11.085 Leased Vehicles (VC §4453.5)

Leased vehicles must be registered in the names of both the lessor and the lessee.

The lessor is designated as LSR; the lessee is designated as LSE. Certificates issued in 1985 or prior may show the lessee as “care of (c/o)” (the “c/o” was part of the address field).

If the input document does not have a designated space for the lessee address, the lessor must provide the lessee’s address on a Statement to Record Ownership (REG 101) form whenever it differs from the registered owner address shown on the application documents. If a REG 101 is completed, it must be the top document.

An application on a report of deposit of fees (RDF) solely because the lessee address space on the title or REG 101 is blank must not be returned. Assume the registered owner address shown is the lessee’s.

To Change The Legal Owner (Lienholder ) Only—The properly endorsed title or an Application for Replacement or Transfer of Title (REG 227) form and the appropriate fees are required. If a California-titled vehicle is two model years old or newer, a lien release on a REG 227, Lien Satisfied/Legal Owner/Title Holder Release (REG 166) form, or any other type of lien release are no longer acceptable. The lienholder of record must apply for a replacement title prior to changing to a new lienholder.

Lessor-Retailer (VC §373) Sales—A Report of Sale-Used Vehicle (REG 51) form is not required for the sale of a previously leased or rented vehicle if sold to one of the following:

• The lessee of the vehicle, or the person who, for a period of at least one year, has been designated by the lessee as the driver of the vehicle covered by a written lease agreement.
• A transfer smog is not due, unless the biennial smog is due.
• If the lessor collects use tax when the lease is terminated, a Statement of Facts (REG 256) form completed and signed by the lessor stating the payoff amount, amount of tax collected, and the Board of Equalization tax identification number is required.
• A buyer for agricultural, business, or commercial purposes.
• A government, governmental agency, or instrumentality.

A REG 51 is required if the vehicle is sold by a dealer or sold to anyone other than those listed above.

Change of Lessee Only— In addition to the procedures listed in the Basic Transfer Requirements section in this chapter, the following must be submitted:

• The California Certificate of Title with the signature of the lessor on the appropriate lines of the front and back.
• The California Certificate of Title new owner section on the back of the title completed to show the names of both the lessor and new lessee.
• A Statement to Record Ownership (REG 101) form, as explained above.
• A smog certification, because the person in possession of the vehicle has changed.
• A transfer fee, in addition to any other fees due. Use tax is not due.
• Odometer mileage disclosure, if appropriate. The same employee cannot sign for both the lessor, as seller, and the lessor, as buyer.
• A Report of Sale–Used Vehicle (REG 51), if applicable.
• A transfer fee in addition to any other fees to change the lessee. Use tax is not due.

The lessee’s signature alone will not be accepted for release of ownership. All leased vehicle transfers require the lessor’s release on line 1 on the California Certificate of Title.

Change from Lessor to new buyer:

• A smog certification, if applicable. A Smog Certification may not be required:
  • When the vehicle is transferred between the lessor and the lessee, or
  • The person who has been the lessee’s operator for at least one year unless a biennial smog certification is due.

See Section 11.010 for additional information.

• A Report of Sale–Used Vehicle (REG 51), if applicable.
• A transfer fee in addition to any other fees.
• If the lessee sold the vehicle to a third party, two transfer fees are due in addition to any other fees due.

Use tax is due. If the lessee:

• Buys the vehicle at the end of the lease, use tax is based on the balance owed at the time of lease pay-off.
• Sells the vehicle within 10 days, use tax is due only from the third party.
• Sells the vehicle after 10 days, use tax will be due from the lessee and the third party.