Third Party Lease Buyout

I recently went through a third-party lease buyout in California. I often see the question on how this is done so I wrote a quick document of my experience:

I think the main one I hear is how to avoid paying sales tax twice when selling to a private party. This can be avoided (in CA) by (a) selling you lease within 10 days of acquiring the title from the lessor (b) applying and being approved for a CDTFA-111 from the CDTFA.

Note, if you sell to a dealer, the leasing company transfer the title to them directly (so you also won’t have to pay use tax), but will likely charge a higher rate to them than your payout amount impacting any profit you might have.

I thought I’d start a thread to help answer any questions. It’s been a process which was difficult given you are dealing with (i) leasing company (ii) DMV and (iii) CDTFA and they have dependancies on each other.


Thanks for starting this thread. I am about to go thru this process in CA next month. I already have a buyer lined up (close friend) for my leased BMW. Since the payoff is almost $6,000 lower to me than 3rd party payoff I have to tech buy the car directly from BMW and then sell to my friend.

Do I still need to post a dummy ad for sale, even though I have a buyer already in place? Did you have any issues with this process?

On the CDTFA form, I’ll list myself as the current owner and BMWFS as former owner?

  1. RE: dummy ad, I would reach out to CDTFA to ask, they are responsive. I’d recommend trying to reach the local office versus the general office, since they would be the ones approving anyways. I did this by simply applying for the form to kick off the process. My sense is that they just need some proof, perhaps it can be a letter or something between you and the new buyer.

  2. RE: buyer and seller names, that is correct

Thanks, I’ll call them on Monday.

Did you face any issues all thru this process? I’m a bit wary of it and don’t want to end up with a double taxation issue.

Not sure if you dealt with BMWFS but how long did this whole process take for you?

If you are asking about the use tax part, definitely CDTFA is the biggest risk since they approve the use tax exemption. DMV shouldn’t be an issue since they collect tax on behalf of CDTFA, so CDTFA authority on taxes should supercede DMV.

If you are referring to the overall transaction. There’s lots of moving parts - leasing company, dmv, third-party, board of taxes. Given there is dependencies and timing constraints it may get confusing. If you haven’t already I’d recommend taking a peek at my doc – if you drop comments I can help answer them in detail.

Sorry, I haven’t dealt with BMWFS. The process was pretty quick for me since I did some steps in parallel. The long poll is actually waiting for the title from the leasing company, then transferring it to my name (so I can give it to the new buyer). It took around 2 weeks end to end.

Is there a reason you didn’t use CA REG-262 to perform the 2nd transfer?

Good question. I was the seller, so I opted to give the buyer the title so they could perform the second transfer themselves (and pay their use tax).

My understanding there is an alternative way to do this is transfer straight from initial title (leasor signed to me) to the new buyer. You would include the REG-262 as you mentioned for the second transfer (and might be able to even skip the need for the CDTFA-111).

I didn’t want to overcomplicate things for myself given I was mainly interested in insuring that I didn’t pay use tax. I think the alternative route would require more complexity/coordination with the new buyer.

Yes, saw the doc and it was helpful. My understanding is to avoid tax I have to sell the car within 10 days from when I get the title from BMW, not 10 days from when I send the payoff check and intent to buy the car. So, steps 1-4 in your doc can be done prior to receiving the title and once I get the title in hand, the transfer can then be done within 10 days. Hope I’m right in this assumption.

That was my understanding also. But the language is vague in Section 6277 (see link below) and I personally couldn’t get CDTFA to confirm whether it’s when the (i) lease is paid / lessor issues the title or (ii) when I receive the title. I’d recommend reaching out and asking to confirm, or simply just having your friend sign the paper work within 10 days of (i) just for coverage.

Note also, when you receive the title from the lessor, it hasn’t been transferred in your name yet. If the new buyer wants the actual title in hand before signing the bill of sale, you’ll need to register beforehand (which can take 7-21 days to get the title as per DMV).

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My friend has no issues with signing the paperwork before title gets to me. In fact, he’s even willing to transfer the money before the bill of sale/title is executed so I don’t have to use my funds to send a check to BMW. But I’ll call CDTFA tomorrow anyway. Thanks.

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No problem. Good luck!

In case it’s helpful, I’ve heard others say that you can also simply goto DMV with the buyer and do the transaction together (and not requesting the CDTFA-111). I didn’t explore this option since my buyer wasn’t local. See the portion on leased vehicles below:

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Has anyone successfully sold a lease buyout to a dealership in CA (Vroom, Autonation, etc) without getting the title transferred into their name first? It is technically possible with a REG-262, but both Vroom and Autonation refuse to do it.

Dealers can ask for the option to transfer it directly to their name.

However, leasing companies do not need to honor the payoff quote to you, and may change different rates to dealers.

Yes, VW wanted over $4k for the privilege of transferring directly to a dealer instead of to me. ($15.3k buyout vs. $19.5k 3rd party buyout). I bought the car from VW with the intent on selling it to Vroom, but I was hoping to avoid the additional waiting time for a fresh title from the DMV in only my name. Vroom refused to take the car with the signed VW Credit title, even though it’s clearly been signed over to me. Sigh.

How long did it take you to get the CDTFA-111 approved?

The approval took one day. I picked it up that same day.

Note, CDTFA didn’t accept the appraisal I had from CarMax as proof of sale. They needed a document indicating the car was actually sold. I ended up selling it to a private party and using that as the bill of sale as proof.

So the dealer wants the title in my name before they will sign a bill of sale, which is required to get a 211, but the CDTFA needs a signed bill of sale before they will issue me a 211?


Did you do any research into what it would take to get the sales tax refunded? It appears that’s the only way to actually execute this trick, unless you have a really cooperative private buyer (like you did).

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I did some light research. I had one conversation with the CDTFA about it. They said it is possible, there is explict call out for “Purchases for Resale” from their website:

You can apply for the rebate online. The one person I talked to made it sound difficult and not common.

She gave a tip that you need to make sure the car isn’t used for personal use, and mentioned lots of people get denied for that. That means making sure any miles since purchase are for resale purposes (since you’ll have a odometer reading when you buy from a lessor and sell to third party). I think it probably makes sense to have a log.

OK, thanks. Your checklist was pretty helpful.

I’ll share my experience as well, hopefully it is helpful. I was ~19mos and ~9500 miles into my 24/7.5k e-Golf lease at the beginning of August and discovered that Vroom was willing to give me $21.3k for the car. My buyout at the time was $15.3k, so I immediately started the process. I had Vroom pull my 3rd party dealer buyout, but I wasn’t expecting VW to be quite as greedy as they were - they wanted $19.5k from Vroom.

So I mailed a check off to VW Credit for $15.3k, and requested that they expedite the title (which they did not - first snag). It took VWC about a week to process my check and paperwork and put the original title in the mail, which I received ~15 days after mailing my check (I paid for expedited processing, they lost the separate check for that and snail-mailed it anyway). Since the title took so long to arrive, Vroom revised their quote pretty dramatically - from $21.3k down to just $17.9k. Sigh. Still a good chunk back, but not quite what I was hoping for.

This is where the real trouble starts. I took the title to Autonation, who offered to match Vroom’s quote. The dealer spoke to Autonation corporate, and then informed me that they were unwilling to buy the car with VWC’s name still on the title, even though it had been signed by VWC and I had a lien release letter as well. Vroom told me the same thing a day later - unless the title was in my name exclusively, they wouldn’t touch the deal. In CA, you can use REG-262 to do multiple title transfers without getting a fresh title each time, but neither dealer was willing to do it.

So I started down the path of getting the title transferred, and immediately discovered (as lease_buyout mentioned) that in order to get a CDTFA-111 exemption approved, you need a signed bill of sale showing that you have the car pre-sold to its eventual new home. Well, I wasn’t going to get that from Vroom or Autonation without a fresh title, which meant that I wasn’t going to be able to get the exemption. I would need to find a private party to sell the car to, and I just wasn’t interested in the hassle of that.

At this point, I just gave up and decided to keep the car. I still paid about 20% less than private party value and I love the car (I had planned to lease another one once it was gone), and I chalked it up to “experience is what you get when you don’t get what you want”.

IMO, the only way to sell a lease buyout to a dealer (Vroom, etc) in CA would be to follow these steps in this order:

  1. Get a buyout quote from your leaseholder and mail them a check. You must stop driving the car at this point. Any use of the car after this will trigger a use tax bill in CA. Pay them for whatever expedited title processing (and hope they don’t lose your check for that, like VWC did mine).
  2. Wait for the original title to arrive. The day it arrives, take it to the DMV, transfer the title into your name, and pay the sales tax. Pay for expedited title processing to speed this process up. At this point, your 10 day clock starts. ("The sale of a vehicle to a lessee by a lessor may be considered a nontaxable sale for resale. If the lessee transfers title and registration to a third party within 10 days from the date the lessee acquires title from the lessor at the expiration or termination of a lease, the sale will be presumed to be a sale for resale. Transfer of title and registration occurs when the lessee endorses the certificate of ownership.)
  3. Within 10 days, you need to receive the new title from the DMV and sign a bill of sale with Vroom, Carvana, etc. showing that you sold the car. This may be impossible, given the time it takes to get a title from the DMV, but the way the law is written, this is what is required.
  4. Use this bill of sale and the paperwork from the original title transfer to show that you sold the car within 10 days and request a refund of the sales tax paid. This should be technically possible using CDTFA-101, but I would contact the CDTFA first to find out exactly what documentation they will ask you to provide (call your local office - mine was incredibly helpful).

I would like to believe that there’s some leeway allowed in the 10-day rule, since my CDTFA office said their leadtime for processing an exemption was 8 days, but that’s another question that you should ask them before you embark on this journey.

This is not a fun process, and because of the way the 10-day exemption is timed (from receipt of original title to sale of vehicle), it may not actually be possible when companies like Vroom/Autonation are involved.

Hope this helps. If you manage to do it, please tell us about it. :slight_smile:


Wow, your story is almost exactly the same as mine:

  • My car was also a VW e-Golf 24/7.5K lease with similar miles
  • My car personal payoff was similar ~$15K and dealer payoff was ~$19K
  • My car quote was similar but from CarMax and ~$18K (your second quote)
  • VW credit also messed up expediting my title, said they “forgot” the separate check for shipping too

Where we diverge is I went the private buyer/CDTFA-111 route.

Ack, feels very hard to time correctly, I think rush processing is 7-10 business days from DMV too. CDTFA mentioned when I called in it can be beyond 10 days if you are buying for the intent to resale, afraid to hear what caveats might be lurking behind this route though (lol).

Thanks for sharing. Sorry to hear it didn’t work out as you expected, but sounds like you still had a good outcome by keeping the car. Also would like to hear if others manage to do this too :slight_smile:

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I did this about 6 months ago with an e golf. Buyout 15.2k, got an offer from Carstub, and completed deal with Carstub. Overnighted a cashiers check to VW with separate check for them to expedite title back to me. Took about 5 business days in all. When I got the title I called the guy from Carstub, he came over right away and I signed the title over. I got 2 cashiers checks for 10k a piece and it was a done deal.

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