Understanding Voids and Rollbacks
A Report of Sale (ROS) in California can become void or need unwinding under certain circumstances, such as when a sale is not completed or the vehicle delivery is pending. Voids differ from rollbacks: while a void nullifies a transaction that wasn’t completed, a rollback involves changing the transaction due to financing issues or contract modifications, where the vehicle has been registered and driven on temporary plates (TLPs).
When to Void a Report of Sale
A sale can be voided if the transaction was not consummated—meaning the buyer hasn’t taken possession of the vehicle. According to the DMV guidelines, the dealer must mark all parts of REG 51 (Report of Sale) as VOID, and a Statement of Facts (REG 256) form must be completed to explain the situation and ensure the vehicle did not leave the dealer’s custody. [DMV Report of Sale Manual]
Steps to Void and Manage Documents
- Mark REG 51 as VOID for unconsummated sales.
- Complete a REG 256 for documentation.
- Destroy any issued Temporary License Plates (TLPs) and notify the DMV system electronically.
- Keep all copies of the voided ROS and REG 256 at the principal business location for possible audits.
- Ensure that the electronic system is updated to reflect the voided transaction.
Best Practices and Pitfalls
Dealers should ensure strict compliance by retaining clear internal records and regularly auditing them. Avoid common pitfalls such as processing voids late, missing key signatures, or forgetting to return TLPs, which can result in penalties. Regular training and clear internal procedures will aid in maintaining compliance and preventing costly errors.
