Effective January 1, 2003, passage of Public Act 652 of 2002 permits dealers to sell off lease vehicles without having the vehicle title in their possession. "Off lease vehicle" means a motor vehicle leased for a term of more than 30 days that the lessee elects to purchase.

The new law requires the lessor to mail the title to the dealer within 21 days after receiving payment for the purchase price of the vehicle and any other fees and charges due under the terms of the lease. The dealer has 15 days after receiving the title from the lessor to make application for title and registration for the customer before being subject to the $15 late fee.

The Michigan Department of State, in an effort to assist dealers with compliance, has developed the following steps for dealers to use when selling an off lease vehicle. The two-stage transaction takes into account both the purchase and delivery dates and the requirements of the Michigan Vehicle Code governing the transfer of vehicle ownership.

Stage One - Date of Purchase:

1. The lessee electing to purchase a vehicle he or she has been leasing generally visits the dealer to arrange for the purchase of the off lease vehicle. The dealer completes the RD-108 to record the sale information.
   
   
2. The purchase date is indicated on the RD-108 in the appropriate space on the top left-hand side of the document.
   
   
3. The dealer records the phrase "Off Lease Purchase" and the current mileage of the vehicle in the Remarks section of the RD-108.
   
   
4. The customer signs the RD-108 and is given a copy of the RD-108 and all other signed documents.
   
   
5. The lessor receives the purchase price and has 21 days to mail the title to the dealer.

Stage Two - Date of Delivery:

1. When the dealer has received the title from the lessor, the lessee visits the dealer a second time to complete the transaction. The title is properly assigned to the purchaser, including the properly completed odometer statement. The dealer may not sign the title on behalf of the purchaser.

2. The dealer enters the delivery date on the RD-108 in the space located under the purchase date on the top left-hand side of the document.

3. The dealer enters the current mileage of the vehicle in the designated boxes on the RD-108. The mileage entered on the RD-108 must match the mileage entered on the title's odometer statement.

4. The dealer gives the customer a second copy of the RD-108 showing the delivery date and the mileage at the time of delivery.

5. Unless the lessor owns and retains the license plate on the vehicle, the plate remains with the vehicle and is processed as a no-fee correction with the RD-108 in the lessee's name.

6. The dealer has 15 days to apply to the Secretary of State for the customer's title and registration after the title has been received from the lessor. After 15 days the standard $15 late fee is assessed.

If you have any questions about off lease vehicle sales, contact the Dealer and Repair Resource Section by e-mail at Dealer@Michigan.gov, or by telephone at (517) 373-6993.