How to sell a pre-owned vehicle legally and what documents do you need?

While many Canadians enjoy the convenience of trading in their used cars at the dealer, selling privately is still the best way to maximise profit. After you’ve familiarised yourself with prepping a car for private sale, there are various governmental procedures that you have to keep in mind when transferring ownership to someone else.

The mechanical inspection documentation

While provinces vary to certain degrees, the most common factor you’ll find is requiring valid mechanical inspections. Some provinces choose to impose mandatory inspections on most (if not all) used private vehicle sales, but many simply require that the vehicle has passed inspection previously and is still within specified time constraints. It’s always fun to gripe about having to pay out-of-pocket for sometimes-unnecessary mechanical inspections, but remember, most of these inspections go towards keeping vehicles on the road safe for the occupants and everyone else on the road.
When selling your vehicle, make sure you have all the proper documentation of the vehicle’s past inspection(s) to give to the buyer and to show at the motor vehicle agency at signing. Some provinces even make it easier by slapping a windshield sticker on the car so you don’t need to worry about this step (Québec, for instance).

The Transfer of Ownership

Another piece of documentation that is necessary for most provinces is a Transfer of Ownership (tax) form that is available from each respective government agency’s website. Make sure to fill out this form accurately and ask the buyer to do the same as it can cause problems the day you go to transfer the car and because tax forms. These official forms should not be confused with a Bill of Sale, which is something else you should prepare for the transaction.

The Bill of Sale

On the Bill of Sale, which can be on something as crude as a piece of loose leaf paper, make sure to record the buyer and seller names, the date of sale, the description of the vehicle including colour, mileage, etc., price, and signatures all round. This is something else that you may be asked to present at the motor vehicle agency.

Taking your plates off the car

Lastly, licence plates are typically associated with the owner of a vehicle and not to the vehicle itself. This means that you must ensure that you take your plates off the car before handing it over to the new driver. If you no longer need the plates for another vehicle – and assuming you don’t hang them up on your garage walls like me – you can often apply for a refund for the remaining period before your plates expire and then surrender them to the motor vehicle agency.

More information can always be found on your province’s motor vehicle association’s website and it is strongly recommended that you follow all steps listed there before completing any private car sale.