Seller Beware!

Scales of JusticeWould you write about selling a vehicle? I have friends who sold a car and months later they received information that the car was in an impound lot. The purchaser had failed to register the car in his name and since the car was still registered to them they were legally liable. How does one insure that the new owner re-registers the vehicle?

This is an area of civil law that I am not familiar with, so I asked for legal advice. This is what was related to me:

In my opinion the registered owner would bear responsibility to the towing/storage company. The seller would then have to chase after the buyer for indemnification. This may seem harsh, but the reason that we have a system of registration is to ensure that liabilities and responsibilities are clearly designated.

It is the vendor's responsibility to ensure that registration is changed as much as it is the buyer's. If I was giving advice to the seller I'd be telling them not to pay the account and have the matter addressed in court, so that the purchaser could be brought in by 3rd party proceedings to place responsibility where it ought lie.

I do know that when you transfer ownership of a motor vehicle ICBC requires that you complete form APV9T, the Transfer/Tax form. The purchaser is then required by the Motor Vehicle Act to present the form and register the vehicle within 10 days of the transfer. Many do not and the vehicle may be resold a number of times before it is registered again. No doubt this is done to avoid paying sales tax.

ICBC will tell you if the vehicle you sold is no longer registered in your name once it has been re-registered if you check with them. If this does not happen within a reasonable time, you may wish to lodge a complaint with police and provide a copy of the transfer to Consumer Taxation to force the buyer's hand. Of course, this would assume that you have kept a copy of the transfer form, that the form was completely filled out at the time of sale and you have taken steps to insure the identity of the buyer.

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Reprinted With Permission

Our firm just represented a client in a similar situation; however his matter was a bit more severe. He was on the hook for a lot of money because of the actions of someone else.

The client had sold his vehicle to a friend (former friend now) who was to have the vehicle emission tested, safety inspected, transfer of ownership, and properly insured. His friend assured him he would take care of all those things in a day or two after the purchase.

Our client gave the vehicle to his friend with his plates still on it. Going on the word of his friend our client went ahead and canceled his insurance coverage 2 days later.

The purchaser completed none of the obligation and continued to drive the vehicle and got into a accident being 100% at fault.

Legally our client still owned the vehicle as no transfer of title had been executed. Our client became vicariously responsible for the accident and the actions of the purchaser since our client legally owed the vehicle at the time of the accident. Also just our client's luck the person his friend hit had been in a much more severe accident the year before and was going to be filing a personal injury suit. She filed the suit against all parties including our client.

Our client's purchaser filed bankruptcy and fled from Canada putting our client on the hook for well over $100k because that's what the injury claim was seeking. We settled the case for a lower amount, now our client actually owes us more than the settlement amount.

Our client can legally seek all his expenses (settlement and legal cost) from his friend. However, what are you going to do when the other party has no assets and/or is nowhere to be found?

Our client learned an expensive lesson, which could easily have been far worse and expensive if someone had suffered even more severe injuries or death. Also if our client had litigated the matter he would have lost and been responsible for the other parties’ costs on top of the claim they were seeking.

All this could have easily been avoided if our had been a bit more diligent and actually made sure the transfer was actually executed. The fact that our client had a written agreement with his friend which said that the vehicle was being sold was and the buyer is responsible for emission, safety inspection, transfer of ownership and insurance was not enough to get him off the hook as the full legal requirements for transferring the vehicle were not completed.

In a complicated case such as our client's the legal cost start to run through the roof real fast, and you would be personally liable for all the costs because the vehicle was not insured at the time of the incident. Because logically why would you continue to insure a vehicle which you think you no longer own. Also each party to the litigation will attempt to shift the blame on the other parties to limit liability on themselves. This turns the case into a major mess.

So next time you sell a vehicle ALWAYS ALWAYS ALWAYS make sure the transfer is complete.

Vicarious liability is

Vicarious liability is applicable to the beneficial owner of a vehicle, not the registered owner.   The lawyer's client is clearly not the beneficial owner given the story that is told.  

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