When you want to sell a car, the process may seem complex, especially as it generally involves transferring ownership, completing a bill of sale, and filing relevant paperwork with the state DMV or equivalent agency.
Using a power of attorney to sell a car may be required in certain scenarios such as when you reside in a different state or county, are deployed in military service, are hospitalized, or are unavoidably absent for the transaction.
Also, it is critical to be informed about additional requirements (for obtaining a POA) that states may have other than the general requirements for the POA document to be considered legal and binding. This may help avoid legal complications during a car sale.
What Does POA Stand For?
POA, also called Power of Attorney, is a legal authorization allowing a representative, agent, or attorney-in-fact to act on behalf of another person referred to as the principal. This authorization may permit the agent or representative to act with broad or limited permission in making decisions about the property, investment, medical care, or finances of the principal. Consequently, you may use a power of attorney to sell a car.
Do You Need a Power of Attorney When Selling a Car?
If your name is not the one on a vehicle title or you are not the individual identified by the DMV or vehicle documents as the registered owner of a car, you are likely to need the power of attorney for car title transfer and to sell the car.
Other scenarios where a power of attorney may be required to sell a car include:
- Military Deployment: If the car seller is on active duty as military personnel stationed overseas or in remote locations, a power of attorney may be required to sell a car.
- Absent Owner: If the owner of a car resides in a different state and cannot attend the sale process, a power of attorney may be used to authorize the sale of the car.
- Physical or Medical Limitations: Car owners who are injured, hospitalized, or otherwise unable to be present during the sale or vehicle transfer process may authorize an agent using a power of attorney to perform the car sale on their behalf.
- Lienholder Authorization: When a car is financed and the lienholder requires specific authorization for its sale, a power of attorney may be needed to transfer ownership.
- Handling Estates and Legal Guardianships: When a deceased person's car is to be sold, the executor of the estate may require a power of attorney to sell the car on behalf of the deceased. Also, if a minor owns a vehicle, the guardian may need a power of attorney to sell the car on the minor's behalf.
Note that it is recommended that you research the specific laws applicable in the state where the car sale is to occur before completing a car sale transaction using a power of attorney. For instance, states like Colorado and Nevada require POA documents to be notarized for them to be authentic. Also, some states require specific DMV forms for POAs to be used in car sales. For example, Alabama requires Form MVT 5-13, while California uses DMV Form REG 260.
How Does a Power of Attorney Work in Car Sales?
Selling a car typically involves transferring the vehicle title, signing the bill of sale, and completing the relevant DMV paperwork. A power of attorney plays a crucial role in these steps if the vehicle owner is not directly involved in the process.
Firstly, a power of attorney authorizes the representative to sign the vehicle's title on behalf of the owner, ensuring that the transaction complies with legal requirements. In addition, the POA permits the agent to sign the bill of sale and complete any required DMV or equivalent state agency paperwork. Such paperwork may involve registration cancellations or tax documentation.
Depending on the terms of the power of attorney documentation, the agent may be allowed to collect payment for the car sale on behalf of the owner and manage other financial aspects related to the sale.
Steps to Get a Power of Attorney for Selling a Car
A power of attorney document may be categorized as limited or general depending on the scope and authority intended by the principal to be granted to the agent.
A limited POA document grants the representative the right to perform a task or restricted tasks specified within a defined scope. These tasks may include transferring the car's title or applying for a duplicate vehicle title. A limited power of attorney for car titles is often used when the car owner intends to delegate authority for a single purpose.
A general POA grants the agent broad authorization to handle various legal and financial matters related to a car sale. It may permit the agent to handle other matters, such as insurance processes and any legal issues arising from selling the vehicle. Unlike limited power of attorney for car title, a general POA does not limit the scope of the agent's authority in the car sale process.
Steps To Get a Power of Attorney
- Decide whether you want a limited or general power of attorney
- Prepare the POA document. You may use an online template or hire the services of an attorney to prepare the POA for you. Typically, the POA document should include:
- The full name and contact information of the principal
- The full name and contact information of the agent
- A clear description of the car to be sold (including the VIN, make, model, and year)
- The specific rights or powers granted to the agent
- Both the principal and agent must sign the POA
- Notarize the POA. Notarizing the document ensures that the document is legally binding on both parties
- Submit the POA document. If your state demands that you share copies of the POA document with certain state agencies and relevant parties, you must do so.
Note that the following documents may be required to obtain a POA:
- A valid government-issued ID
- Vehicle title
- Vehicle registration details
- State-specific forms (optional). Some states may require certain forms or documentation completed before your POA documents become valid
Pros and Cons of Using a Power of Attorney for Car Sales
Using a power of attorney in a car sale has its pros and cons. The main advantage of using a POA is that it affords a smooth car sale transaction in the absence of the car owner. In doing this, a POA document empowers a trusted person or agent to handle the paperwork and other administrative tasks to complete the sale on the owner's behalf. Also, in complex situations, such as where a car owner is incapacitated, a minor, or is deceased, the sale process can still be completed with a power of attorney to sell the car in compliance with the relevant laws.
One of the disadvantages of using a power of attorney to sell the car is that it requires the principal to be able to find an agent they can trust, which comes with the risk of fraud or mishandling of the car owner's rights. In addition, the cost and time required to prepare a legally binding POA may appear more burdensome than the requirements of a straightforward transaction between the buyer and the car owner. Hence, a power of attorney to sell a car may constitute an unnecessary complication or process when simple transactions are possible in situations where the owner may be present.
