Title help please - legal question

If I may ask a question to the legal minded in the group...

I have a "friend" who sold a car he owned outright 8 months ago and didn't have the title notarized (or completely filled out) as the buyer stated it wasn't required in his state and he'd done this a bunch of times, etc. etc.

The buyer subsequently bought a different car and sold "my friend's" car to another party (buyer #2) who is now asking that the title be notarized. The title now only contains buyer#2's information. It was never registered by buyer #1. The date of transaction is being recorded as almost 8 months after the original one between my friend and buyer #1.

Is there any risk to helping out buyer #2 in this situation and completing the title as asked?

Thanks in advance. I'm sure my friend will appreciate your input.

Jim

To give typical lawerly advice, there isn't enough information here to say and your "friend" should consult an attorney with knowledge of applicable laws.

What we can say for sure is that buyer #2 needs to deal with buyer #1. If buyer #1 needs to clean up the original transaction with your "friend," then your "friend" by all means should do so. However, your "friend" has no relationship with buyer #2 and dealing directly with that person is fraught with unknowns. Any lawyer will tell you that unknowns are always full of "risk," which is why this forum is not a good place to get legal advice...

Nine17,

Your comments are actually pretty helpful. Thanks for your input.

Jim

This happens all the time when a car is traded in, the used car dealer does not register the car prior to resale. Unless the laws are different in your state there should not be a problem. #2 should just go to the DMV and register the car.

Quote:

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Originally Posted by jimhuiz

If I may ask a question to the legal minded in the group...

I have a "friend" who sold a car he owned outright 8 months ago and didn't have the title notarized (or completely filled out) as the buyer stated it wasn't required in his state and he'd done this a bunch of times, etc. etc.

The buyer subsequently bought a different car and sold "my friend's" car to another party (buyer #2) who is now asking that the title be notarized. The title now only contains buyer#2's information. It was never registered by buyer #1. The date of transaction is being recorded as almost 8 months after the original one between my friend and buyer #1.

Is there any risk to helping out buyer #2 in this situation and completing the title as asked?

Thanks in advance. I'm sure my friend will appreciate your input.

Jim

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Couple things:
1) Is the person your friend sold the car to initially (aka buyer 1) a car dealer or broker? If so, in most states he is legally allowed to skip title and sell to another party without re-titling or re-registering the car. If he is not a licensed broker, then buyer 1 is involved in a private sale, and by selling the car he is illegally skipping title. This is illegal in most states, as buyer 1 is not paying sales tax on the purchase of the car. This has been my experience.
2) Does the Title have a block which requires that a sales price is stated? If not, then buyer 2 will need a bill of sale. If buyer 2 is buying the car from buyer 1 but the title has your name on it as the legal owner, then he would need a bill of sale from you (the person whose name is legally on the title).

I don't want to alarm anyone, but it is important to remember that the fine print in title documents in many states indicates that they are signed "Under Penalty of Perjury." As John Draneas notes in a recent Sports Car Market magazine article, the current fiscal crisis in which our governments find themselves has made it very cost-effective for Attorneys General to investigate persons who are evading sales and transaction taxes on automobiles. I would hate to think that my signature might turn up on a document that is not scrupulously truthful. My accountant and I work hard to take advantage of every exemption, deduction, and loophole in the tax laws, but "everybody does it" is not a recognized defense to a Perjury charge.

Quote:

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Originally Posted by Nine17

I don't want to alarm anyone, but it is important to remember that the fine print in title documents in many states indicates that they are signed "Under Penalty of Perjury." As John Draneas notes in a recent Sports Car Market magazine article, the current fiscal crisis in which our governments find themselves has made it very cost-effective for Attorneys General to investigate persons who are evading sales and transaction taxes on automobiles. I would hate to think that my signature might turn up on a document that is not scrupulously truthful. My accountant and I work hard to take advantage of every exemption, deduction, and loophole in the tax laws, but "everybody does it" is not a recognized defense to a Perjury charge.

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I tend to agree with Nine17. It is important to re-emphasize that the problem is between buyer 1 and buyer 2. If buyer 1 is asking you to do anything that is not above board, then buyer 1 is not an honorable person to begin with, and you should be wary of helping him in any way that can bring you into legal trouble as an accomplice. A good Notary will want more info before providing his stamp. And if you tell him the truth, he may not be willing to notarize the title, as buyer 1 is deliberately side stepping his legal responsibilities, whatever they may be (perhaps for instance, he gave buyer 2 some sort of guarantee?).
Just from the limited info, sounds like buyer 1 is a small time flipper and has painted himself into a corner with his buyer. Bottom line is there is no upside for you in helping him, only potential exposure to trouble.
If you are seriously contemplating helping him regardless of this, tell him that you would like the contact info of buyer 2 and bill of sale from his sale of the car to buyer 2.
If everything is above board, then perhaps you can go to your notary with this information and present it to him for his signature. If there are any issues, let buyer 1 properly title the car in his name and do the proper title work on his own. He created the mess, and he can figure out how to clean it up by himself.

All of the information was very helpful. Thanks.

The situation resolved itself without any further input required from my end.

Everyone is happy, especially me, since buyer #2 has the car close to my home and I may get the chance to buy the car back one day (I miss it more than I thought I would...).

Lesson learned on partially filling out the backside of a title in a private sale...not doing that again.

Happy that it all worked out for everyone.

Most states have similiar laws that require a buyer to title the car within a specified time. Licensed dealers are not required to do so, they operate under different laws.

Some collectors will obtain a car with the title only signed (no date or other info filled in) by the seller. The new collector then keeps the car on the open title and passes the open title on to the next guy when he sells the car. This type of "title jumping" is illegal and frowned on by most states as they want the sales tax for every transaction. It is also more than a little risky for all parties. A lot of bad things can happen if you do not have clear title in your own name or purchase a car from someone other than the name on the title (or a licensed dealer).

I know of a case where a title was passed on an open basis and later the seller reappeared with a new replacement title, claiming ownership. He was the last owner of record because the new owner did not title in his name, it was easy for him to get the replacement title for a "lost" title. Of course legal arguments resulted...it is best to just pay the taxes and establish clear ownership. Lots of other bad title stories.....