California Car Consignment Rules & Dealer Requirements | 2025 Guide

Car consignment in California is legal, but dealers must follow strict state rules designed to protect sellers and buyers. These California car consignment rules, dealer requirements, and best practices (updated for 2025) cover compliance with written agreements, title & odometer handling, lien payoff, insurance, fee disclosure, and payment timing.

Dealer License Requirements

• Only licensed California dealers may legally consign and sell vehicles.

• Private individuals cannot offer consignment services without a dealer’s license.

• The California Department of Motor Vehicles (CA DMV) regulates licensing and compliance.

Source: CA DMV Occupational Licensing Division

Source: California Registration Procedures Manual

Written Agreements

A written consignment agreement is required (California Vehicle Code § 11730), and should include:

• Seller’s name, contact information, vehicle details (VIN, mileage, title status) and other specific language (linked sources below)

• Dealer’s responsibilities (marketing, storage, test drives, payoff if applicable)

• Vehicle eligibility criteria and requirements (vehicle condition, safety, inspections, other)

• Commission or fee structure

• Timing for seller funding once the vehicle is sold (20 days from sale)

• Explicitly addresses how an outstanding lien will be paid, if applicable

• Terms for cancellation

• Seller’s insurance requirements while on consignment

• Requires signatures by both parties (dealer and seller). Provide seller with a copy, and dealer maintains original.

Source:  CA Vehicle Code §11729

Source:  Sample Agreement Template

Clear written agreements are the foundation of California consignment dealer requirements and help both parties avoid disputes.

Title, Odometer & Power of Attorney Handling

• Vehicle titles remain in the seller’s name until sold.

• Federal and California law require an odometer disclosure at time of sale. Vehicles greater than 10 model-years old may be marked “Exempt.”

• A limited power of attorney may be used to allow the dealer to transfer title once the vehicle is sold (linked source below).

Best Practice: Dealer should retain and store the unsigned original title from the seller. If a lien is present, obtain a copy from the seller’s lender for the file.

Source: CA DMV POA 

Source: CA DMV Odometer Reporting

Escrow / Consignor Payment Timing Rules

• California does not mandate a separate escrow account for consignment sales.

• Dealers must pay the consignor (or lienholder, if applicable) within 20 days after the date of sale.** Many dealers fund sooner as a best practice once buyer funds clear. 

• Keep all proceeds handling transparent and documented.

** Failure to pay the agreed amount to the consignor (or designee) within 20 days after the date of sale is cause for suspension or revocation of the dealer’s license (VC §11705 (a)(10)).

Insurance & Test Drives

• Dealers must carry garage liability insurance covering consigned vehicles.

• Sellers should confirm whether their personal policy provides any residual coverage while the vehicle is in the dealer’s possession.

• Dealers are responsible for test-drive coverage under their policy.

Best Practice: Dealers should confirm with their insurance agent and/or underwriter that their policy specifically covers, Owned and Consigned vehicles for liability and certain damages. Dealers should require sellers to maintain full coverage (including comprehensive) while their vehicle is on consignment. This requirement should be included in the consignment agreement and discussed with the seller at time of signing. Obtain a copy of the seller's insurance card for verification and have the seller initial the insurance section of the agreement.

Clear insurance coverage and test drive responsibility are key best practices in California car consignment dealer requirements, protecting both the seller and the dealer.

Lien Payoff Process

Vehicles with open loans can be consigned in California, but the lienholder must be paid off by the dealer within 20 days of the sale.  Dealers handle this process directly by sending funds and title release instructions to the lienholder.

Best Practice: At the start of the consignment, the seller should provide:

• Lender’s contact information
• A current payoff statement
• Written authorization for the dealer to process payoff

It’s also important to check for negative equity — when the loan payoff is higher than the expected net sale proceeds (estimate sale price minus the dealer’s commission, fees, and charges). If negative equity exists, the dealer should collect the shortfall from the seller upfront and hold it in trust. This ensures the lien can be fully satisfied and the title can be released without delays once the vehicle is sold.

Source:  Electronic Lien & Title Program

Proper lien payoff handling is a critical part of California car consignment dealer requirements and ensures a smooth title transfer for both seller and buyer.

Fee Disclosure Rules

• All fees and commissions must be clearly disclosed in writing.

• Disclose flat fees or percentages, reconditioning costs, and any storage/marketing fees.

Cancellation & Cooling-Off Notes

• Sellers may terminate the consignment agreement at any time, unless a specific contract clause states otherwise.

• Any cancellation terms (e.g., notice period, retrieval fees, reimbursement for dealer out-of-pocket expenses) must be spelled out in the agreement.

FAQs

Here are common questions sellers and dealers ask about consignment in California.

Can a private seller consign without going through a dealer?
No. Only licensed California dealers may legally consign vehicles.

How long does a California dealer have to pay the seller after sale?
California requires payment to the consignor within 20 days after the date of sale; many dealers target 24–48 business hours after funding as a best practice.

Can a car with a loan still be consigned?
Yes, as long as the dealer handles lien payoff at closing.

Last reviewed: September 2025

Retail My Ride Is Here to Help Dealers and Sellers

Once you understand the consignment requirements in California, the next step is putting them into practice. Retail My Ride connects licensed dealers with motivated consign-ready sellers, helping you stay compliant while growing your inventory.

• For Dealers: Join America’s #1 hub for car consignment to access a steady stream of private seller, retail-ready vehicles — free to join and built to grow your acquisition pipeline.

• For Sellers: Get top dollar for your car by working with a licensed retail dealer who handles everything for you.

⚠️ Important Notice

This page is provided by Retail My Ride for general informational purposes only. It is not legal advice. Car consignment laws and dealer requirements may change at any time. Always confirm the latest rules with your state DMV, licensing authority, or qualified legal counsel before making decisions.