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This guide provides essential information for dealers looking to offer car consignment services in Texas. Understanding these requirements helps ensure compliance with state regulations.
Car consignment in Texas is legal, but dealers must follow specific state rules designed to protect both sellers and buyers. These include written agreements, proper handling of titles and odometers, clear fee disclosures, and lien payoff procedures. Understanding these requirements helps ensure a safe and profitable consignment process.
Only licensed motor vehicle dealers may legally consign and sell vehicles in Texas.
Private individuals cannot offer consignment services without a dealer’s license.
The Texas Department of Motor Vehicles (TxDMV) regulates licensing.
Source: TxDMV Dealer Licensing
Source: Texas Department of Motor Vehicles – Publications - Dealer Manual (PDF)
A written consignment agreement is required in Texas.
The agreement should include:
Seller’s name and vehicle details (VIN, mileage, title status)
Dealer’s responsibilities (marketing, storage, test drives, payoff if applicable)
Vehicle eligibility criteria and requirements (condition, safety, state inspections, and other factors)
Commission or fee structure, including timing for seller funding once the vehicle is sold
Terms for cancellation and how notice must be given
Seller’s insurance requirements while the vehicle is on consignment
Best Practice: Provide seller with a signed copy of the agreement and dealer maintains original in vehicle "deal jacket."
Vehicle titles remain in the seller’s name until the vehicle is sold.
Federal and Texas law require an odometer disclosure at the time of sale. Vehicles more than 20 model years old are classified as “Exempt.”
A limited Power of Attorney (Form VTR-271-A) may be used to allow the dealer to transfer title once the vehicle is sold.
Best Practice: The dealer should retain and securely store the unsigned original title from the seller. If a lien is present, obtain and keep a copy of the title or payoff statement from the seller’s lender in the file.
Source: Texas DMV – Title Transfers & Odometer Disclosure - Selling a Car
Texas does not mandate escrow accounts for consignment.
However, all proceeds must be handled transparently, and payment must be remitted to the seller promptly after sale (usually within 10 business days).
Many reputable dealers voluntarily use escrow or separate trust accounts if the dealer plans to accept vehicles with "negative equity" on consignment.
Dealers must carry garage liability insurance covering vehicles on consignment.
Sellers should confirm their personal insurance does not remain liable once the vehicle is left with the dealer.
Dealers are responsible for test drive coverage under their policy.
Vehicles with open loans can be consigned, but the lienholder must be paid off at time of sale.
Dealers typically handle lien payoff directly from buyer funds at closing by overnight mailing or electronic funds transfer along with clear instructions for the lender to release their lien and send the title directly to the dealer for handling. Do not send title to seller.
Seller should provide lender contact and payoff statement at the time of consignment and gathering this information is included in the consignment agreement.
Texas law requires all fees and commissions to be clearly disclosed in writing.
This includes flat fees, percentages, reconditioning costs, and any storage or marketing fees.
Sellers may terminate the consignment agreement at any time, unless a specific contract clause states otherwise.
Any cancellation terms (e.g., required notice, retrieval fees) must be spelled out in the written agreement.
Can a private seller consign without going through a dealer?
No. Only licensed Texas dealers may legally consign vehicles.
How long does a Texas dealer have to pay the seller after sale?
Typically within 10 business days of the completed transaction.
Can a car with a loan still be consigned?
Yes, as long as the dealer handles lien payoff at closing.
Last reviewed: August 2025
Once you understand the consignment requirements in Texas, 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: Learn more and join America’s #1 hub for car consignment and access a steady stream of retail-ready vehicles.
For Sellers: Get more money for your car by working with a licensed retail dealer who handles everything for you.
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.
This information is provided for general reference only. Laws and regulations change frequently. Always consult with legal counsel and verify current requirements with your state's DMV or regulatory authority before offering consignment services.
Learn more through our Articles, Common Questions, Testimonials, About Us, and Which Vehicles Are Best Suited for Consignment.
