What You Need to Know About Release of Liability Forms

After a car sale, many states require you to file release of liability forms. It’s one of the many things you should do to protect your butt when you sell a car. The trouble is, most people have no idea what a release of liability is and what the benefits are to filling out this paperwork.

Let’s find out.

What is a Release of Liability Form?

The Waiver of Liability Agreement, otherwise known as a Release of Liability Form, is a legally-binding document drawn up between two parties. There is a Releasor who promises not to sue and a Releasee who is potentially liable otherwise.

Once this form is signed, the Releasor takes full responsibility for the risks and agrees not to sue the Releasee for future damages or injuries. This process can be performed for many reasons, and one of the most popular is selling a car.

Filing a Release of Liability Form After a Car Sale

When you sell a car yourself (instead of through a dealership), you remain at risk until that person transfers the title. If they end up in an accident while the car is still registered and titled to you, then you would be legally required to pay for those damages – or you could sue the other person, which could take years.

The way you prevent this scenario from happening is to properly document the sale. That starts with a bill of sale. Then, you need to contact your insurance company and cut all ties to the vehicle.

The most critical step, however, is to contact your local DMV, the Secretary of State, County Clerk’s Office, Motor Vehicle Administration or Department of Revenue, whoever handles the car titling in your state, and send them a Release of Liability form. It’s vital that they receive the form as a notice of the sale.

When to file a Release of Liability

The key is, you don’t want to delay. This should be one of the first things you do once that vehicle leaves your possession. Otherwise, you are in jeopardy.

Most states have laws regarding the timeframe for submitting this form. If you live in a state that doesn’t require any release of liability forms, we still recommend contacting the DMV. It’s always better to go above and beyond what’s needed to protect yourself.

Release Your Liability

Just like you need to cancel your car insurance, submitting the appropriate release paperwork to your local office should be a natural step. Most states provide the paperwork for you and make the process quite simple. In fact, you might not even need to visit the office, so explore your state’s online resources first before making the trip.

In general, you will need the following information on your release of liability or notice of transfer forms:

  • Your name and contact information

  • Name and contact information of the buyer

  • Vehicle’s license plate number

  • Year, make, model and color of the car

  • VIN number

  • Odometer reading

  • Date of sale

How to Protect Yourself When Selling a Vehicle

Selling a car is a big task and there’s a lot to think about. What’s most important through it all is that you protect yourself. This starts with screening your buyers and weeding out any people you aren’t sure about.

Know their plan

It’s wise that you ask if they have the financing planned before setting up the meeting. Don’t take a check for payment. Instead, you want to stick to cash, money order or financing from the bank. If someone wants to purchase your car without seeing it, this is a big red flag.

Do your paperwork

To speed the process up a little, you can have all of the paperwork ready ahead of time. Just make sure you don’t turn over that title until you receive the payment. It’s also wise not to fill out the title in advance just in case the sale falls through.

Get them covered

Then, prior to having anyone test drive your car, you want to make sure that your insurance covers them. It’s also wise to get a copy of their driver’s license before you let them drive your car. You can snap a copy with your phone and send it to a friend so they know who you are with.

Stay safe out there

Your best bet is to take someone along with you for the entire event. Meet your buyers in a busy, public area. The grocery store parking lot is always a good idea. You should go with them for the test drive and agree upon the route before starting.

Consequences of Neglecting a Release of Liability

When you don’t have a written waiver for the sale of a car, you face chances of having to go to court and battle out a disagreement. This is a situation you don’t want to be in.

Don’t think for a moment that these situations don’t happen every day. Just read about this guy who sold his car to a dealer and ended up in court months later when it was involved in an accident.

Unfortunately, this is an everyday occurrence, but it’s something you can easily prevent. You just need to take the right steps. Here are just a few consequences filling out the release of liability forms prevents.

Lost time

If you get into a battle with the buyer, you are going to spend a lot of time fighting them. Between talking to a lawyer and dealing with the courts, plan on taking time off work and life while things get resolved.

Lost money

Not only will you have court costs to consider, but possible medical bills and property damage as well. You will have to pay for legal fees if you need any help, and you’ll have to cover your time off work either way.

Mental pain

It would be nearly impossible to remain peaceful while going through a battle like this. Even if you think everything will work out in your favor, there’s going to be times throughout the process where you worry.

Cover yourself

There’s no reason you should face mental and legal trouble over someone else’s reckless behavior.

Your best bet is to not neglect this vital step when selling your car. Filling out the release of liability forms only takes a small chunk of time and keeps you protected in the event of an accident down the road. Don’t risk your time, money or sanity by allowing a buyer to take advantage of you later.

Title Gods specializes in recovering lost car titles and solving all kinds of title-related issues. We are not attorneys. This article is not legal advice.

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