I am looking for opinions as to not what would be legal, but what would be fair.
My 23 year old son was driving around a motorcycle which made me extremely nervous. He decided to sell it and spend the money on a car. The problem was the cars he was able to afford all needed a lot of work which would cost more money than he had.
I was driving a sports car at the time which was four years old and fully paid for. I never really liked it (it was an impulse, middle age crisis car) and wanted a conservative ,good on gas, small grocery getter. I decided to offer my sports car to my son for the amount he received for his motorcycle. Even though it was substantially less than book value, at least I know it it has been well maintained and is in good shape. He jumped on the deal, I took the money and put it down on a little Ford and everyone was happy.
That is until my son was offered six thousand dollars more for the car than the amount he paid me.
Now the question. Obviously the car is his and he could do what he wanted and keep the profit legally. However, is it right for him to make a profit on a car that I practically gave him.
(He did not sell it but if he had, would you expect him to give you some or all of the profit)
Without thinking about it much I say no on him selling it and pocketing the “extra” cash. The point of your gift was to give him a better car than he could afford on the market. He sells the car and buys a market clunker with a fraction of the cash he’s basically ruined the important part of your gift. Now, perhaps if he sold it and spent most of the money to get ANOTHER good car that happened to be more suited to his lifestyle requirements then it wouldnt be so bad.
A gift for your birthday or something is completely different than a gift given you in a time of need. I don’t know anyone who wouldn’t be miffed if you gave them something to help them out, and then they used it for something else.
For example, think about the people who refuse to give money to the homeless because they’ll spend it on booze instead of food. Why should it matter if it’s a gift?
EDIT: A better word might be “donation.” I’m sure you’d be upset if you donated to help out for a good cause, and the person instead decided to keep the money and, I don’t know, spend it on gambling or something.
I think Big T hit the nail on the head there. It really wasn’t a gift so much as helping someone out (unless the OP is in the habit of giving out multithousand dollar gifts on a regular basis).
IF I help someone out they certainly have the right to “throw” that help away so to speak. But, if they do, they probably shouldn’t expect more help from me in the future.
What’s wrong with selling the car if the entire outcome would be more favorable to everyone? For example, if I give my son a $10,000-valued car for $5,000, but then someone comes by and offers him $11,000, he can turn around and get a better car and nobody lost anything other than the resources that were originally committed.
I’d be very proud of my son for so effectively turning a profit.
And I’d make it perfectly clear that having made $6k on the sale of the sportscar, I was not going to be handing out any more cars at bargain prices for the near future, he’d better make sure he got himself a good car that runs and set some of that money aside for repairs.
I’d probably phrase this along the lines of “good for you. Cars are so expensive to keep running and that sports car was probably more than you needed. Now you’ll be able to get yourself a good reliable car and have some money set aside for the inevitable set of brakes and won’t need to come running to me.”
When I was a kid, my mom heard a news story about a very sick child who wasn’t leaving the hospital because the family did not have air conditioning (there was a heat wave going on). My mother called the radio station, who put her in touch with the family. They came and got our air-conditioner later that day.
My siblings (and father) were kinda bummed. We were sweating, and could not afford to go out and buy an air conditioner. Sadly, the kid died before being released from the hospital. His family never contacted us to return the air conditioner.
I will just quote this because it’s exactly what I wanted to say. If he sold the car for a profit to purchase something a bit more practical I would think it was great. If he sold the car for profit to pay for hookers and blow, well, not so much.
I would never expect to get any of the money back though - particularly not from my son.
I’m presuming that since you’re giving him such a lavish gift, he’s changed his ways and is an upstanding citizen. Certainly I’d expect him to share the profit with his mother.
When you sell someone something, you lose all interest in that thing. If you wanted to protect your equity in the car, you should have leased it to him in perpetuity for the amount of money he had, which would have allowed him use of it, but maintained your ownership of it. Expecting to get residuals out of something because someone else makes a profit on it later works great in Hollywood, but not in real life.
He bought low and had the opportunity to sell high.
I’m glad to hear it. I stand by my answer though - this isn’t purely a buy low/sell high issue. There’s family involved, and it really wouldn’t be a family thing to do for him to keep all the profit.
That was my thought. Of course legality, it is his to do what he wants. He could set it on fire and I would have no recourse. The point of giving him the deal, however, was for him to have a dependable vehicle to get back and forth to work without a car payment so I felt like he is safer than being on a motorcycle in Florida traffic and afternoon downpours. I could have sold it myself if I wanted to make a profit. Ultimately he did not sell it because, number one, he figured even with that extra money, he wasn’t going to get a car that he knew was treated well and was in such good shape and two, I told him if he didn’t like the car, I’d be happy to give him a full refund and save the car for when his sister gets her license. I really don’t think he was seriously considering it at any point but it got me thinking about how I would feel if he did. Hence throwing it out to the masses for opinions.
Everyone always says that gifts don’t have strings attached, but they can. We received a very nice table and chair set from Jim’s best friend, with the condition that we give the table and chairs to someone else who needs it when we’re done with it. We just sold our old car to my sister and brother-in-law (for a nominal fee) with the condition that they give us first option to buy it back (at a set price) when they’re done with it. Gifts CAN have conditions, as long as everyone agrees to them from the outset.
You could have made your gift to your son with the condition that you were giving HIM the car so he could drive it, and you expected him to drive it for X number of years rather than selling it for a profit (which you could have done yourself if that was what you wanted out of it). If no conditions like that were made, that makes things a lot more tricky. Yes, it’s his to sell, but no, you didn’t sell him the car at a low price for him to make a profit on it - you sold it to him for him to use.
Yeah, I’m in agreement with this. He’s not lowballing some Craigslist dupe and then turning around to make some cash. He got a car at a significant reduction from its true value, specifically because it was all the kid could afford. He can’t turn around and say “hey, this car is significantly undervalued!” That was the entire point!
Now, if he were my son, and if he came to me and said “Dad, look, I can sell this car for $12,000 and get Car X, which is what I really want and would serve my purposes perfectly, for $11,000. What do you think?” I’d have no problem with that. But if he’s going to turn around and sell the great car for $12,000, pocket $6,000 and buy a piece of crap for $6,000 I’d have a serious problem with it. Because, again, the entire purpose of the transaction was for the kid NOT to have a piece of crap car. If that’s all he wanted, then give me my damn car back and go buy your own.
Yeah, the more I think about it, the more I think that that’s what would bother me most about the situation (were it to occur).
The whole point of this gift is for the kid to have a much nicer car than he could otherwise afford. If he wants to use the nice car in a trade for a different nice car, that’s fine. Because without my car, he couldn’t have gotten what he wanted and so my gift had purpose.
If he’s going to trade my nice car in for a crap car and pocket the change, I’d have a real problem with that. He could have afforded a crap car all on his own. That’s my money you’re pocketing there.