Assignment Of Proceeds From Sale Of Vehicle

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DEFINITION of 'Assignment Of Proceeds'

Assignment of proceeds occurs when a document transfers all or part of the proceeds from a letter of credit to a third party beneficiary. A letter of credit is often used to guarantee payment of a loan or other obligation. The person who is entitled to receive those proceeds can choose to have them delivered to a third party - this is an assignment of proceeds. To receive an assignment of proceeds, the original beneficiary of the letter of credit will need to submit a request to the bank or other entity issuing the letter of credit asking to assign the funds to a different person or company.

BREAKING DOWN 'Assignment Of Proceeds'

The assignment of proceeds will need to be approved once it is submitted. Once approved, the bank or other entity will release the money to the specified party, pending fulfillment of any requirements set forth in the letter of credit. However, if the principal party does not meet the obligations outlined in the letter of credit, no assignment will take place. Samples of assignment of proceeds letters can be found on the internet. Assigning the proceeds from a letter of credit can be utilized in many types of scenarios, such as to pay suppliers or vendors in a business transaction or settle other debts.

Seller's Responsibilities - Selling a Vehicle

When selling your vehicle, accompany the purchaser of the vehicle to a secretary of state branch office to assure the title is transferred into your purchaser's name.  If you cannot do this, maintain a record of the sale for not less than 18 months.   A "record of the sale" can be either a photocopy of the reassigned title or a form or document that includes the year, make, vehicle identification number, name, address, driver license number, and signature of the person to whom the vehicle is sold and the purchase price and date of sale of the vehicle.  

Under Michigan law, a seller is not liable for any damages or a violation of law that subsequently results from the use of ownership of the vehicle by the purchaser if the owner maintains proof of sale as noted above.

As seller, complete your part on the title assignment by entering:

  • The vehicle mileage
  • The selling date
  • The selling price
  • Your signature

Note: If there is more than one owner named on the front of the title, all owners must sign.

Examine your title for any liens (bank loans). If there is a lien it must be released by the lienholder in the appropriate signature space, or you may attach a lien termination statement from the financial institution.

Have the buyer enter their name, address, and signature in the buyer's section of the title assignment.

Do not make any changes on the title. Any alterations will void it! This includes erasing, scratching out, use of white-out, etc.

Also Important:

  • Keep your license plate! Never leave it on the vehicle or let the buyer borrow it. You can transfer the plate to another vehicle you may own or purchase.
  • The buyer may drive the vehicle home without a license plate using the most direct route if they carry the assigned title from the seller.
  • Cancel your insurance coverage on the vehicle sold.

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