How To Sell a Car in Alabama

Selling a vehicle in Alabama involves a defined set of legal requirements established by the Alabama Department of Revenue (ALDOR). Both private-party sellers and those transacting with a dealership must follow specific procedures for title assignment, odometer disclosure, and license plate removal to ensure the sale is legally valid.

What You Need To Know Before Selling a Car in Alabama

Before listing a vehicle for sale, it is important to understand the legal conditions governing private vehicle transactions in Alabama.

Alabama Title Law and Ownership Requirements

Under Section 32-8-30 of the Code of Alabama, a certificate of title is required for most motor vehicles before a valid sale can be completed. The titled owner must ensure that the vehicle is free of encumbrances and that all ownership records are current and accurate prior to transferring the vehicle to a new owner.

Vehicles Exempt From Title Requirements

Not every vehicle requires an Alabama certificate of title. Per Section 32-8-31, the following are among the vehicles exempt from the title requirement:

• Vehicles owned by the United States or any agency thereof
• Vehicles owned by the State of Alabama or any political subdivision thereof
• Vehicles over 35 model years old (for motor vehicles) or 20 model years old (for travel trailers)

For vehicles not subject to the Alabama Uniform Certificate of Title and Antitheft Act, a valid bill of sale and registration documents may serve as proof of ownership.

Satisfying an Existing Lien

If an active lien is recorded on the vehicle's Alabama certificate of title, the lien must be fully satisfied and released before the vehicle can be sold. If the title is not submitted to the department for lien removal and the title is subsequently lost, the owner must obtain a lien release statement to obtain a replacement lien-free title.

Once the loan is paid off, the lienholder is responsible for releasing the lien. The seller should contact the lienholder to obtain a lien release letter and, if applicable, the physical certificate of title, before proceeding with the sale.

No Vehicle Inspection Required for Private Sales

Alabama does not require a private-party seller to obtain a vehicle safety inspection or an emissions test before completing a sale. Alabama law does not provide for emissions testing of motor vehicles. A physical vehicle inspection is only required for first certificates of title, such as for new vehicles or out-of-state vehicles being titled in Alabama for the first time.

Documents Required To Sell a Car in Alabama

Completing a private vehicle sale in Alabama requires preparing several documents. Both the seller and the buyer should retain copies of all completed paperwork.

Certificate of Title

The existing certificate of title is the primary document establishing ownership. The seller must complete the assignment section on the reverse side of the title, providing:

• The buyer's full legal name and address
• The date of sale
• The odometer reading (if applicable)
• The seller's signature, which must be signed exactly as the name appears on the face of the title

If joint ownership is reflected and the names are joined by "and," both owners must sign the title assignment. If the names are joined by "or," only one owner's signature is required. The State of Alabama does not require the title assignment to be notarized.

The State Motor Vehicle Department will not accept any document that has been altered, including any use of correction fluid or similar means.

Bill of Sale

While Alabama does not require a bill of sale for all private vehicle transfers, many county licensing officials do, and it is strongly recommended for all transactions. Per Administrative Rule 810-5-1-.246, a valid bill of sale for a motor vehicle must contain the following minimum information:

• Full name and complete physical address of the buyer
• Full name and complete address of the seller
• Date of sale (month, day, and year)
• Complete vehicle description: VIN, make, year, model or series number, and body type
• Purchase price of the vehicle
• Signatures of both the seller and the buyer

Both parties should retain a signed copy of the bill of sale for their personal records.

Odometer Disclosure Statement (Form MVT 5-5)

The Federal Truth in Mileage Act of 1986 requires the transferor to certify the vehicle's odometer reading at the time of sale. The Odometer Disclosure Statement (Form MVT 5-5), issued by the ALDOR Motor Vehicle Division, must be completed for most vehicle transfers.

The seller must certify one of the following:

• The stated odometer reading is the actual mileage of the vehicle
• The mileage is in excess of the odometer's mechanical limits
• The odometer reading is not the actual mileage (discrepancy warning)

This form is not required for:

• Vehicles that are 20 model years old or older
• Vehicles with a Gross Vehicle Weight Rating (GVWR) of more than 16,000 lbs.
• Non-self-propelled vehicles (e.g., trailers)

Failure to complete or providing a false odometer statement may result in fines and/or imprisonment under federal law.

How To Transfer a Car Title in Alabama

Per Section 32-8-44 of the Code of Alabama, upon transfer of ownership, the seller must deliver the properly assigned certificate of title to the buyer. The buyer must then apply to a designated agent for a new certificate of title. The delivery of the certificate does not act as a transfer of title until the new application is completed and processed.

Step 1: Complete the Title Assignment

The seller completes the assignment section on the reverse of the existing certificate of title. The information entered must match all supporting documentation exactly. Any alteration to the title document will result in its rejection by the department.

Step 2: Prepare the Bill of Sale

A bill of sale containing all required information per Rule 810-5-1-.246 should be prepared and signed by both parties. Both the seller and the buyer receive a signed copy.

Step 3: Complete the Odometer Disclosure Statement

For applicable vehicles, the Odometer Disclosure Statement (Form MVT 5-5) must be completed and signed by both parties at the time of transfer.

Step 4: Deliver Documents to the Buyer

The seller delivers the following to the buyer at the time of sale:

• The properly assigned original certificate of title
• A signed copy of the bill of sale
• The completed Odometer Disclosure Statement (Form MVT 5-5), where applicable

The buyer must then apply for a new certificate of title through a designated agent within 20 calendar days of the purchase date.

Step 5: Buyer Submits Application Through a Designated Agent

Applications for an Alabama certificate of title are processed by designated agents, including county License Plate Issuing Officials. Replacement titles and certain other title services may also be processed online through the MyDMV portal.

Title Transfer Fee Schedule in Alabama

The following fees apply to motor vehicle title transactions:

In addition to the state fee, designated agents collect a $1.50 commission per application. Certain counties may also impose local fees.

Sales Tax on Private Vehicle Sales

Under Alabama law, private-party vehicle sales (referred to as "casual sales") are subject to a state automotive sales tax of 2% of the gross purchase price. Local city and county taxes may also apply. The buyer pays the applicable taxes at the time of registration with the county licensing official.

What To Do After Selling Your Car in Alabama

In Alabama, license plates are to be removed by the registrant upon the sale or disposal of the vehicle and may be voluntarily surrendered to the local licensing official. The plate does not remain with the vehicle. If the seller subsequently acquires another vehicle, the license plate may be eligible for transfer to the new vehicle.

If the plate cannot be surrendered physically, Form MV 32-7A-5 (Request for Registration Revocation) is available from the local licensing official.

Notify the Insurance Provider

After the sale is finalized and the license plate is removed, the seller should contact the automobile insurance provider to cancel coverage for the sold vehicle or transfer the policy to a replacement vehicle. Maintaining insurance on a vehicle no longer owned is not required under Alabama's Mandatory Liability Insurance law, and continuing unnecessary coverage may result in avoidable premium charges.

If an MLI (Mandatory Liability Insurance) verification notice is received for the sold vehicle, the seller should:

1. Visit MyDMV to respond online to the verification notice; or
2. Visit the local licensing official and provide documentation (bill of sale, etc.) to complete the registration revocation process.

Retain Copies of All Sale Documents

The seller should retain a copy of the completed bill of sale and any other transaction documents. Copies of sale documents may also be needed to prove the sale in the event of future liability disputes.

Contact Information

Alabama Department of Revenue — Motor Vehicle Division
2545 Taylor Road, Montgomery, AL 36117
Phone: (334) 242-9000
Official Website: ALDOR Motor Vehicle Division