How many cars can I sell in Michigan without a dealer license?

Michigan law allows selling up to 5 vehicles per calendar year without a dealer license. The limit includes any vehicle purchased with intent to resell. Michigan has stricter limits than most neighboring states and actively enforces this threshold.

Why is Michigan stricter than other states?

Michigan has a strong automotive industry presence with established dealer networks that lobbied for strict curbstoning enforcement. The Secretary of State prioritizes consumer protection and responds aggressively to complaints about unlicensed sellers.

What triggers a Michigan curbstoning investigation?

Consumer complaints are the primary trigger—buyers who discover undisclosed damage or title issues often report sellers. SOS also monitors online marketplaces and investigates sellers with multiple listings. Competitors (licensed dealers) frequently report suspected curbstoners.

How fast must I transfer a title in Michigan?

Michigan requires title transfer within 15 days of purchase—the shortest timeline in the region. Failure to transfer within 15 days results in late fees and provides evidence of potential curbstoning if you sell the vehicle before transferring title.

Can I get a Michigan dealer license from home?

No. Michigan requires a commercial location with proper zoning for vehicle sales. The location must have adequate display space, office area, and cannot be residential. Some flippers lease small commercial spaces or share facilities with existing businesses.

What if I buy and sell cars in different states?

If you are a Michigan resident, the 5-vehicle limit applies regardless of where you buy or sell. Michigan tracks your activity through title records. Selling vehicles across state lines does not exempt you from Michigan dealer licensing requirements.

Michigan Car Flipping Laws 2025: 5-Vehicle Limit, Dealer License & Penalties | AutoHunter

Michigan's Strict Approach to Car Flipping

Michigan maintains some of the strictest vehicle flipping regulations in the Midwest. With its deep automotive industry roots, the state prioritizes protecting licensed dealers and consumers from unlicensed operations. Understanding Michigan's rules is essential before flipping your first car.

The Michigan Secretary of State administers dealer licensing and enforcement. Unlike some states with passive enforcement, Michigan actively investigates complaints and monitors online marketplaces for suspicious activity.

High Enforcement State

Michigan actively prosecutes curbstoners. The Secretary of State has dedicated investigators and responds to consumer complaints within days. Do not assume you can operate under the radar—the risk is substantial.

The 5-Vehicle Annual Limit

Michigan Vehicle Code Section 248.5 establishes that selling more than 5 vehicles per year constitutes dealer activity requiring licensure. This is one of the lowest thresholds in the country.

What Counts Toward the Limit

Any vehicle purchased with intent to resell
Vehicles sold regardless of profit or loss
Online sales through any platform
Consignment sales where you're the title owner
Vehicles sold to out-of-state buyers

Exemptions

Personal vehicles owned 12+ months before sale
Inherited vehicles from estates
Vehicles transferred between immediate family members
One-time vehicle gifts without compensation

Calendar Year Reset

The 5-vehicle count resets January 1st each year. Strategic timing allows selling 5 vehicles in late December and 5 more in early January—10 vehicles in a short window while remaining compliant.

Michigan Dealer License Requirements

Michigan Dealer License Requirements and Costs
Requirement	Details	Estimated Cost	Time to Obtain
Surety Bond	Minimum $10,000	$100-$500/year	1-3 days
Business Location	Commercial zoning required	$500-$2,000/month	Varies
Liability Insurance	$300K combined single limit	$1,500-$3,000/year	1-7 days
Dealer Education	16-hour pre-license course	$200-$400	2-3 days
License Application	SOS dealer application	$150	2-4 weeks

Step-by-Step Licensing Process

Complete dealer education: 16-hour pre-license course covering Michigan law, consumer protection, and business practices
Secure business location: Lease or purchase commercial space with appropriate zoning
Obtain surety bond: Minimum $10,000 bond from licensed surety company
Purchase liability insurance: $300,000 combined single limit minimum
Submit application: File with Secretary of State including fees and documentation
Pass inspection: SOS inspects your location before license approval

Location Requirements

Michigan's location requirements are specific:

Commercial zoning designation
Minimum display area for vehicles
Enclosed office space with desk and filing
Business signage displaying dealer name and license number
Phone line dedicated to dealership
Cannot be a residential address

Penalties for Violations

Michigan Curbstoning and Dealer Violation Penalties
Violation Type	Civil Penalty	Criminal Penalty	Additional Consequences
Unlicensed dealer (1st)	$1,000 fine	Misdemeanor possible	Cease and desist order
Unlicensed dealer (repeat)	$5,000+ fine	Misdemeanor charges	Asset seizure possible
Title jumping	$500 per violation	Misdemeanor	Title fraud charges
Odometer fraud	Up to $100,000	Felony	Federal prosecution
Consumer protection violation	$25,000+	Varies	AG enforcement action

Enforcement Reality

Michigan's enforcement differs from states that rarely prosecute:

Consumer complaints trigger investigations: Buyers who feel deceived file complaints with SOS
Online monitoring: Investigators browse Facebook Marketplace and Craigslist
Dealer reports: Licensed dealers report suspected curbstoners
Sting operations: Undercover purchases of suspected illegal sellers

Title Transfer: The 15-Day Rule

Michigan's 15-day title transfer requirement is the strictest in the region. Failure to comply creates immediate problems:

$15 late fee plus additional penalties
Evidence of title jumping if you sell before transferring
Complications for buyer registration
Red flag for curbstoning investigation

Title Jumping Prosecuted

Michigan specifically prosecutes title jumping—selling a vehicle without first transferring title into your name. This is treated as fraud and can result in criminal charges beyond civil penalties.

Strategies for Michigan Flippers

Working Within the 5-Vehicle Limit

Focus on profit per vehicle: Make each flip count with higher margins
Target premium vehicles: $3,000-$5,000 profit per flip beats 10 cheap flips
Time sales strategically: Use the December/January calendar reset
Consider dealer partnership: Licensed dealers may consign your vehicles

When to Get Licensed

The math for Michigan dealer licensing:

Annual costs: Approximately $4,000-$8,000 (bond, insurance, rent, fees)
Break-even: Need 2-3 additional flips at average margins
Benefits: Auction access, credibility, unlimited volume

If you're consistently hitting the 5-vehicle limit and turning away opportunities, licensing likely makes financial sense.

Cross-Border Considerations

Some Michigan flippers explore options in neighboring states:

Indiana: 12-vehicle limit, lower enforcement
Ohio: 6-vehicle limit, moderate enforcement
Canada: Different regulations but import/export complications

Note: Establishing business in another state has its own legal requirements. Michigan residency still creates obligations.

Common Michigan Curbstoning Mistakes

Assuming online sales are anonymous: SOS investigators monitor platforms
Using family member names: Structuring to avoid limits is fraud
Skipping title transfer: 15-day rule is strictly enforced
Ignoring consumer complaints: Responding professionally can prevent escalation
Underestimating enforcement: Michigan is not a passive regulation state

WATCH

High-Regulation State

Pros

Lower bond requirement than Ohio ($10K vs $25K)
Clear licensing process
Strong dealer auction access once licensed
Lower annual license fees
Quality over quantity forces better deals
December/January timing strategy available

Cons

Only 5 vehicles per year—lowest in region
Active enforcement and investigations
Shortest title transfer window (15 days)
Commercial location required for license
Higher insurance requirements
Consumer complaints taken seriously

Recommendation

Michigan's strict 5-vehicle limit and active enforcement make it challenging for volume flippers. Success requires focusing on quality over quantity—target higher-margin vehicles and make each flip count. If you're serious about scaling, the dealer license path is well-defined with lower bond requirements than some states. Consider the break-even analysis carefully: at $4,000-$8,000 annual costs, you need consistent volume to justify licensing.

Frequently Asked Questions

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