Legal question about selling a car

My brother is selling his old car and has found only one buyer. The guy doesn’t have the money for the car ($3500) right now and wants to pay $1500 down and $200 every two weeks. If my brother writes this guy a contract will it be good enough for court if the guy stops paying? The guy is willing to pay the $1500 down and not not take possesion of the title until he has paid off the full amount. Would my brother be responsible for the car and any accidents it may be while in possesion of the other guy while my brother still has the title in his name?

It depends what the contract says and what your local laws are. Your brother might want to get a lawyer’s advice.

For the love of God NO!

Your brother is currently the titled owner of the car. As such he is responsible for what damages arise out of its use. This is true regardless of the status of the sale of the vehicle to the proposed buyer.

The buyer needs to either:

  1. arrange financing through a bona fide bank or
  2. pay you brother in full for the purchase price of the car.

Sure, Bro can make whatever financial arrangements he wants and can write down as many ‘what ifs’ as satisfies his imagination and the buyer can agree to them, but does anyone (the driver, your brother, the potential victim of an accident…) need the brain damage of making sure the agreement is legally binding? NO!

On a more cynical note: A car thief doesn’t need a title to a car to make a profit from it, he only needs the CAR. If he can have the car for a month without the fear of law enforcement coming to bear on him, then the car is already as good as gone, parted out and unobtainable. In that case, who cares if your brother is withholding the title, the car is gone.!

do NOT make deals like this. Period.

I’ll first state that I don’t think the OP’s brother should go through with this deal, at all.

But it does bring up an interesting question. Can he change the title to the buyer’s name, but hold a lien against it? that’s exactly what the bank does when you finance. You get a title in your name, with a lienholder (Citibank, for example).

Could I, as an individual, be a lienholder on someone else’s title, and reserve all the legal rights inherent to that position?

Yes. It’s done all the time. But I don’t know specifically how. The DMV could tell ya.

Under what theory would an owner be liable when he is not negligent? I’d be interested in hearing about this.

I don’t see any reason that the contract contemplated would not be enforceable. You could, of course, reserve a lien until the purchase price is fully paid, but the contract itself would suffice.

What if your car is stolen and the thief runs into a building? I don’t see how you, as the titled owner, could be responsible for the thief’s actions. Anyways, back to the OP…If this guy can’t get a bank to loan him $3500 for a vehicle, your brother should ask himself why the banks won’t lend him money. Also, will the buyer be able to purchase auto insurance?

New York (and I believe most other states) have a law making the owner of the car strictly liable for all negligence of users of the vehicle. The reason for this is that the owner is required to get insurance to cover his or her liability. Because the owner is statutorily liable, there is no question that the insurer will pay on the liability of a covered person, and the injured party will be compensated.

Stolen cars are generally those which are used without the permission of the owner. The scenario you advance would not cause problems for the vehicle owner (except of course that his car would be damaged). Allowing someone to drive the car while they make payments to you, while you emain the titled owner is a different matter entirely. Even if the guy takes off with the car and doesn’t make god on his end of the bargain, the fact will remain that you allowed someone else to drive a vehicle to which you have retained ownership. I feel I should call you a name for being ridiculous. Consider it done.

Lenders protect themselves by transferring the title into the purchaser’s name while placing a lien against the vehicle–their interest in the car is printed on the actual title so that they have to release that interest before a transfer of ownership can take place.

Lessors are banks that own the car and let you drive it on an extended rental agreement. THEY are the titled owners and protect themselves by requiring the “renter” to carry liability insurance at a level that satisfies their own desires.

I bring those 2 points up only to illustrate that Billdo knows his (?) stuff.

So what happens if I valet my car and the guy wrecks it? Am I still liable? Just curious.

PS: sorry for going offtopic! And to the OP, I still think it’s a bad idea.

I just last month sold a car to my neighbor on time. He’s a college student who came over and pitched the idea of an installment purchase. I decided that it would work for me.

Transferring the title while retaining a lien, which I did for the reasons mentioned above (so I could quit paying the insurance on it) was no problem. I went to the DMV with my neighbor and we told the clerk what we wanted. Bing-bang-boom. She knew the drill. He got a certificate of title in the mail showing me as the first lien holder, as did I.

For a contract I used a boilerplate form I picked up at Office Depot.

It’s up to your brother to evaluate the economic risk involved, but he must limit it by transferring title and holding a lien should he proceed.

Hmm…, or whatever Office Depot became.

New York Vehicle & Traffic Law Section 388 provides:

In New York, if you permit a valet to park your car, and he negligently causes death, personal injury or property damage, you (or your insurance company) are liable. If someone actually steals your car, you won’t be liable. But if the situation is ambiguous (e.g. tell a friend or family member not to use your car, but leave access to your car keys), the owner will quite likely be held liable. Your state law may vary.


So what happens if I valet my car and the guy wrecks it? Am I still liable? Just curious.

This is a nasty one. As was said, you get to be liable. And when the victims are done with you, they’ll take a bite out of the valet, the company he works for, the owner of the premises, allow of the collective estates, families and religious organizations to which they belong …