Vehicle Industry Registration Procedures Manual

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Section 12 of 38

Chapter 11: Transfers

11.150 Rollbacks (VC§5901)

A rollback is when a buyer returns a vehicle to the dealer after operating it on the customer copy of the dealer’s report of sale. The report of sale cannot be voided when this occurs; all fees are due from the date of sale and must be submitted promptly to DMV. A sale canceled prior to operation of the vehicle by the buyer is not a rollback and the report of sale must be voided.

If a dealer sells a vehicle to a purchaser whose financing is rejected (requiring a new contract) and the replacement contract has a cosigner, another party added, or a new purchaser, the application must be handled as a rollback.

A dealer who returned all vehicle license fees (VLF) collected to the first purchaser may collect prorated VLF from the second purchaser based on the original purchase price and date of sale (VC §11713(g)). However, VLF cannot be charged when the second buyer is a qualified nonresident military person who is exempt from VLF.

New Vehicle Rollback —When a new vehicle rollback is subsequently sold to a second buyer or registered to the dealer, the following must be submitted:

  • An Application for Title or Registration (REG 343) form in the second buyer’s name.
  • An Application for Registration of New Vehicle (REG 397) form in the first buyer’s name.
  • A Report of Sale–Used Vehicle (REG 51) form in the second buyer’s name.
  • A Vehicle/Vessel Transfer and Reassignment Form (REG 262) from the first buyer to the dealer.
  • A Lien Satisfied/Titleholder Release (REG 166) form from the legal owner (lienholder) for the first sale, if applicable. A REG 166 is not required when:
    • Financing was not approved for the first sale or the dealer entered the information in error. Accept a Statement of Facts (REG 256) form or a Statement of Error/Erasure (REG 101) form from the dealer regarding the lienholder information.
    • The lienholder remains the same for the second buyer. The lienholder must be shown on the REG 343 for the new owner.
  • REG 256 containing the following information:
    • Name of the person who returned the vehicle to the dealer and the date returned.
    • Reason the vehicle was returned (for example, credit unavailable).
    • If the vehicle was voluntarily returned by the prospective purchaser.
    • If the vehicle was sold under conditional contract, chattel mortgage, etc.
    • If the trade-in, if any, was returned to the prospective purchaser.
    • If the down payment was returned and whether it was a cash down payment or cash in addition to the trade-in.

Registration fees based on the original (first buyer’s) purchase price and date of sale and a transfer fee for the transfer to the second buyer. A smog certification is not required provided the original REG 397 is submitted.

If registration fees are paid within 20 days from date of sale to the first buyer, the dealer will not be charged an ASF for an over 20-day violation, regardless of the length of time the report of deposit of fees (RDF) is held pending sale to a second buyer. The dealer has 30 days to submit the transfer application without penalty.

Used Vehicle Rollback— In addition to the Basic Transfer Requirements listed in this chapter and in chapter 10 for nonresidents, the following must be submitted:

  • A Statement to Record Ownership (REG 101) form in the name of the second buyer that includes the name of the legal owner (lienholder), if appropriate
  • A Lien Satisfied/Titleholder Release (REG 166) form from the lienholder for the first sale, if applicable. A REG 166 is not required when:
    • Financing was not approved for the first sale or the dealer entered the information in error. Accept a Statement of Facts (REG 256) form or a Statement of Error/Erasure (REG 101) form from the dealer regarding the lienholder information.
    • The lienholder remains the same for the second buyer. The lienholder must be shown on the REG 101 for the second buyer.
  • A REG 256 containing the following information:
    • Name of the person who returned the vehicle to the dealer and the date returned.
    • Reason the vehicle was returned (for example, credit unavailable).
    • If the vehicle was voluntarily returned by the prospective purchaser.
    • If the vehicle was sold under conditional contract, chattel mortgage, etc.
    • If the trade-in, if any, was returned to the prospective purchaser.
    • If the down payment was returned and whether it was a cash down payment or cash in addition to the trade-in
  • A Vehicle/Vessel Transfer and Reassignment Form (REG 262) from the first buyer to the dealer.
  • Two Report of Sale–Used Vehicle (REG 51) forms: one for the first buyer and another for the second buyer.
  • A smog certification, if appropriate.
  • Two transfer fees and any other fees due.

The dealer may register a rollback in the first buyer’s name, using the dealer’s address. The REG 256 indicated above must still be submitted.

Nonresident Vehicle Rollbacks— In addition to the nonresident requirements in Chapter 12, the following must be submitted:

  • The nonresident service fee.

When processing:

  • The transfer fees are not collected.

Sales to Nonresident Military (NRM) Personnel, in addition to basic transfer or nonresident requirements, the following must be submitted:

A Notification of Alternative Forms of Financial Responsibility (REG 5085) form.

Rollback procedures do not apply once certificates have been issued on a dealer sale to the first buyer (even if the vehicle is subsequently returned to the dealer). The application must be processed as a transfer of ownership. If the first buyer paid VLF and the second buyer is an NRM, the VLF paid earlier is due.