What happens when the buyer of your car doesn’t transfer the title? This is a common scenario that carries a handful of risks. In this article, we’ll explain the risks for both seller and buyer when the car title isn’t transferred immediately after purchase.
When you sell a car, you assume that you are no longer liable for the car because it is no longer in your possession. However, this is not true. The title record of the car is not officially transferred to the buyer’s name until the title is transferred through your state’s DMV agency.
The title record is associated with you, as the seller and owner, by the vehicle’s VIN. If the car is involved with a traffic infraction, parking ticket, accident, or any other type of liability and the car title isn’t transferred to the new buyer’s name, you are still considered liable for the consequences.
DMV notification of sale
While you can’t force the buyer to transfer the car title in a timely manner, there are steps you can take to prevent continuous liability for the vehicle. Within 30 days of the sale, notify your state’s DMV agency. Each state has a method to disclaim ownership of a vehicle you’ve sold, for example, see Texas’s Motor Vehicle Transfer Notification form. Completing this form, either online, by mail, or in person, will help avoid liability for civil and criminal acts associated with the vehicle.
As the buyer of the car, it’s crucial to transfer the car title into your name as soon as possible. Until your name is on the title, you are not the legal owner of the vehicle.
By holding onto the title for an extended amount of time, the probability of the title certificate being lost or misplaced increases substantially. If you lose the title before you can transfer it into your name, you’ll either have to have the prior owner obtain a duplicate title for you, or you’ll have to pursue another form of title recovery. This may sound easy, but oftentimes sellers are very unlikely to assist after the transaction has been completed.
Claims against the seller
If the seller is going through a divorce, or bankruptcy, or a creditor has a claim against them, the creditor is going to look for high-value assets such as vehicles and real estate. If the vehicle comes back as still listed in the seller’s name, the creditor can legally claim your vehicle to repay the seller’s debts.
No proof of ownership
If there’s a situation where the car has to be towed or impounded, without your name on the certificate of title, you cannot prove your ownership and likely won’t be able to recover the car. In any situation where you’re required to show proof of ownership for the car, you are only considered the owner if the title has been officially transferred to your name. Simply showing a car title with someone else’s name on it, but signed over to you is not valid proof of ownership.
The main takeaway here is that when you purchase a vehicle, you need to complete the transfer of the car title. If you sold a car and the buyer still hasn’t transferred the title, you should notify your state’s DMV agency to avoid future risks and liabilities.
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