Michigan Car Consignment Rules & Dealer Requirements | 2026 Guide

Car consignment in Michigan is functionally controlled by Michigan’s dealer licensing, title issuance, and retail sale requirements. Michigan does not provide a stand-alone “sell a car on consignment” government guide; instead, title and dealer rules determine whether consignment-like activity can be done compliant with the Michigan Vehicle Code.

Dealer License Requirements

• Only licensed Michigan motor vehicle dealers may sell, offer for sale, or display a vehicle for retail sale in Michigan. Dealers must have the proper dealer license issued by the Michigan Secretary of State (SOS).

• A dealer license is required for persons or businesses selling more than five vehicles in a 12-month period.

• Dealers must maintain a permanent place of business, keep records on site, have surety bond coverage, and meet all licensing and training requirements outlined in the Michigan dealer manual and application packet.

Source: Michigan Department of State — Vehicle Dealers information (license requirements)

Source: Vehicle Dealer Application Packet

Source: How to Become a Vehicle Dealer in Michican (private site)

Written Agreements

Michigan does not have a specific statutory template for vehicle consignment agreements published by the SOS or BMV. Because Michigan requires possession of a properly assigned title before a sale transaction can be completed, consignment-like arrangements must rely on written contractual structures that are consistent with traditional (owned-inventory) dealer licensing and title compliance.

Best Practice:

• Use a written agreement that clearly outlines the arrangement, rights, obligations, and payment timing.
• Include commission/fee structure, sale process, escrow or payout terms, inspection/test drive terms, lien authorization, and title transfer procedure.
• Sample Agreement Template

Michigan Consignment Reality Check

Michigan does not publish a state “how-to” guide for vehicle consignment. Instead, the Michigan Secretary of State’s Dealer Manual requires that a dealer have immediate possession of a properly assigned certificate of title or other approved ownership document before a vehicle may be displayed, offered for sale, or sold at retail.

Because of this title-control requirement, traditional consignment models where the owner retains title until after a retail sale are generally not workable in Michigan. Dealers who advertise or structure “consignment” transactions typically must ensure the transaction is built around compliant title possession or transfer before the vehicle is marketed or delivered.

Dealer takeaway:
Michigan is not a plug-and-play consignment state. Any consignment-like program must be structured carefully to satisfy Michigan SOS title and dealer-sale rules before the vehicle is offered to the public.

Title, Odometer & Power of Attorney Handling

• Under Michigan Dealer Manual Chapter 3: Title & Registration Requirements, a dealer must have in immediate possession a properly assigned certificate of title, an electronic title (ELT), or other acceptable ownership document before the dealer may display, offer for sale, or sell a vehicle.
• A vehicle may not be marketed or sold at retail unless the dealer controls the required title/ownership document in accordance with this rule.
• Michigan recognizes limited exceptions — such as new vehicles with a Manufacturer’s Certificate/Statement of Origin (MCO/MSO), off-lease vehicle transactions, buy-back vehicles, and inventory lender arrangements — but these do not support traditional consignment with title remaining with the owner until after sale.
• Proper title assignment must include the dealer’s name, address, dealer license number, a completed odometer mileage disclosure (when applicable), and signatures of buyer and seller.
• Because of these title possession and display requirements, dealers who describe their offering as “consignment” in Michigan typically need to structure the transaction to ensure compliance with Chapter 3 title rules.
• Implication for consignment: In Michigan, traditional consignment with owner retaining the title until sale is not supported by Michigan’s title rules. Dealers must have title control (proper assignment or possession) compliant with SOS requirements before the sale can proceed.

Source:  Title and Registration Requirements (Dealer Manual Chapter 3) 

Escrow / Seller Funding Timeline Rules

• Michigan does not publish a universal payout timeline specific to consignment transactions. Because consignment-type activities are tied closely to title and retail sale processes, payout timing should be handled in the written agreement.

• Common industry best practice is to remit net proceeds after buyer funds clear and title/registration requirements are satisfied, subject to any lien payoff or other documented deductions.

Best Practice:
• Clearly define payment triggers and timeline in the written agreement.
• Tie payout to dealer receipt of cleared funds and valid title transfer or commitment.

Insurance & Test Drives

• Dealers should carry appropriate garage liability insurance covering vehicles in their possession for sale.

• Confirm that policies explicitly cover vehicles held on consignment-type arrangements (non-owned inventory), test drives, and any transport.

Best Practice:
Obtain seller proof of comp/collision insurance, include insurance terms in the written agreement, and document coverage expectations.

Safety & Regulatory Inspection Notes

Michigan does not have a statewide mandatory safety inspection like some states do, but dealer-retail vehicles must meet federal safety and emissions standards appropriate to Michigan regulatory requirements. Check Michigan SOS guidance for specific county emissions programs when relevant.

Advertising, Disclosures & Buyer-Facing Rules

• Dealers must comply with Michigan advertising laws and avoid misleading or deceptive advertising.

• The Federal Trade Commission (FTC) Used Car Rule requires a Buyer’s Guide on all used vehicles displayed for sale at retail, including those sold through consignment-like arrangements.

Lien Payoff Process

• Vehicles with open liens can be sold, but lien payoff must be coordinated so that title can be issued to the buyer without delay.

• At intake, obtain lender contact info, a current payoff statement, and written authorization for payoff handling.

Fee Disclosure Rules

• All fees and charges must be clearly disclosed in writing in the retail sale contract. Michigan’s regulations require detailed itemization of charges in the transaction documents.

• Dealers commonly disclose service/documentation charges, reconditioning, storage, and any administrative fees.

Cancellation & Contract Terms

• If a consignment-type arrangement is used, include cancellation terms, retrieval procedures, and any storage/handling fee terms in the written agreement.

Michigan Car Consignment FAQs

Can a private seller consign a car to a dealer in Michigan?
Michigan does not provide a statutory “consignment” program; traditional consignment with owner retaining title until sale is not supported due to title possession requirements. Any consignment-like arrangement must be structured with proper written agreement and title control compliant with Michigan Vehicle Code.

What is required for a dealer to sell vehicles in Michigan?
Dealers must be licensed by the Michigan SOS and must have properly assigned titles or ownership documents before offering or selling a vehicle.

Do I need a dealer license to sell cars occasionally in Michigan?
Yes — selling more than five vehicles in a 12-month period generally requires a dealer license.

Want more general answers about selling or consigning a car?
Visit Retail My Ride’s full FAQ center

Last reviewed: January 2026

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⚠️ 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 the Michigan Secretary of State, licensing authority, or qualified legal counsel before making decisions.