What Transfer of Liability Means and Why It Matters

Transfer of liability is the process of removing yourself from legal and financial responsibility for a vehicle once you sell it. In California, this means notifying the Department of Motor Vehicles that you are no longer the owner, so you stop being liable for accidents, parking tickets, tolls, or registration violations that happen after the sale.

If you do not transfer liability, you remain responsible for anything that happens with that car — even if the new owner causes an accident or racks up unpaid tickets. The DMV will send violation notices to your address. Insurance companies may hold you liable for claims. This is why completing the transfer is not optional; it is a legal requirement that protects you.

California law gives you a specific window to report the sale. The sooner you do it, the sooner your liability ends. Waiting or skipping this step is one of the most common and costly mistakes sellers make.

Key Takeaways

  • You must report the sale to the California DMV within 5 days of selling your vehicle, or you remain liable for what the new owner does with it.
  • The fastest way to transfer liability is to fill out the Notice of Transfer and Release of Liability form (REG 138) and mail it to the DMV or submit it online through the DMV website.
  • You can also ask the buyer to register the vehicle in their name, which automatically transfers liability once the DMV processes their registration.
  • Keep a copy of your bill of sale and proof that you reported the transfer, because the DMV may contact you if the new owner causes violations before they register the car.
  • If you sell to a dealer, the dealer handles the transfer, but if you sell to a private buyer, you are responsible for reporting the sale yourself.

The Two Ways to Transfer Liability in California

California gives you two paths to transfer liability. The first is to report the sale directly to the DMV using the Notice of Transfer and Release of Liability form (REG 138). The second is to have the buyer register the vehicle in their name, which automatically notifies the DMV that ownership has changed.

Most sellers use the first method because it is faster and puts the transfer on record when ready. You do not have to wait for the buyer to complete their registration. The second method works if the buyer is reliable and registers quickly, but it leaves you exposed during the gap between the sale and their registration.

If you sell to a dealer, the dealer is responsible for transferring liability. If you sell privately, you must do it yourself. Dealers are required by law to handle the paperwork; private buyers are not, so the burden falls on you.

How to File the Notice of Transfer and Release of Liability (REG 138)

The REG 138 form is a one-page document that tells the DMV you no longer own the vehicle. You can obtain it from the California DMV website, any DMV office, or through your insurance company. Fill in your name, the vehicle identification number (VIN), the date of sale, and the buyer's name and address if you have it.

You have three options to submit the form. You can mail it to the DMV address listed on the form (typically the address for your county). You can submit it online through the California DMV website if you have a California driver's license or ID. You can also deliver it in person at any DMV office. Online submission is the fastest; mailed forms take 1 to 2 weeks to process.

Keep a copy of the completed form and any proof of mailing or submission. If the DMV later contacts you about violations or tickets from the new owner, you will need evidence that you reported the transfer on time. The DMV will send you a confirmation once the transfer is recorded.

What Happens If the Buyer Does Not Register the Vehicle

If you report the transfer but the buyer never registers the car in their name, you are still protected. Your liability ends once the DMV records your transfer report. However, the vehicle will still be registered to you in the DMV system until the buyer registers it.

This creates a gap where the car is unregistered but still in your name. If the buyer drives it and gets pulled over, the officer will see it registered to you. If they cause an accident, the other party may initially contact you. This is why having a bill of sale signed by both you and the buyer is critical — it proves you sold the vehicle and when.

If the DMV contacts you about violations or tickets from the new owner after you have reported the transfer, respond when ready with a copy of your transfer report and bill of sale. The DMV will investigate and clear your record once they confirm the sale date.

The 5-Day important date and What Happens If You Miss It

California law requires you to report the sale within 5 days. This is a hard important date. If you miss it, you remain liable for the vehicle until the buyer registers it or until you eventually report the transfer.

Missing the important date does not prevent you from reporting later — you can report the transfer at any time. However, you will be liable for anything that happens during the gap. If the new owner causes an accident, gets a ticket, or racks up toll violations, those can be traced back to you and your insurance.

The 5-day window is measured from the date of sale, not the date you sign the paperwork. If you sell on a Monday, you have until the following Saturday to report it. Weekends and holidays do not extend the important date, so plan accordingly. If the 5th day falls on a weekend or holiday, submit your form the business day before.

Scams and Safety Issues to Watch For

Scammers sometimes pose as buyers and ask sellers to hold off on reporting the transfer. They claim they need time to arrange financing or registration. Do not agree to this. Report the transfer when ready, regardless of what the buyer says. Your liability protection depends on it.

Another common scam involves buyers who ask you to keep the registration in your name temporarily so they can "test drive" the vehicle or use it before finalizing the purchase. This is a red flag. Once money changes hands and the buyer has possession, you must report the sale. Keeping the registration in your name after the sale is complete exposes you to liability and may violate California law.

Be cautious of buyers who refuse to provide their name and address for the transfer form. You do not legally need the buyer's information to file the REG 138, but having it helps the DMV process the transfer faster. If a buyer refuses to identify themselves, that is a sign the transaction may not be legitimate.

Never accept a check that is contingent on you delaying the transfer report. Once the sale is final and you have been paid, report it when ready. If the check bounces later, you will have already protected yourself by reporting the transfer on time.

What to Keep and What to Do After the Transfer

After you report the transfer, keep copies of three documents: the signed bill of sale, the completed REG 138 form, and proof that you submitted it (a mailed receipt, an online confirmation, or a DMV office receipt). Store these for at least three years. If the DMV or a third party contacts you about the vehicle later, these documents prove you sold it and reported the sale on time.

You should also notify your insurance company that you have sold the vehicle. Your policy may allow you to remove the car from coverage when ready, which can lower your premium. Some insurers will not remove the car until they receive notice from you, so do not assume they know about the sale.

If you financed the vehicle through a loan, contact your lender to let them know the car has been sold. They may have specific instructions for releasing the lien or transferring the title. Some lenders require you to notify them before you can legally sell the car.

Frequently Asked Questions

Do I have to include the buyer's name and address on the REG 138 form?

No, you can file the form with just your information and the vehicle details. However, including the buyer's information helps the DMV match the transfer to the new owner's registration and speeds up the process. If you have the buyer's information, include it.

What if I sold the car to a private buyer and they will not register it?

Report the transfer yourself using the REG 138 form. Your liability ends once the DMV records your report, even if the buyer never registers the vehicle. If the DMV contacts you about violations or tickets, respond with your transfer report and bill of sale to prove you reported the sale on time.

Can I report the transfer online if I do not have a California driver's license?

No, online submission through the DMV website requires a valid California driver's license or ID. If you do not have one, mail the REG 138 form to the DMV or deliver it in person at a DMV office.

What happens if I report the transfer but the buyer causes an accident before they register the car?

Once you have reported the transfer, your liability is released. If the other party in the accident contacts you, direct them to the buyer and provide them with your transfer report as proof that you no longer owned the vehicle at the time of the accident. Your insurance company should also be notified so they can information in directing the claim to the correct party.

Is there a fee to file the Notice of Transfer and Release of Liability?

No, there is no fee to file the REG 138 form. The transfer report is free whether you submit it online, by mail, or in person at a DMV office.