advice needed about uncleared finance on cars

[lynzfa]

A friend who has a taxi firm bought a car 2 years ago from another taxi driver for him to use as a taxi.He recieved a letter the other day from a finance company to say there was still outstanding finance on the car.

He was told he could not sell it on as it was now being investigated.They wanted to know where he bought the car from,who it was bought from,how much he paid and how he paid for it and they also wanted to know if he knew there was finance on it.Clearly he didnt know this as he wouldnt of bought the car otherwise but now he is gettingworried as he doesnt know if they can take the car off him or not.Any advice on this would be great.He hasnt replied to the letter yet as he doesnt know wht to do.

[buzby]

In Scotland, he can categorigally refute any third party claim as he made the purchase with no suspicion that it was owned by an HP company and as such has good title and the vehicle cannot be taken from him. If in England, such right is not automatic, however since 2 years have elapsed, I think there is an element of the HP company not being efficient in pursuing their property, and as a result may lose any claim.

 

I would think that to ensure his interests are best protected, he gets a Solicitor to respond to the letter to ensure HGIS interests are best protected.

[Tavmania]

As above they would need to prove he had no knowledge. If for instance it was advertised in a paper etc they would have no chance.

[JonCris]

As he purchased in the course of a business he may be considered to have special knowledge (he should have checked HPI) therefore may be a risk of losing the car. Suggest he try & find out how much they will accept to settle the matter.

 

Then go after the other taxi driver for his money before that person gets banged up in the pokey

[buzby]

Perhaps, but only if in 'the trade'. Simply because someone is 'in business' does not magically make them knowledgable about such matters. As for seeing how much they want, no way. That would be an immediate admission of fault and/or acceptance of responsibility and that should be avoided. I doubt any court would think it reasonable to pursue this - effectively out the blue - after two years. They have been grossly negligent and I fail to see why the OP should recompence them for their errors.

[JonCris]

Being 'in business' is the way the courts WILL look at it as it's not difficult to expect a business man or woman to take better precautions that an layperson. Particularly if that person is even loosely connected with the buying & selling of cars.

 

With such easy access to the HPI anyone who today buys a car in a private deal WITHOUT checking has only themselves to blame if they later find they have been ripped off

 

Also to request a settlement figure is NOT accepting liability it's simply matter of good sense because they won't be ignored & the taxi driver risks them turning up & repossesing the car without warning.

[lookinforinfo]

I remember reading some time ago that even if you have bought a car

where finance was outstanding, or indeed was stolen, if you have added

things to the car in the meantime, then ownership is not so clear cut.

Obviously because the things you have added are yours and it would not be

equitable to deprive you of them.

 

I suppose things like fog lights that are easily removable wouldn't count,

But fitting a sun roof for example would. So it may depend on whether your friend has fitted extras to the car and what they are.

[JonCris]

If you add things or modify the car you do so at your own risk & it does not transfer title to that person. Any recovery of the cost would be against the person who sold you the car.

 

If that where the case all the car thieves in the land would be doing it. "just fit a sunroom to this motor mate know what I mean" wink wink

[buzby]

Particularly if that person is even loosely connected with the buying & selling of cars.

 

By that definition, everyone is 'in business' either selling their time or expertise to third parties. Someone who is in the trade, as I noted earlier, would have an expectation, but lets say there WAS an HPI check and it showed clear at that time, even HPI provide insurance for an additional fee to cover their possibile misinformation! That realy strikes confidence - and the same thing is happening with firms delling mobile phones with pre-cleared IMEI check. If this information is readily availavle (and by that I mean for the cost of a phone call or web-link) then the onus clearly falls on the purchaser. However, if I'm expected to pay private companies between £30 to £50 for data that may or may not be correct, no court will insist I should have done this. Saying that it's my fault if I don;t pay the £50 or so required is overlooking the fact these firms offer the service to make money. I am not obliged to pay them to get data the DVLA could provide me with at no cost (or a token fee to cover processing). Don;t fall into the trap that just because the information is available from somewhere at a price, it is my duty to pay it. It most certainly is not.

 

Regarding the settlement figure, again I reiterate that even dealing with the Insurance Company is tantanount to being leveraged into agreeing they have a possible claim. As for the car being 'reposessed' as I understand this, it would have to be by court order, and the purchaser would still have the right of redress by either getting an injunction, preventing disposal, or suing the company for the value.

 

In either case, my recommendation that a solicitor deals with any such negotiations remainst the best option at this stage so his interests are not put at risk.

[JonCris]

buzby to suggest that all who buy a car are in the 'business' at the time of purchase is nonsense. If your paying what may be many thousands (or even hundreds) to purchase a car then I think it is reasonable for a court to expect you to protect that investment by checking (& paying a few quid) you have clear title. As for asking how much to settle you are wrong it in no way is an addmission of liabilty. Liabilty to what? Liabilty for the HP contract. Not being signatory not so.

 

As the car is no longer in the possession of the the original buyer the HP company can recover it without warning. The new owner is NOT protected by the CCA therefore no court order is required. It would then be upto the current user to issue proceedings to prove title. So unless he/she is proactive they risk it being snatched without warning.

[buzby]

As the suggestion that someone who is a hairdresser, plumber or market gardener is better placed than than a bus driver or clerk to know that the vehicle might be subject ot an HP agreement?

 

You also make the mistaken belief that an HPI 'clear' check gives you undisputed clear title is erroneous. Even the firms supplying the data are clear on their responsibilities (if theor wrong, you get your money back, not 'clear title'). As to your definition of a 'few quid', the last time I checked it was £30. Should this not rank along with bounced cheques as an unjustifiable charge?

 

As to the recovery of the vehicle without warning, they would certainly have to find it first which may cost them considerably more money, and would not be recoverable from the current beneficial owner, only the original debtor.

 

And harking back to my earlier post, the scenario you outliner could not happen in Scotland, as the OP would already have already achieved good title, and the claimant required to prove otherwise. So this, along with the lack of car clamping on private property (which has alredy been stopped as extortion) seems to help consumers too. If only we could get hte Small Claims limits up, we'd be in heaven!

[JonCris]

I am not mistaken in my belief. I know precisley how it works. If the HPI check clears the vehicle & its later found not to be the case then you have a claim against HPI. £30 to protect what mey be an investment of thousands unreasonable I don't think so.

 

Also their charges ARE for a service about which (unlike the banks) you do have a choice

 

As for 'finding' the vehicle or the 'cost' Not a problem these days you make it sound harder than it is & as for the cost, the HP company are not going to just let it slide they are going to come after their pound of flesh. Best to try & pre-empt them

 

I understood small claims in Scotland was/is going up. Am I wrong?

[buzby]

Any claims against HPI is limited, not absolute - but I maintain this information if available should be freely available on asking, not 'sold' on the pretence of saving a purchaser grief later on. In this particular instance, it would have been in the HP Co's interests that their vehicles could not be easily sold, insisting that someone should pay an additional fee for what should be a common courtesy is not the way forward, and with this information not being freely available, it is not a 'slam dunk' that their claim to title after 2 years would be respected by a court. Did they report it stolen or pursue the original lessor? If they did, and if the latter case received payment, any subsequent action for recovery on their part would be illegal, effectively being paid twice because the system can be easily manipulated.

 

As to the charges for a 'service', like DDM bouncing, does it REALLY cost £30 to enter a VIN into a computer? THe database could easily be available with limited information warning of some restriction at no charge. Taking reasonable steps is one thing, but turning it into an industry for profit without a low-cost alternative denies customers the choice, and it is this I object to.

 

I can assure you finding the vehicle has considerable relevance. If after 2 years they hadn't found it, but depended on a re-registration to do so weakens their case considerably. Also, these companies sub-contract much of their business, so everyone along the line has their hand out. This might be cost effective if the vehicle is a luxury model, but faced with a vehicle of dubious condition 4 or more years old...? Quite a risk with no guarantee of any profit at the end of the day - and if there's no money in it for them, do you seriously think they'll expend the effort?

 

The Scottish Small Claims system still has the original limits of £700, with a Summary Cause capped at £1,500 and an Ordinary Action for all amounts above this. The first two are easy for consumers to get to grips with, but the OA is Solicitor-only territory, so effectively anything over £1,501 has to be fought using the legal profession - which is a real bugbear when compared to the (much fairer, IMHO) English process.

 

There's been a working party looking in to raising the limits, but the first suggestion I heard was for Small Claims to be allowed up to £2,500, the ending of Summary Cause and the OA for actions over £2,501. Whilst a step in the right direction is still not high enough. There was a call for submissions on how the system should be modernised, along with an online service to match your Moneyclaim online but there has been nothing published so the old system still rumbles on regardless.

 

You're most welcome to come up an celebrate the first New Year that we get parity - I'll get in the first couple of rounds too, but I'm not holding my breath for any changes before 2008.

[JonCris]

Of course a claim against HPI is not a 'slam dunk' but then neither is claiming title.. I think your attempt to argue that their fees are in some way simular to those charged by the banks is somewhat mistaken. They may be costly but they aren't arbitary, you have a choice & if you choose not to take what I think would be reasonable care then I think the claim to title is greatly weakened.

 

I do agree about the fact that only after 2 years have they started to chase for their money. It may even be that a court would award title on those grounds alone unless of course the HP company could show that they had made every attempt to find the property, & this is most important the current owner had NOT kept the DVLA fully informed of their ownership of the property.

 

They are talking about raising the limits here. The problem is that for a large & complicated claim claimants won't be able to find lawyers who will act for them. After all no one works for nowt

[lynzfa]

Does anyone know what would happen if he was to sell the car on.does he have to tell that person it has uncleared finance on it.or can he not sell it.

[buzby]

He'll be committing fraud. In simple terms, it will not be his to sell if (HP). Different on a credit agreement, because unless the car is noted as being security on the loan, then it IS his to sell, but must repay the loan when it is sold. However, in addition to HPI recording the interest of a third party in it, DVLA also keep details of banks and finance houses, telling them each time there is a material change (reg number, keeper and/or address change etc).

 

Any garage taking it in part exchange will check it, a private buyer may not (but should), but it's not a clever thing to do.

 

A

[bazak1]

it does seem a clever trick to play but as buzby says is illegal because the vehicle is not actually owned until its fully paid for.

[lookinforinfo]

Not sure if the laws in Scotland are the same but South of the border the case would come within the Hire Purchase Act 1964

S.27 S.27 of the Hire Purchase Act 1964, as amended, provides:

 

"(1) This section applies where a motor vehicle has been bailed … under a hire purchase agreement … and, before the property in the vehicle has become vested in the debtor, he disposes of the vehicle to another person.

(2) Where the disposition referred to in subsection (1) above is to a private purchaser, and he is a purchaser of the motor vehicle in good faith, without notice of the hire purchase … agreement …, that disposition shall have effect as if the creditor's title to the vehicle had been vested in the debtor immediately before that disposition."

S.29(1) defines a private purchaser as - for present purposes - one who, at the time of purchase, does not carry on a business of buying cars in order to sell them. S.29(4) defines the debtor as - for present purposes - the person to whom the vehicle is bailed.

The effect is that a person, other than a car dealer, who in good faith buys a car from someone who turns out only to have it on hire purchase, obtains a good title.

 

So your friend would have a good title to the car here. You may need to check with Scottish Courts to see if they have the same law there , or if not,

under which law it comes under.

[JonCris]

Does anyone know what would happen if he was to sell the car on.does he have to tell that person it has uncleared finance on it.or can he not sell it.

 

You can sell a car which is on HP but ONLY with the consent of the creditor. Also you must tell any buyer so they can 1st pay of the outstanding debt. Anything less would be theft

 

Anyway most buyers will check with HPI & if they haven't been told they'll run a mile

 

However a private buyer who purchases such a vehicle may well have good title & be able to keep it. The seller on the otherhand will be in deep do do

[buzby]

Agreed - in Scotland at least anyone who has purchased a vehicle and later discovers the vehicle is owned under an HP agreement had claim good title providing there was nothing about the deal that would alert him otherwise (presumably being at a 'bargain' price). However, if adverse possession has been taken - say the finance house had already found the vehicle and taken it back - the subsequent purchaser would have to legally contest the repossession, which would be expensive.

[JonCris]

Yes buzby whilst not entirely sure I think as the 'innocent' buyer you can place a lien on the vehicle to protect your position

[buzby]

I believe you are right, however this would have to be in place before the reposession happened. If it did, the finance house would be in contempt of court, but not otherwise.