice president, the secretary or manager and is authorized to sell the subject vehicle on behalf of the company. On this subject, it’s always best to issue payment by check or cashier’s check and in the name of the “Company” that appears on the front of the title. The cashier's check Receipt or cancelled check will help to serve as proof that you issued funds to the company. If you are in doubt, it’s always best to either go to the courthouse or seek professional legal advice. False Information on any of the documents can cause a title to be revoked.

Buyers Beware:
If you are making a purchase from a private party. Make certain the seller is in fact the legal owner of the vehicle. Further, make certain the title doesn't show a lien. If so, make certain the lien has been released. Check to see if the title is for a reconditioned, salvage or rebuilt salvage vehicle. Watch out of Out of State Titles! As mentioned elsewhere in this article, the Seller's Name should be imprinted on the front of the title. Regardless of in which state the vehcile was last registered. The best advice for situations involving out of state titles is to Meet the Seller at the Local Tax Office. Without getting into great detail, many states have lax title laws. Simply stated, because of lax laws in some states, buyers should not risk being scammed. Meet the seller at the local tax office! (Hint: If the Seller tries to offer “excuses” for not having things in perfect order or if you see the words such as: Rebuilt, Reconditioned or Duplicate Title or Certified Copy of a Title you will want to be on guard as you will also want to make certain the vehicle does not have a salvage history. As previously mentioned, the best way to do this is to meet the seller at the County Tax Office and let the Clerk review the title and other paperwork to make certain there are no legal problems or salvage problems. Salvage problems are being mentioned because a recent change in the Salvage Laws in the State of Texas and lax laws in other states seems to have created a large number of salvage vehicles being recycled onto the roadway. If the vehicle is not registered in Texas or does not have a Texas Title, Don't take a chance. Meet the seller at the local tax office!

Buying from a Licensed Dealer
The Dealer Handles the Registration Process: When buying from a licensed dealer, the dealer is required to complete the registration process and pay the appropriate amount of sales tax within 20 working days. Once the dealer has competed the filing of the transfer, he should provide you with a copy of the Title Receipt which is also known as the Tax Collector’s Receipt for Title Application which will serve as proof the dealer completed the process and forwarded the sales tax to the county tax collector. Note: If the sale is for Cash, the dealer should provide the buyer with a Tax Collector’s Receipt showing proof of payment for taxes on the full sales price. However, if the dealer financed the sale, the dealer is only required to remit sales tax on the down payment. The remainder of the taxes will be paid as the loan is repaid to the dealer. Regardless of whether the sale is a finance transaction or for cash, the dealer should provide the purchaser with the Tax Collector’s Receipt within 20 working days unless the dealer has paid off a lien and is waiting for title to the subject vehicle. Buyers, if you've had a serious problem and have not received a title for a purchase made from a licensed dealer, Click Here to file a complaint with the TxDOT Dealer Enforcement Section. Or, you can simple contact HIADA at 713-686-3733 or Send Email as we might be able to assist you toward a faster resolve.

More Advice for Buyers and Sellers
Advice for Buyers:
Buyers should be aware that transfer of vehicle ownership can only take place if you are dealing with the true owner of the vehicle. The owner’s name will be imprinted on the Front of the Title. In Texas, since a person can’t sell or even offer for sale an automobile for sale until it is registered in their name and if the vehicle is in fact registered, their name will be imprinted on the Front of the Title. In other words, there’s no logical way a person can legally sell you a vehicle unless their name is on the front of the title.
After verifying the seller's name matches their ID. Further, make certain the seller provides you with a photocopy to keep in your files. If the seller doesn’t want you to have this information and especially, if you are making a purchase and the seller does not want to accompany you to the Court House, you might want to seriously consider making certain you are not dealing with a scam artist such as a Curbstoner. A Curbstoner is a person that buys and sells vehicles but without a license. They usually sell low end vehicles that have been reconditioned for appearance and just enough to make a quick sale. (Hint: A Curbstoner will usually tell you they are selling the vehicle for a distressed friend or relative. This makes it easier for them to give an excuse for their name not being imprinted on the Front of the title. As mentioned, the true owner’s name is always imprinted on the Front of the title.) You can find numerous articles on Curbstoning on the Internet. Before buying from a private party, it is strongly suggest that you research this subject if you have even a slight suspicion about the seller. In closing this subject, please know we are not trying to discourage you from making a purchase from a private party for you can in fact get a good deal from a private party. Just as long as you are doing business with the true owner of the vehicle! (Hint: If you see a private party ad in the newspaper or on the Internet, it’s always as good idea to use a search engine such as www.google.com to do a cross reference check on the phone number. If you discover the phone number has been connected to other and recent vehicle ads, you might have uncovered a Curbstoner.) Legitimate private party sellers will usually not be connected to other recent offerings.

Help from Friendly Dealers
Although we must admit, sometimes there may be a legitimate reason why the seller can’t meet you at the county tax office in order to complete the transfer. In such case you might want to seek the advice of a friendly neighbor. Some consumers might be able to find usefule advice by visiting a friendly licensed independent used car dealer. Although they aren’t obligated, most dealers probably wouldn’t mind looking over the paperwork and supporting documentation to help you determine whether or not you will have all the paperwork necessary to complete the transfer of ownership. In such case, if the dealer sees something that might be in question he can bring it to your attention. For this reason, you may want to seek an “experienced” local independent dealer such as a Member of the Houston Independent Automobile Dealers Association. Members of trade associations such as HIADA are usually experienced and more knowledgeable than your ordinary car dealer. Although they aren’t obligated to give advice, (and provided you call them first to make an appointment) most HIADA members will be glad to assist their neighbors and public by assisting in this manner. In closing this subject, both parties should understand that simply because you have someone look at the paperwork, it will not mean the documentation is truly okay as independent dealers do not have access to the vehicle title and registration database information therefore they should not be considered liable if a problem arises. In other words, if you don’t go to the county tax office to complete the transaction, you can still be taking a chance. In other words, if problems do arise, please don’t blame the dealer for simply trying to help!

Don’t be Afraid:
All things being mentioned, this article might have scared you, but don’t let this make you afraid to purchase or sell to a private party. Just be on guard by being knowledgeable and patient! As a final comment on this topic, private party buyers and sellers are always welcome to contact us about matters concerning this or other automobile related topics.

If the Buyer and Seller Can't Meet at theTax Office:
As mentioned numerous times, to avoid mistakes, it's always best for the buyer and seller to meet at the local tax office in order to complete the transfer of ownership and registration. If this isn't possible, the next best alternative to having both parties meet at the county tax office is for the seller to provide the buyer with photocopies of the front and back of the title and all supporting documents. In this way, and before money or custody of the vehicle changes hands, the buyer can take the "photocopies" to the tax office. As mentioed this takes place before the real documents and vehicle change hands. In other words, the seller maintains possession of the actual title and documents as well as possession of the vehicle. The buyer keeps the money in his pocket until the documents can be verified. Since payment shouldn't be made until the documents have been veriried, the seller may want to collect a small deposit to hold the vehicle until the paperwork can be verified. A deposit is merely a consideration to keep the seller from selling the vehicle to someone else and to allow time for the buyer to verify the documents. A deposit should be let’s say, no more than fifty bucks and under the condition that buyer will complete the purchase if the paperwork is in order but if the paperwork isn’t in order, the buyer will get a refund of the deposit. This will allow the buyer to take the photocopies to the courthouse and have them inspected by the clerk. If the clerk says the documents look okay, the buyer goes back to the seller to get the originals and complete the transaction. In this manner, the buyer has ample time to verify the documents and the seller never has to go to the courthouse. The buyer simply needs to make certain they return to the courthouse with the exact same documents that were photocopied and shown to the clerk.) The deposit is being mentioned as it would be unrealistic to expect the seller to hold a vehicle for more than a few minutes. Depending upon the time of day, it may take more than just a few hours or until the next business day to verify the information. (Note: Seller’s should never release the title or original documents without full payment! Sellers should also verify the identity of the prospective buyer before releasing photocopies.)

Sellers:
If you’ve read the previous paragraph, please understand you should never release the Title or any Original Document for the purpose of allowing the purchaser the opportunity to verify the documents. The Title and Original Documents should only be released after you have received full and final payment! The comments about photocopies are for the mere purpose of allowing the prospective buyer an opportunity to check the validity of the documents necessary to complet the transaction.

Serious Advice to Sellers:
Make certain you get proper identification from the purchaser. Keep a photocopy of their Drivers License or Government Issued Identification Card on file as a permanent record. If the buyer cannot provide ID, you should not move forward with the transaction until proper identification has been established. It is recommended that the seller should only accept cash as payment. Due to the high incidence of Cashier’s Check Fraud, it would be best to meet the buyer at the buyer’s bank where the seller can cash the check on the spot. According to the Federal Trade Commission, Cashier’s Check Fraud and Advance Payment Scams are a growing problem that poses a serious risk for sellers. Although HIADA Members may agree to accept a personal check from purchasers, it is strictly up to the individual dealer. HIADA Recommends that all dealers should have very strict policies regarding the acceptance of checke and should always be on guard for potential problems. On this subject we'd like to mention, professional crooks have a lot of experience in defrauding the public. (The rule of thumb should be verify everything and don 't be afraid to ask questions or seek advice. Remember, if a deal looks too good to be true, it probably is. Meaning, it could be a scam.) We recommend sellers to be extremely cautious when accepting a personal or a company check from private parties. On this subject, since Texas Motor Vehicle Dealers are in fact Bonded, it might be okay to take a check from a Legitimately Licensed Dealer. But this is provided that you are doing business with a legitimately licensed dealer. Just because a dealership has an office and a sign, it doesn’t necessarily mean they are currently licensed. (Hint: Ask the dealer to show you a copy of his Texas Dealer’s License and Bond. Look for the Expiration Date! A legitimate dealer should have no problem in providing this information. In fact, all Texas Dealers are supposed to have this information prominently displayed on the wall at the entrance to their building. If you don’ t’ see it, you might not be doing business with a legitimately licensed dealer.)

Serious Advice Concerning Identification:
On the subject of Identification: The automobile registration process requires the submittal of a Joint Statement – Title Application Form 130-U that requires a signature from both the buyer and the seller. According to the Tax Code Section 152.101 filing a false statement is a Felony of the Third Degree. In a case where a purchaser knowingly has acquired a vehicle from a person other than the true owner that is named on the front of the title, the purchaser could get tangled up in a serious legal mess. In such a case, the purchaser might be at risk of having the vehicle siezed if fraud did in fact take place. The purchaser could even be charged with a criminal offense in the event the true vehicle owner might have been defrauded of the subject vehicle! The rule of thumb is whether you are buying or selling, make certain you know who you are doing business with by making certain you verify their identity. Identity Theft is becoming a common and growing problem. Buyers, if you are in doubt, we strongly recommend that you meet the seller at the local county tax office and let the clerk verify the identification of all parties. Click Here to see more information from the Federal Trade Commission concerning identity theft.

Taxes and Other Fees:
In the State of Texas, the Taxes are the Responsibility of the Purchaser. When you apply for a vehicle title, you must pay the motor vehicle sales tax, which is 6.25 percent of the purchase price if you buy from a dealer. There’s also a small Ad Valorem tax whereby the rates will vary depending upon the school district tax rates where the sale takes place. If a vehicle is sold by a Private Seller the State requires the tax rate is computed based upon Book value or rather Standard Presumptive Value which is computed as 80% of the established Book Value. However, in the case where the purchase price is less than the established presumptive value, the buyer can obtain an appraisal certificate or a Licensed Motor Vehicle Dealer in the State of Texas or a motor vehicle dealer that is licensed under similar regulatory requirements of another state. Buyers can also get an appraisal certified by an Insurance Adjuster licensed by Chapter 4101 of the Texas Insurance Code. The State Comptroller’s Office can provide more information on this subject.

Other Fees & Insurance:
Buyers must also pay title transfer, registration and local fees. Dealers are entitled to collect a documentary fee of $50.00 for handling their part of the transfer process. Registration fees vary by county. Proof of Insurance Texas requires proof of financial responsibility or proof of liability insurance when you title and/or register your vehicle. If you do not provide proof of insurance, the tax office will not process the registration application. If you trade in a vehicle, the personal automobile policy for the traded vehicle should provide 30-day coverage after an additional vehicle has been acquired. In most cases, a copy of the personal automobile insurance policy or the card issued for the policy is acceptable as proof of financial responsibility. (Note: We are not an Insurance Agent and we aren’t giving legal advice. Your policy or policies from other states may differ therefore you should seek clarification from your insurance agent for specific details about your policy!) If your other vehicle is registered out of state, be certain to take a copy of the policy to the tax office when applying for registration.

Note: The information in this article and website is not intended as a substitute for professional and legal advice. This is especially true when dealing with financial matters such as Cashier’s Checks, Money Orders or other types of payment. This information is only intended as reference material to assist lay persons in having a better understanding the Title and Registration Process in Texas. All persons are advised to seek professional and legal advice when transferring ownership of a motor vehicle or property.

Related Links:
Texas Department of Transportation - Drivers and Vehicles Information
Vehicle Titles and Registration VTR – Regional Offices
(For Lost Titles and other stuff. Not for registering vehicles or paying tax.)
County Tax Offices
(Register and Pay Tax)
Counterfeit Check Fraud - Crimes of Persuasion
Curbstoning - Curbstoners
CurbStoppers.Com