Dealer Licensing - Record Keeping
The Michigan Vehicle Code requires all 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.
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 or sold.
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.
A washout system is a record keeping
system approved for Class A (new vehicle) dealers only. 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