When you sell a car that carries a service contract, the contract does not automatically leave with the title. Some contracts follow the vehicle to a new owner, some stay with the original buyer, and some end when the car changes hands. The transfer clause is the part of the paperwork that answers which of those applies, and it is easy to skim past on the day you are busy signing for a purchase.
Find the clause before you need it
Look in the contract for language about transfer, assignment, change of ownership, or sale of the vehicle. The wording varies, and a contract may cover the same idea in a section you would not think to check, such as one about the owner or one about cancellation. Read every mention. If the contract says nothing, that silence is a question to put to the company in writing, not a sign that transfer is allowed.
Questions to put to the company
Before you list the car, ask the company these questions and keep the answers in writing. Can the contract be transferred at all, or does it end when you sell? Is there a transfer charge, and if so, who pays it and when is it due? Does the buyer need to submit a request, and by what deadline? Must the request come from you, from the buyer, or from both? Does coverage carry over without a gap, and does the new owner's coverage start on the day of transfer or on a later date? Does the transfer change the remaining term, the mileage limit, or any waiting period that has already run? What proof of maintenance must the new owner provide, and do your past service records have to move with the car?
What a transfer can change
A transfer can alter more than the name on the paperwork. Many contracts tie coverage to a registered owner, so a late or unregistered transfer can leave the new owner exposed. Some contracts limit or remove a refund option after a sale. Others tie the contract to the vehicle identification number, which makes the car itself the thing being covered. Check whether the contract names the owner, whether it names the vehicle, and whether the refund rules still work for a buyer who did not sign the original purchase.
Cancellation after a sale
If the contract cannot transfer, the cancellation terms become the main concern. Find out who may request cancellation, how notice must be sent, and whether any refund goes to you, to the buyer, or to a lender if one is involved. The cancel clause and the transfer clause often sit near each other, so read them together rather than separately.
Keep the sale in your records
Keep a copy of the contract, the company's written answer on transfer, any transfer confirmation, and the bill of sale. Tell the buyer, in writing, what the contract says so they are not relying on a verbal promise. A seller who skips this step is the one who gets a call later asking why a claim was denied. The published tables on this site show which companies post their contract terms, and the sample contract page lets you read the transfer language before you ever have a car to sell. For how the site compiles its figures, see the methodology page.