What happens if there's a cash shortfall on a sale at a car dealership?

Miscellaneous and Personal Stuff I Must Share
21

Really? The day was pretty much over already, it was 7:30-8pm. And do dealerships review their accounts on a daily basis?

And my last comment is really the crux of it, versus all the replies that assume the dealership would readily and easily be able to pursue the missing funds from a customer in such a scenario: in a private sale, the title transfer, and tax payment that goes with it, concludes the matter as far as the state is concerned. Right?

Even if there is a signed letter saying “I, robardin, sell my vehicle, VIN #XXX, to Shady Joe, for the amount of $10,000”, once I’ve transferred title to Shady Joe there is very little I can do to pursue a claim that he never fully paid me the $10,000. That due diligence is solely my responsibility as the seller: there is no state enforced “contract” for “$10K from Shady Joe to me, and title transfer from me to Shady Joe”. The only reason the state cares about the amount is to charge tax in the title transfer. I know from doing 5-6 private vehicle sales that the state checks the amount for reasonable book value, to avoid people writing in $100 in the bill of sale even as they personally exchange $5,000 or something like that as a tax dodge, but that’s all.

Let’s say the next day after giving the title to Shady Joe, I find that his envelope of money contained fakes. What can I do? I could try to sue him for it, but the burden of proof would be on me, not Shady Joe. And given that it was a cash transaction, there would be no way to prove my envelope of fake money was given to me by him in that specific deal.

So how would a dealership be in any different a situation than I would be with Shady Joe?

The likely best answer is that the dealership should have a policy never to take a cash payment, only a bank or cashier’s check, which could be verified or reissued. But that hold/reissue is something only I (the bank customer) could do, and I’m not sure of any legal reason I’d have to do it if they lost my check, though it’d certainly be suspicious of I refused to do it with the dealership picking up all the fees and costs involved in doing so.

And if the dealership DID accept cash as a matter of policy, and my sale was actually written up as a cash deal (it may have been), without specific mention of a cashier’s check, then I see no way they could’ve come after me any more than I could’ve gone after Shady Joe.

22

They can go after you just like you could go after Shady Joe. You say you paid $25k in cash? Great. Where did you get that cash from? Oh, you don’t have a record of a withdrawal of that money from the bank? Indeed, sir, why would you pay such a large amount of money in cash when a cashier’s check would work fine, or even a personal check?

Oh, you got the $25k in cash from “some guy” who “owed you money”? What is his name? What did he owe you the money for? Where did he get the cash?

You will soon be drowning in so many lies that you’ll just drive to the jail yourself.

23

This is NOT a “finders keeper” scenario. There was no “finding” of lost money, it’s a case of a seller not being careful enough in ensuring payment clearing before legally transferring ownership of something.

I will ask my police officer buddy about this, but like I said, I am pretty sure the burden of proof in what I called the Shady Joe Scenario in my simul-post with your response would rest on me, the seller, once I’d signed the title over.

So I show the cops a cell phone picture of an envelope with fake money in it - or show them the actual envelope. OK, nice envelope. “Shady Joe gave me that!” OK, let’s talk to Shady Joe. “Nope, never seen that before in my life - the envelope I gave him definitely had real money in it, he’s trying to pass his own fake money off as being my fault.”

Now what? How can I get a subpoena to investigate his financial records based on that flimsy claim?

Finally, I’d think there is a difference between Shady Joe passing off fake money (perhaps I could eventually prove he’s got more fake money matching the kind he gave me in his apartment, or on his person - both of which would require a search warrant with enough evidence to acquire, which I would think needs to be more than my say-so), and the dealership straight up forgetting to take my money, and likely not realizing it for days or weeks later.

24

Why would the police or the justice system do all of this on my word?

Imagine if I were Super Shady Joe trying to squeeze double payment out of Shady Joe. Why should the law presume my accusations are meritorious?

I’m actually very curious about this. I am (was) very sure that the seller is 99% SOL in the Shady Joe Scenario. Do you KNOW, rather than assume, that it’s so easy to successfully go after Shady Joe, instead of simply getting a lot of police officers and judges annoyed with you at continually calling them or filing requests to subpoena Shady Joe based on nothing more than your word against his?

25

Car dealerships definitely review their accounts on a daily basis. They need that money in the bank as soon as possible because it’s costing them money each day a supplier hasn’t been paid.

No. You are comparing worthless pieces of paper to an actual payment. A car dealership is not your local fleamarket. You will shortly have a lien on that title for $25,000.

Listen, that dealership is going after you. They’ll have a CPA testify you did not pay. Even if that doesn’t close the case right then and there the judge is going to require you to say how you paid for the car. So you can say you paid with a cashier’s check that hasn’t been cashed and will be re-issued, or you can commit perjury. Take your pick.

26

Hey, you got away without buying the TruCoat. You’re a winner in my book.

27

It would be a civil matter, and likely a criminal larceny matter once the facts were adduced. Of course, the police are unlikely to press charges initially, but if I was your lawyer against Shady Joe, I would file a complaint alleging breach of contract, fraudulent inducement, and a declaratory judgment to give you title to the car.

I then use the tools of discovery to subpoena Shady’s bank records. No $10,000 withdrawal? Huh. I either depose him or send him written interrogatories. “Joe, where did you get the $10k?”

Keep in mind that if Joe lies here, he is committing an additional crime. We can fingerprint the money or do a touch DNA analysis on it. If you find one skin cell of Shady Joe on one of those $1 bills, what is his answer?

28

But when you just say, “Hey, I gave him $25,000 in cold hard cash”, that’s not the end of it. Where did that cash come from? Did you withdraw it from the bank? Did you sell grandma’s china for $25,000 in cash?

The thing is, nowadays there are all sorts of rules for large cash transactions, put in place to slow money laundering down to a dull roar. Where did the cash come from?

I guess you’re picturing the two of you standing in front of a judge. You say, “Hey Judge, I gave him a bag with $25,000 in cash, and he took it, and hid it under his desk.” And the sales guy is gonna go “No way. He didn’t give me anything.” And the judge is going to say, “Well I don’t know who to believe here.” and throw up his hands and throw out the case. But the judge is probably going to believe the dealership guy. Because, if you really handed him $25,000 in cold hard folding money, why didn’t you get some proof of that?

Because let’s say that you’re at the dealer, you really did hand him $25,000 in cash, and drive away with the car, and the next day the dealer sues you claiming they never got paid. How are you going to prove you really paid them? Wouldn’t you want some evidence that you really paid them in cash? Like, some witnesses? It seems really easy for the dealer to steal your cash and claim they never got it, right?

So…when you claim that you handed over the cash and scooted out with no verification on your part, it looks suspicious. Maybe you’re that casual about handing over fat stacks of cash, but most people wouldn’t be, right? And the judge is going to ask you where the cash came from.

The point is, yes, it’s a he-said she-said situation. But there should be records on both sides. The side that’s telling the truth should be able to provide more records than the side that’s lying. And the more records there are that support one side or the other, the more likely it is that the judge is going to rule for that side. So a bunch of weak evidence in favor of one side or the other starts to add up more and more until the judge is pretty sure one side is bullshit.

29

Right, I guess this is what I’m getting at - the police are there to investigate criminal actions, but at least initially, this is a civil court case. Which could be drawn out and expensive, and in the case of a private car sale of $10,000 (part of which was real money, the rest being fake), is it worth the cost of retaining a lawyer, the court time, etc.?

Is a simple civil court accusation enough to do things like force exposure of one’s financial records?

If I sold my motorcycle for $2,000 to Shady Joe and it turned out half of it was fake, I don’t think I’d consider for one second getting legal representation and going after him - the chances of success seem small to me, without going through so much trouble that it’d cost me far more than the $1,000 I was out.

$25,000, now, that’s a different level - but this would be a dealership with a lot more gross income than that - I could see them having a policy of having the salesman be on the hook for it, and let HIM go after me in court on his own time/money or something.

Which in the end is really what my OP was about. Obviously someone forgot to do their job, and I was allowed to walk out with keys and clear title to a car off their lot without having given them $25,000 in cash. I wasn’t asking after the LEGAL question of “what can they do to get the money”, as asked to a lawyer type, but the OPERATIONAL question (as asked to someone who’d worked in a car dealership) as to what the management would have done to the salesman or the financing officer (or both) in response.

30

The proof that I gave them $25,000 to get the car would typically lie in the fact that they gave me the title to the car. I didn’t steal the title - they did the paperwork themselves, to transfer it from them to me.

You see my point? It’s not suspicious that I wouldn’t demand a receipt for my payment, the “receipt” for my payment is the goods I paid for, the car itself.

And like I said, it’s very possible there WAS a receipt for the payment in my stack of papers: after I gave him the check, he didn’t run off to the cashier’s window to get a receipt for that forgotten payment. I just drove off.

If I could check that paperwork now, I would, but I didn’t keep it, that was 8 years ago.

In which case, whose neck was on the line? The salesman, or the financing officer? It seems someone signed a form saying they took payment when they hadn’t (I left the financing officer’s office with a stack of papers, which I handed to a cashier, who then gave me the keys to the car), and I’m guessing from his reaction it was the salesman. (i.e., the “receipt” in question was a note from the salesman saying “give this guy the keys and title, we’re all good”)

31

Yes.

32

The only minor difference I can see with a personal check, and assuming there is no such clause as you mentioned (I’ve never seen that, but could be I just never looked closely enough :slight_smile: ) is that with an undeposited personal check the money is still in your account. If you do nothing eventually the burden shifts to whoever was supposed to be paid to get a new check from you. This happens once in a blue moon with a very sloppy individual or small business…just not for $25k. Anyone dealing in amounts like that who stays in business for even a little while is checking accounts and going after discrepancies like that.

The small difference I mean though is with a cashiers check the money goes to the bank’s account when you draw that check. The only way to get it back is to create a paper trail asking for a refund and conclusively showing you never paid.

As for the third method of payment, paper currency, one the reason new car dealers don’t like to deal in cash is lack of paper trail the money actually changed hands and was real. Another reason though is they must file a report to the IRS, it doesn’t involve the local police or civil courts like the OP scenario itself would, for cash payments more than $10k, like banks must for cash withdrawals >$10k and regulators also hassle banks about not filing those reports for amounts close to the limit that ‘they should have known looked suspicious’. Which is also where your problem comes setting aside $25k for a car then taking it home after the dealer, remarkably, never asks for it. You can’t deposit it back without creating more paper trail. And you may have an IRS problem if there isn’t a paper trail where the money came from, if you didn’t withdraw it from a bank immediately prior. Also consider it’s a crime to withdraw less than $10k cash at a time to avoid the reporting requirement if it’s a ‘structure’ to eventually withdraw more than $10k for a given purpose. It’s one of the most elastic definitions of a ‘crime’ on the federal books. All in all it doesn’t actually make sense to deal in cash in amounts more than cheap used car prices. It makes it more likely to get ripped off and it attracts rather than avoids govt attention.

33

OK, let me rephrase key points from the story in my OP to emphasize what I was wondering about. Some of them are legal type questions (what can be done, and by who, to try to claim missing payment on a vehicle sale that has already been recorded), but others are actually questions about how a car dealership is run.

The story is from an 8 year old memory - there are parts of it I may have wrong - so I’m open to someone who’s either worked in a car dealership, or has bought a car recently from one, to say if this anything sounds fishy.

I did all the steps the dealership expected me to do to get my car - put a down payment on it with a CC on a Saturday, come back on Monday after work, sit and listen to a spiel about extended warranties, sign a bunch of forms with the salesman and the financing officer, take the forms to the cashier’s window escorted the salesman, getting the forms stamped or whatever, and receiving those forms, plus the registration card, a handshake and the keys to the car (with the title being mailed to me separately directly from the state).

The part about handing over my balance payment was obviously supposed to happen either with the financing officer, or the salesman. The cashier definitely looked over all the forms before handing over the keys and documents.

So, first question, who was it who dropped the ball? I’m guessing the salesman was supposed to do it, based on his reaction. (I’m also inferring that the vast majority of buyers DO do some kind of financing, and aren’t handing over more money when picking up the car versus the down payment they plunked down earlier.)

Second question, what was on the line for him, had I not been (immediately) honest?

That raises the secondary question, what proof could the dealership offer the court system that I hadn’t paid them, when they had given me all the paperwork that they would have ordinarily done if I had done so?

I have no idea if SOP would be to give me a specific receipt for my cash payment of balance - I didn’t look. But if it was SOP, then I can only assume the receipt was in my paperwork already from the cashier’s window.

Does that sound right, from a car dealership perspective?

If it is not SOP to give me a specific receipt for payment of balance - if simply giving keys and title transfer is all that’s typically done - then what grounds would they have to pursue me as an exceptional case?

If I have “all the right forms” from them, and they can’t find their money, … they can request that I go back to my bank, verify if the cashier’s check was cashed, and if not, request a stop payment and reissue. There are significant hassles and costs involved in this, apparently, but of course the dealership would cover them. Could my refusal to go along with this be taken to civil court, on no basis other than I’m being a jerk, since I have All The Right Forms from them? Am I not in my rights to simply say, please stop bothering me with this?

Given all that, could it be policy for the dealership to require the employee whose signature authorized the title transfer and surrender of keys - apparently the salesman - to make good on the amount, and leave it up to him to try to pursue the reissue? And had it been a truly cash transaction (rather than cashier’s check), he’d be super duper SOL as a result?

34

Why are you hung up on paperwork?

It’s like this:

You: Received car
Them: Didn’t receive payment.

Nothing else matters as long their evidence that they didn’t get any money from you outweighs your evidence that you paid them, which you wouldn’t have since you didn’t pay them in this hypothetical.

It is unlikely a salesman would have the kind of fiduciary responsibility to make up that shortfall, especially since they will get it from you. He could be fired.

35

I believe the actual legal precedent can be found in “Keepers V. Weepers”.

36

They can take you to court, and be granted discovery (which would be subpoenas of your bank records and requests for documents) based upon the allegation that you didn’t pay for the car.

And what is that evidence going to conclusively show? That you didn’t pay for the car. Case closed, plus possibly criminal charges for attempted grand theft auto.

37

Book 'em Dano!

robardin, why do you think anyone but you would be responsible for paying for the car in this scenario?

38

I really don’t know why you keep coming back with walls of text that amounts to nothing more than reasserting the nonexistent “finders keepers” principle.

Despite all the dramatic eye contact and soul-searching here, you didn’t volunteer to give the guy one of your kidneys. You just paid what you were supposed to pay. There is no great virtue in not making a misguided attempt to commit fraud.

39

I think this might be the key, here.

Let’s say that you’d handed the ashen-faced guy cash. Let’s also say that he would, then, have gotten you an actual receipt for said cash. Would you even be telling this story now, all these years later? I don’t think you would. Oh, if you’d given him cash and he’d given you no receipt, yeah, that’s a hell of a story; but if giving him cash leads to him giving you a receipt, then it’s a much less interesting story.

You gave him a check, and — though he went ashen — he didn’t get you a receipt. But, again, grant for the sake of argument that he would’ve, if it’d been cash; and grant, too, that he didn’t bother because the check was effectively its own receipt (since they can’t deposit it and then claim you didn’t pay them, the way they could with cash; or, if they lose it, they can just ask you to cancel the check and please have the bank issue a replacement).

Would that explain everything?

40

That’s just it. I have every proof that I paid them in full that they’d ever have given me, or anyone else who bought a car from them. What legal right would they have to demand further proof in pursuit of money they can’t find?

Or could they go around dunning people for double payment any time they had a clerical error, with the burden of proof of payment on the consumer? That doesn’t sound right at all.