Lowball Sale Prices. Many people will ask you to write a lower price than they actually paid you on the title and bill of sale, to save on sales tax at DMV. Ethical? Unethical? That depends on your point of view about government. However, we will definitely say that a buyer who wants you to write $4,000 on the bill of sale and then pay you with a check for $5,000, is completely loony. They’re asking you to aid in tax fraud – and then deposit a check that proves it! If they’re paying cash, your call.
Note that DMVs are really putting the screws to used car buyers these days, often taxing them on more than the Blue Book value – even if they actually paid you less than the Blue Book value. (You see why we’re ambiguous about ethical/unethical?) Some states will tax the buyer the actual below-Blue Book price only if they have a notarized bill of sale. Generally, if we sell a car for substantially under Blue Book, we’ll take the time to go to a notary and have it done right. It can save the buyer several hundred dollars.
Filling Out the Title Properly. Twenty years ago “open title” sales were common. Kids would buy beaters, fix them up, and sell them for a profit. The title would never even transfer, until the kid resold it to the final buyer. Motor vehicle departments are getting meaner about this. We haven’t done it for years, but it wouldn’t surprise us if it’s a misdemeanor in some states by now. The one thing you absolutely should fill out is the odometer reading. If someone buys a car from you, rolls back the odometer, and resells it, this could come back to bite you.
Fraud. Selling cars doesn’t have all the rules that selling houses does; at least you don’t need a termite inspection. But even when the bill of sale says “as is, no warranty”, that doesn’t mean you can lie your head off without worry. If your car was in a major wreck, or was flood damaged, or used as a police car or taxi, or imported without passing emission standards, you’re obliged to tell the buyer. Assuming you knew about it, of course. A lot of people buy a car that had been wrecked and resell it without ever knowing, just as lots of house sellers didn’t know the house had termites. “Not knowing” doesn’t mean you’re 100% free and clear if some bozo decides to sue you in small claims court … but judges are pretty good at spotting liars (and bozos), and a small claims judge would be likely to just sigh and assign you to repay them the difference in value.
Safety and Smog Emissions Tests
Like tag return procedures, smog and safety inspection rules vary from state to state, and even county to county. In some places there are no tests at all.
However, you don’t necessarily have to take a repair shop’s estimate lying down. A lot of unscrupulous repair shops treat mandatory safety or smog tests as a “we gotcha!” situation: “either you pay up, or we’ll prevent you from selling your car!”