In Kentucky, vehicle selling is governed by the Kentucky Revised Statutes (KRS) Chapter 186. Sections 186.045 and 186A.215 of this law mandate that the seller provide the buyer with a properly assigned title, including the odometer reading at the time of sale.
Additionally, the seller must complete the necessary document and submit it to the County Clerk's Office within 15 days to complete the transfer transaction. Complying with these regulations is crucial for several reasons.
First, it ensures the legal transfer of ownership, protecting both parties from potential disputes. The buyer is assured they are purchasing a vehicle with a clear title, free from liens or undisclosed issues. On the other hand, the seller is relieved of any future liabilities related to the car once the sale is reported.
Second, it helps maintain accurate vehicle records, which is essential for taxation and law enforcement purposes. Failure to comply can result in fines, legal complications, and difficulties in future transactions. Therefore, adhering to these laws is vital for a smooth and secure vehicle sale process.
Legal Requirements Before Selling a Vehicle in Kentucky
When selling a vehicle in Kentucky, the Division of Motor Vehicle Licensing (DMVL) and the County Clerk's Offices, which operate under the Kentucky Transportation Cabinet (KYTC), process the title transfer and update the vehicle's registration records in the state.
Before the vehicle sale, these offices recommend to perform or comply with the following legal requirements below:
Duplicating a Title
When selling a vehicle in Kentucky and the original title is lost, the seller must first apply for a duplicate title for $6 before transferring ownership. This process begins at the local County Clerk's Office.
To apply for a duplicate title, the seller must complete the Application for Title/Registration (Form TC 96-182). All registered owners must also sign the form and have their signatures notarized.
If someone has power of attorney for the owner(s), they can sign on their behalf, but they must submit a copy of the power of attorney with the application. If the County Clerk staff notarizes the signatures, proper identification must be presented.
If the seller or owner's name has changed since the title was issued, they must attach a copy of the legal document authorizing the name change, such as a marriage certificate or divorce decree. However, the name on the title cannot be changed during the duplicate title process.
If the owner is deceased, trust or probate papers and a death certificate must be provided. The trustee, petitioner, or executor must apply for the duplicate title.
The Title Branch of the KYTC will print the duplicate title the next business day and mail it to the owner. If there is a pending lien filed, the printing of the title will be held for 30 days. The vehicle owner or seller should contact their County Clerk's Office if they have not received their title within 45 days of the application.
Getting a Vehicle History Report
Aside from preparing the title, obtaining a vehicle history report can provide crucial information to potential buyers when selling a vehicle in Kentucky. The DMVL of KYTC offers historical records of motor vehicles to the public upon request.
These records can clarify essential details such as odometer discrepancies, transfer dates, owner information, salvage information, and signature verifications. They also help correct any errors that may appear on Kentucky titles.
To request a vehicle history report, the seller must complete the appropriate form and include a $3 fee. The available forms include:
- Request for Motor Vehicle and Boat Records (TC 96-16A)
- Governmental Agencies' Request for Vehicle Records (TC 96-16G)
- Request for Personal Information for Motor Vehicle Fuel Theft (TC 96-16B)
- Request by Towing & Storage Companies and by Creditors in Possession (TC 96-16T)
These forms can be submitted to the KYTC's DMVL by mail or by using the drop-off boxes on the 1st-floor entrance or the 2nd-floor One Stop Shop at 200 Mero St., Frankfort, KY 40622-2014. Address the submission to "ATTN: Records Management."
Requests are processed within 3 to 5 business days, and the reports are emailed or mailed to the customer as requested.
Advertising the Vehicle
In Kentucky, specific regulations govern the advertising of vehicles for sale to ensure transparency and honesty in transactions, as outlined in the Kentucky Consumer Protection Act or the KRS Chapter 367 and other sections in the KRS.
According to KRS 367.170, all advertising must be truthful and not misleading. Sellers must provide accurate information about the vehicle's condition, mileage, and any known defects.
Furthermore, under KRS 186A.530, if a vehicle has a salvage title, this must be clearly disclosed in any advertisement, as failing to do so is considered deceptive advertising.
For licensed motor vehicle dealers in Kentucky, there may be additional advertising regulations that they must adhere to, which typically include specific requirements for price disclosures, financing terms, and vehicle availability.
Selling a Vehicle with a Lien in Kentucky
In Kentucky, selling a vehicle with a lien involves several essential steps to protect the interests of the buyer, seller, and lienholder.
First, the seller must inform the lienholder of their intent to sell the vehicle. This notification allows the lienholder to provide a payoff amount, which is the total amount required to release the lien on the car. To clear the lien, the seller must then ensure this amount is paid off, either by the buyer or through the sale proceeds.
The seller must also provide the buyer with a completed and notarized title transfer document. This document includes the lien release, which can be obtained from the lienholder once the payoff amount is settled. Without this release, the new owner cannot register the vehicle under their name.
Title transfers involving a lien must be processed through the County Clerk's Office. The Clerk's Office will verify that the lien has been satisfied and that all necessary paperwork is in order before processing the title transfer.
Motor Vehicle Sales Tax in Kentucky
Buyers in Kentucky must pay a 6% road usage tax, which is a form of sales tax, during a vehicle sale. This tax is calculated based on the vehicle's retail price, which can be either the retail price listed in the NADA (National Automobile Dealers Association) guide or the purchase price paid by the buyer, whichever is higher.
If the tax is being calculated based on the purchase price, the seller must disclose this price on the vehicle registration application. The seller must then sign the application and have it notarized, confirming the accuracy of the stated purchase price. Note that the taxable value cannot be lower than 50% of the vehicle's NADA "trade-in" value.
In Kentucky, certain types of transfers are exempt from the usage tax. These exemptions apply to:
- Transfers to charitable or educational organizations
- Dealer registrations
- Transfers between corporations or their subsidiaries
- Transfers between spouses
- Transfers between parents and children
- Military exemptions
- Transfers to or from the state government or U.S. government
- Transfers between corporations or proprietorships
- Transfers between grandparents and grandchildren
- Transfers between stepparents and stepchildren
- Transfers by court order or will
- Transfers to local governments
- Transfers due to name changes
- Repossessions
In addition to a 6% road usage tax, Kentucky residents who owned the vehicle on January 1st may owe property taxes on the vehicle.
Sales Tax for Vehicles Sold in Kentucky to Residents of Another State
When a vehicle is sold in Kentucky to a resident of another state, the sales tax requirements differ from in-state sales. According to Kentucky law, if the buyer resides in Arizona, California, Florida, Indiana, Michigan, Massachusetts, South Carolina, or Washington and plans to register the vehicle in their home state, the seller does not need to collect Kentucky's 6% sales tax.
The seller must provide the out-of-state buyer with a sales receipt that clearly states the sales tax amount paid, which would be $0 in this case. This receipt serves as documentation for the buyer to claim a tax credit or exemption when registering the vehicle in their state of residence.
However, this sales tax exemption in Kentucky applies only if the buyer's home state allows Kentucky residents to buy vehicles tax-free or permits them to register the car in Kentucky within a specific period without paying their state's sales tax.
Legal Requirements After Selling a Vehicle in Kentucky
In Kentucky, sellers must comply with specific legal requirements during and after a vehicle sale to facilitate a proper transfer of ownership and protect themselves from liabilities. Key steps during and after the sale include accurate odometer disclosure, proper title transfer, and removal of the license plates.
Odometer Disclosure Requirements
In Kentucky, specific requirements regarding odometer disclosure are in place when transferring ownership of a motor vehicle or motor home. The law aims to make the transaction transparent and prevent odometer fraud.
When selling a vehicle, the seller must provide the buyer with a written Odometer Disclosure Statement, which must be completed, signed, and dated. In some cases, the seller's signature may also need to be notarized. This completed disclosure statement should be attached to the title and registration application documents when submitted to the County Clerk's Office.
This document should clearly state the cumulative mileage registered on the vehicle's odometer. If the seller knows that the odometer reading is different from the actual miles the vehicle has traveled, they must disclose this fact on the statement. It is illegal for the seller to provide false odometer information to the buyer knowingly.
Failure to comply with these odometer disclosure requirements or providing false statements can result in fines and potential imprisonment under Kentucky's odometer law.
In cases of odometer corrections, the seller can update the mileage on the title by completing an Affidavit of Mileage Correction (TC 96-322) and having the County Clerk perform the mileage correction. A photo ID is required for this process.
Transferring the Title to the New Owner
Transferring a vehicle's title to its new owner in Kentucky varies depending on the circumstances.
If the sale is between two Kentucky residents, the seller must sign the back of the title in the presence of a notary to officially transfer ownership. The buyer then takes the signed title, proof of identification, proof of Kentucky insurance, and the necessary taxes and fees to their local County Clerk's office to complete the transfer.
For older titles issued before 2000, a completed TC 96-182 form may be required to complete the transfer.
If there are two owners in the title and one party is unavailable, a Power of Attorney form signed and notarized by the absent party is acceptable.
If selling a vehicle to an out-of-state resident, the seller must inform their County Clerk's Office about the new owner's name and state. If the car has not been transferred within 15 days, the seller must complete the Affidavit of Incomplete Transfer (TC 96-3).
In the case of repossession, lienholders must follow the transfer process. They need to provide a TC 96-182, a security agreement signed by the vehicle owner and lien holder, and an Affidavit Supporting Repossession (TC 96-192) to the County Clerk's Office that filed the lien.
The transfer fee for these transactions is $4, and there is an additional $2 fee for notarization.
Removing the License Plates
After a vehicle sale in Kentucky, the license plate must be removed before the new owner takes possession of the vehicle. This policy results from Kentucky's updated motor vehicle registration system, which will link license plates and registration tags to vehicle owners rather than the vehicles themselves.
Vehicle owners or sellers who remove their Kentucky license plate from a sold car can have that plate reassigned to another vehicle they own in the state. Similarly, vehicle buyers can transfer their existing Kentucky license plate to their new vehicle or obtain a new plate at their local County Clerk's Office.
How To Notify the Kentucky DMVL of the Sold Car?
Apart from removing the license plate, it is essential to properly notify the DMVL about the ownership change after a vehicle sale in Kentucky. Failing to do so can result in the seller being held responsible for any legal issues or fees associated with the vehicle after the sale.
However, unlike other states, Kentucky has no separate form or system for sale notification. The notice of sale already occurs when the seller fills out the back of the title with the buyer's information, has it notarized, and returns it to the County Clerk's Office.