Section 251 of the Michigan Vehicle Code (MCL 257.251) requires vehicle dealers to make and keep certain records concerning vehicle sales transactions. They are subject to inspection by law enforcement officials and Michigan Department of State investigators during unannounced visits to dealerships.

NOTE: All dealer records must be kept for a minimum of five years.

Required Records

A dealer must have the original title or some other ownership document concerning every used vehicle in the dealer's possession. Dealers must also properly maintain either a police book or washout system for all vehicles purchased and sold.

Other records which dealers must maintain vary by license classification, and are listed in Chapter Two of the Dealer Manual.

Police Book and Washout System

A police book is a hardcover, bound volume which contains a complete bought-and-sold record for each vehicle handled by a dealer. Police Books can be purchased at certain office supply stores or printing companies. Dealers may also keep their police book in an electronic format. The requirements for maintaining computerized records were published in a March 22, 1999 dealer bulletin.

A washout system can either be an electronic or paper record keeping system.  First, a stock number is assigned to a new unit. Then, when the vehicle is sold, the trade-in vehicle is given the same number, followed by an "A." When that vehicle is sold, the next vehicle taken in trade becomes "B," etc. When the last vehicle in the chain is sold without a trade-in, the record is "washed out."  A washout system must contain the same information as a Police Book.

When a dealer buys or acquires a vehicle for sale, certain information must be entered into the police book or washout system. Sample entries are presented at the bottom of this page. The following information is required:

• Name and address of the person from whom the vehicle was acquired (not the name of the auction);
• Date dealer took possession of the vehicle;
• Stock or inventory number assigned;
• Title number (does not apply to new vehicles). If the title is not yet available, leave the space blank. The vehicle may not be offered for sale until the dealer possesses a properly assigned title;
• If the vehicle does not have a Michigan title, the state or country which issued the title;
• Vehicle Identification Number (VIN);
• Description of the vehicle (year, make, body style, color, etc.);
• If the vehicle was purchased from or sold to another dealer, that dealer's license number;
• Whether the vehicle has a salvage or scrap title;
• Buyer's name and address;
• Date of sale.

Dismantled Vehicle Requirements

When a dealer sells or delivers a vehicle or its remaining parts after dismantling, additional records must be created and maintained.  See Chapter Two of the Dealer Manual for details.