Each state has its own set of regulations and processes for selling vehicles, and South Dakota is no exception. The Department of Revenue (DOR) registers vehicles, collects taxes related to vehicle sales, and issues seller's permits through an online portal or kiosk. Its mandates are found in the codified law of South Dakota Title 32.
Selling a vehicle in South Dakota involves a series of steps and legal requirements to ensure a smooth and compliant transaction. Whether it's a private seller or a dealer, understanding these requirements is crucial.
Knowing and adhering to these state-specific regulations helps avoid legal issues, ensures proper transfer of ownership, and protects both the buyer and the seller.
Legal Requirements Before Selling a Vehicle in South Dakota
There are two ways to sell a vehicle: privately or through trade-in to a dealer. Sellers often opt for private sales when the vehicle's value is high, while trade-ins happen when the vehicle is not worth that much.
Before selling a vehicle privately in South Dakota, the seller must adhere to specific legal requirements for a smooth transaction. These steps are essential to transfer ownership legally and protect both parties involved in the sale.
Obtain a Seller's Permit
First, the seller must acquire a seller's permit, which is available for free from the county treasurer's office. This process necessitates presenting a valid South Dakota ID card or driver's license. The permit allows the buyer to drive the vehicle for up to 45 days before completing registration and titling.
In certain cases, if the buyer needs more time, they can obtain an additional permit for 5 to 15 days at a cost of $1 per day. However, requesting a second permit for the same vehicle-owner combination requires justification, and the system will check for any suspensions and title record status.
Failing to provide the permit to the buyer at the time of sale constitutes a class 2 misdemeanor. Sellers can obtain the necessary permit online or via a kiosk at their local treasurer's office in their county. However, seller's permits are not issued for boats or snowmobiles.
Reprints are available once within seven days of getting one. If sellers exceed the number of reprints, they can contact their county office.
Prepare the Vehicle Title
When preparing to sell a vehicle in South Dakota, sellers must provide a vehicle title. If the title is missing or lost, they must obtain a duplicate or bonded title.
Duplicate Title
To duplicate a missing title or registration for vehicles, sellers need to complete the duplicate title application and submit it either in person or by mail to the South Dakota county office. The application requires a $10 fee. Requesters can pay through a credit card, except American Express.
For mail requests, sellers can use this address to send the form and the application fee: 445 E Capitol Avenue, Pierre, SD 57501.
Bonded Title
Vehicles that are 30 years old or older, with no ownership record and no bill of sale, require a bonded title. The process begins by submitting a Bonded Title Request Form, photos of the vehicle, and any applicable fees to the DOR.
A trusted agent from the DOR will then value and search the vehicle. Once valued, the DOR provides the necessary documents for purchasing a bond from a South Dakota surety bond company. Individuals have up to 24 months from the approval of the bonded title request to apply for a title that includes a disclaimer about the bond.
Generate a Vehicle History Report
Sellers should provide potential buyers with a vehicle history report (VHR), which details previous accidents, major repairs, flood damage, odometer fraud, and recalls. Being transparent about the vehicle's history can facilitate a smoother sale. Free reports are available, but they contain limited information, which might not be helpful to potential buyers.
Sellers may also request information from DOR by completing a Driver's Privacy and Protection Act (DPPA). Fees include $2 for general information on the vehicle and $5 for title history.
Third-party providers of VHR are also available since South Dakota participates in the National Motor Vehicle Title Information System (NMVTIS). The information is more extensive because it includes data from other states, which is helpful if the vehicle for sale originates from another state.
However, the fee is substantially higher than the fee collected by SD, which may start at a price of $25 or higher, depending on the provider. Information may include past ownership, flood damage, maintenance records, and more.
Inspection records are not required when selling a vehicle in South Dakota, except for rebuilt ones. However, providing a copy to prospective buyers can help them make an informative decision about their purchase.
Advertise the Vehicle for Sale
When advertising a vehicle for sale in South Dakota, sellers must follow specific guidelines to ensure compliance with state regulations. If sellers advertise with a specific offer price for a motor vehicle, they must state the effective period of the ad. This inclusion informs potential buyers about the duration for which the advertised price remains valid.
Sometimes, vehicles for sale have labels on them with the suggested retail price by the manufacturer, which is often referred to as the Monroney sticker. If sellers offer a price higher than this price on the sticker or label, they must affix a supplemental sticker. The supplemental sticker must clearly indicate the final offer price. It provides transparency to prospective buyers.
Any price mentioned in an advertisement, whether written or oral, is considered the offering price. It should include or be understood as the offering price plus taxes, registration costs, documentary fees, and license fees.
If the offer price applies to a single vehicle or a limited number of new or used vehicles, the advertisement must disclose this limitation to avoid misleading potential buyers.
Any limitations must be disclosed when a warranty or guarantee is mentioned in an advertisement. These limitations may include the following:
- Duration of the warranty
- The inclusion or exclusion of service or labor charges
- Any specific characteristics or properties of the vehicle or its parts covered by the warranty
Additionally, the advertisement must specify whether the warranty will be fulfilled through repair, replacement, refund, or other means and clarify whether the method of fulfillment is at the advertiser's discretion.
For more information about the advertisement of vehicles for sale, sellers can always contact the SD DOR.
Selling a Vehicle with a Lien in South Dakota
South Dakota is using an Electronic Lien and Title System (ELT). This system allows paperless handling and storing of titles since all titles with liens are kept in electronic versions. Thus, no titles will be issued and printed as long as there's a noted lien on them.
In the ELT system, lenders can opt to engage the services of an accredited provider. The provider manages electronic notifications of title issuances and a perfected lien. Once a lien is satisfied, the lender will notify its provider about the lien release. From here, the owner will receive the title by mail.
How To Remove a Lien on a Title?
Before owners can sell their vehicles, all lienholders must release their lien on a vehicle title. Either the seller pays off the loan associated with the lien, or the buyer assumes the outstanding balance. Regardless, there are specific steps for releasing a lien on a title.
For liens noted on a title, the lienholder's signature on the vehicle title is not necessary if notice of lien satisfaction is given to the appropriate parties. Lien holders can cancel liens in any county, but they must note liens where the titled owner's county is located.
In cases where the title is in the lienholder's possession, the lienholder is responsible for releasing the lien not more than 20 days after receiving the final payment. The county treasurer must then update the record to reflect the release. Lien cancellation is free of charge.
When the owner holds the title, the lienholder must execute a liability release not more than 20 days after receiving the final payment. The lienholder should either deliver or mail the release to the owner, who must then forward the vehicle title and the lien release to any office of the county treasurer.
Motor Vehicle Sales Tax in South Dakota
In South Dakota, vehicle sales tax applies to the sale and purchase of motor vehicles. Understanding the tax implications can streamline the transaction process for both buyers and sellers.
South Dakota imposes a 4.2% sales tax and a 1% to 2% municipal tax on the sale of products and services. However, a 4% motor vehicle excise tax is applied to the purchase price of motor vehicles by private individuals. This tax applies to all vehicle sales, whether new or used, and is paid at the time of titling and registration.
When a sale is made through a dealership, the dealer is not required to collect the motor vehicle excise tax, but they are mandated to collect sales tax when applicable.
Who Pays the Sales Tax in Private Car Sales?
The buyer is responsible for paying the sales tax in private vehicle sales. This tax is calculated based on the purchase price or the fair market value of the vehicle, whichever is higher. Payment of this tax occurs at the county treasurer's office when the buyer registers the vehicle.
Tax for Out-of-State Sales
When a vehicle is sold in South Dakota to a resident of another state, the sales tax requirements depend on the reciprocal tax agreements between South Dakota and the buyer's home state. If the buyer's home state has a higher tax rate, the buyer might need to pay the difference upon returning home.
Conversely, if the rate is lower, the buyer may not receive a refund for the difference. The buyer should check with their home state's Department of Motor Vehicles for specific details.
Exemptions
Several exemptions and special considerations apply to vehicle sales tax in South Dakota. For instance, vehicles transferred as gifts between immediate family members may be exempt from sales tax, provided the appropriate documentation is submitted.
Non-residents who purchase vehicles in South Dakota but will register them in another state may also be exempt, depending on the circumstances and reciprocal agreements.
Legal Requirements After Selling a Vehicle in South Dakota
Upon selling a vehicle, the seller must remove the license plates. This step is crucial for avoiding any future liability associated with the vehicle. Aside from this important step, here are the other things the seller must do after completing the sale:
Hand Over the Bill of Sale and Other Important Documents
The seller must fill out and provide the buyer with a Bill of Sale form. This document transfers personal property from the seller to the buyer and is necessary for the buyer when completing the title transfer at the county treasurer's office.
Although the Bill of Sale is not mandatory if the information is noted on the back of the title, it is strongly recommended. The seller must also provide a Damage Disclosure Statement if the vehicle was sold with noted damage, although this requirement was lifted for titles issued after July 1, 2015.
Additionally, an Odometer Disclosure Statement must be completed for vehicles less than ten years old and weighing less than 16,000 pounds.
Complete Title Transfers
When transferring the title, both the seller and buyer must complete the necessary information and signatures on the back of the title. Both parties should be present during this process.
The buyer is responsible for applying to transfer the title into their name at the county treasurer's office.
Notify the DOR of the Sold Vehicle
Within 15 days of the sale, the seller must notify DOR about the sale. They can either complete a seller's report of sale and submit it by mail or in person or use online reporting. Sellers can log into the SDCars online customer portal, select the sold vehicle, and choose the report of sale option.
This report officially releases the seller from liability related to the vehicle. Failure to notify the DOR within the specified timeframe may result in continued liability for the vehicle. Moreover, it is subject to a class 2 misdemeanor.
Sellers must keep a copy of this report because the title record will not change automatically. The new owner or buyer must submit the properly endorsed title to the DOR for complete transfer.
Transfer License Plate
In South Dakota, besides removing the plate, there's a "plate with owner" policy. This allows vehicle owners to keep their license plates when selling a vehicle. However, they must transfer these plates from the sold vehicle to their new one.
This process requires visiting the local county treasurer's office and presenting the old license plates for transfer. The county office will handle the necessary paperwork to ensure the plates are correctly associated with the new vehicle.
Cancel the Insurance
When a South Dakota resident sells their vehicle, canceling the associated insurance policy is a critical step. The seller should contact their insurance provider immediately after the sale to terminate coverage. This action prevents them from paying for insurance on a vehicle they no longer own.
The cancellation process typically involves informing the insurer of the sale date and providing any necessary documentation. Some insurance companies may require a copy of the bill of sale or transfer of title as proof.
It is important to time the cancellation correctly - not too early, which could leave the seller unprotected during the sale process, but not too late, resulting in unnecessary payments. The seller should also ensure they have new insurance in place for any replacement vehicle before canceling the old policy to maintain continuous coverage.