How To Limit Your Risk When Selling A Used Car

We may earn a commission from links on this page.

A lot of my advice has focused on how not to get ripped off when buying a car, but I also get asked from time to time what advice I have for individuals who are selling a used car to another individual. Here's what you need to know when selling a car.

You will probably start by advertising the vehicle for sale, on Craigslist or eBay. Be sure your advertisement is accurate when it comes to factual statements. Don't say it has never been in an accident unless you know it has never been in an accident. Are the 60,000 miles on the odometer actual? If so, say it. If not, be careful. I'll explain this below.


You need to be aware that in most states, sales between individuals (i.e., non-dealers) are presumed to be "as-is." As-is means the vehicle is being sold with all faults and the seller is not liable for any future repairs and is not promising to make any. What you see is what you get. Tuck that away for a moment.


While the as-is nature of the sale protects you from being on the hook for repairs after the sale, it will not protect you from a fraud claim. If you make a false statement about the vehicle and the buyer can prove it, you might find yourself in legal trouble.

And in some states, you can be held liable if you fail to disclose a material fact of the transaction to the buyer by remaining silent. You didn't actually lie to the buyer, you just failed to tell them that the vehicle had been wrecked and straightened. "But they never asked!" In some states, you have a duty to disclose material facts like that – and the as-is will not protect you there either.


Once you put the ad up, print out a copy for yourself. If the ad is accurate, it will protect you from crazy claims later.

When you talk to someone who calls – whether in person or on the phone – remember the caveat about factual statements. There is nothing wrong with saying "This car runs great," or "This is a beautiful car," because those statements are not measurable in any meaningful way and are considered sales puffery. That's a term of art: look it up.


Beware of people trying to scam you. People who want to have the car shipped and are willing to pay more than you are asking if they can send you an Indonesian money order. Or they have a friend in the area who owes THEM money but will take the car and pay YOU the money by way of a counterfeit cashier's check. Except they don't ever tell you about the counterfeit part of that sentence. Your bank tells you. There have been whole treatises written on this and I can't possibly describe all the possible rip-offs here. Obviously, if someone is local you have a little less to worry about than if they are from Kyrgyzstan. Some of this is a matter of common sense. Get cash or some form of payment you are comfortable with.

Some states require a Bill of Sale and even make the forms available for download. Like California. Some people in other states like to draw them up anyway. Knock yourself out. Most titles contain all the information you really need to make the sale legal but do whatever you are comfortable with.


I have heard from many people who tell me that they draft a bill of sale that explicitly states that the car is being sold "as-is" and then they often add all kinds of other stuff. "I make no warranties," "Buyer assumes all responsibility for repairs," and so on. Technically, this is not needed if you are in a state that presumes the sale to be as-is but it can't hurt. Unless it freaks out the buyer. The one place it might help is if it prevents the buyer from claiming you made verbal promises to repair anything that broke. Without this, it would be your word against theirs.

The biggest problem I hear about – and this varies from state to state – is when a buyer takes delivery of a car and doesn't process the title properly, leaving the seller's name on the title. They then go and get in an accident or abandon the car somewhere. Again, this doesn't happen in every state but it is a problem in some.


Find out how your state handles title transfers by visiting the DMV or Secretary of State's website. Follow those steps explicitly. If the state suggests you and the buyer come in and fill out paperwork, do it. If the state says you can fill something out online, do it immediately. I hate to be all lawyer on you here but, in Michigan, if you do not handle this correctly you can get sued when the "buyer" kills someone with the car that the state thinks is still yours.


And of course, I should tell you that you can follow all the legal advice in the world and still get sued. I have spoken to countless people who have been threatened with suit or sued after selling a used vehicle. If the complaint is simply that the car broke down after purchase, their case is weak and merely a nuisance. But, once in a while I hear from someone who sold a car and – since they knew it was as-is – did something for which they could legitimately be sued. Like saying the odometer reading was accurate when it was not. Or that the vehicle was not salvaged when it was. And so on.

So, when selling a used vehicle:

  • Keep your advertisement accurate and save a copy of it.
  • Understand that you are selling as-is and know what that means.
  • When speaking with the buyer, be truthful and accurate on the objective aspects of the car.
  • Beware of scams.
  • Use a Bill of Sale if you like although the as-is language is probably redundant.
  • Get cash or a good form of payment.
  • Make sure the title is transferred to the buyer properly.

And there you have it. Of course, I left out the part about all of the nuisance calls you will get because of Craigslist being Craigslist. But that's not a legal problem. That's Craigslist.


Follow me on Twitter: @stevelehto

Hear my podcast on iTunes: Lehto's Law

Steve Lehto has been practicing law for 23 years, almost exclusively in consumer protection and Michigan lemon law. He wrote The Lemon Law Bible and Chrysler's Turbine Car: The Rise and Fall of Detroit's Coolest Creation.


This website may supply general information about the law but it is for informational purposes only. This does not create an attorney-client relationship and is not meant to constitute legal advice, so the good news is we're not billing you by the hour for reading this. The bad news is that you shouldn't act upon any of the information without consulting a qualified professional attorney who will, probably, bill you by the hour.