How do I check the legal status of a car when I buy it?

When selling a car, watch out for the power of attorney

Before you go ahead with the purchase, make sure the seller has the right to sell the car. If you are buying a car from a third party, for example under a power of attorney for the sale of a car, make sure the power of attorney for the sale of the car is correctly drawn up and signed by an authorised person. A poorly prepared power of attorney for the sale of a car can cost you a lot of trouble in the future.

What if someone sells me a stolen car?

What should you do if a car is sold to you by a thief or a middleman? In this case, the law naturally protects the victim, i.e. the person from whom the car was stolen. The law gives the original owner the possibility to claim the return of the item if he proves that he has lost the item involuntarily (i.e. by arbitrary taking, theft or loss).

You must therefore return the car you bought to its owner and claim compensation from the dealer. This is true even if the buyer was a bona fide purchaser (for example, if the selling counterparty appears solid, has all the documents in order and there is no reason to think that the car was actually obtained by some unfair means).

However, there is a limit of three years, after which the original owner cannot successfully bring a claim.

So after three years from the sale of the car, the buyer can rest easy. However, as a precautionary measure, it is always advisable to insist on the production of all documents, including the VIN number of the body, which can at least be used to compare the car with the database of reported thefts.

The best prevention of problems when selling a car, however, is always a good quality car sale contract prepared by a solicitor. Thus, one should be warned against free samples, which often create problems rather than solve them.

The exceptions to the above rule for car sales are public auctions or purchases from a person to whom the owner has entrusted the car (for example, a loan). In that case, you do not have to return the stolen car and the victim would have to recover compensation from the seller.

If you’re not sure what a proper sales contract should look like, we recommend having it checked by a solicitor – poorly written contracts are one of the most common reasons for disputes after buying a car.

Selling a car in foreclosure

Borrowers who are facing, or have already been hit by, foreclosure often try to salvage what they can and get financing at any cost. Perhaps even at the cost of violating the prohibition on the disposal (sale) of items in foreclosure.

Unfortunately for the buyer, however, it must be stated that the contract of sale of the foreclosed property is void. In practice, this means that the bailiff will soon come to collect the car you bought and the most you can do is to claim compensation from the original owner.

Although you will be in the right in this case and the court will most likely uphold your claim, this may not mean a real win. The defendant is in foreclosure, so you won’t have an easy road ahead of you, as the defendant will not have the means to pay the damages.

Again, if the seller is acting under a power of attorney to sell the car, the power of attorney must be properly executed.

In practice, we often deal with situations where the buyer has paid for the car but subsequently lost it due to the seller’s foreclosure. The compensation is then recovered for years – often with no real result.

In practice: We recently dealt with a case of a client who bought a car from an individual for a significantly lower price. Although he had checked the vehicle technically, he had not checked the seller in the Central Register of Foreclosures. Shortly after taking possession of the car, he was contacted by the bailiff stating that the car was in foreclosure and had to be surrendered. Unfortunately, the bailiff was in the right and the client ended up losing not only the car but also the purchase price paid, which he subsequently recovered from the debtor without any realistic chance of quick satisfaction. Such situations are not exceptional and their resolution is often lengthy and costly.

You won’t get a 100% guarantee, but you will at least reduce the risk that the bailiff will come for your car.

If it turns out that the seller is in foreclosure proceedings, we recommend that you do not go ahead with the purchase to avoid getting into trouble. Hypothetically, even in such a case, you can be helped if you obtain the express consent of the bailiff and the creditor whose claims are being enforced regarding the sale of the car.

Otherwise, don’t risk the purchase, even if you have confirmation that the foreclosure should not apply to the car because it is resolved by, for example, payroll deductions. Even in such a situation, it is not possible to buy the car legally.

In general, a debtor who has been subject to foreclosure proceedings is prohibited from disposing of his/her property from the time of the notice of foreclosure. At this point, the person concerned is also entered in the Central Register of Executions. At the same time, the information that a certain car is affected by execution should be entered in the Vehicle Register.

Situations where the debtor has sold the vehicle very shortly before the notice of the commencement of the execution is served are legally opaque. Although we could say that the debtor anticipated the execution and by his/her action tried to circumvent it, the moment of the execution is decisive in the eyes of the law. Whatever took place before then cannot be considered as acting in violation of the law.

In practice, however, a situation may arise where a car has been sold, execution has been commenced immediately thereafter, but the car has not yet been registered in the vehicle register. It is necessary to involve the parties involved and their communication with the bailiff in order to clarify everything and avoid the seizure of the purchased car.

Cars at a standstill

Another trap can be when the seller guarantees a loan or credit with their car. This is because such a thing cannot usually be officially detected. If the seller is guided by dishonest intentions and wants to conceal this fact from you, you may again face a bailiff claiming the car in the future.

In this case, a well-prepared purchase contract in which the seller declares that no such obligation is attached to the vehiclewill provide you with a certain defence. If it were a lie, you would not recover the car, but you would have valuable evidence for future litigation. This is because the seller would be committing fraud.

If you are buying the car through a third party, again, check the power of attorney for the sale of the car to avoid problems later.

Diligence when buying a car pays off, whether it’s the technical or legal condition. If you are unsure, contact the experts who can help you not only with the car inspection, but also with preparing all the necessary documents, such as a power of attorney for the sale of the car or a contract of sale.

If you want to make sure you are not at risk of something like this, we recommend having a solicitor check the contract before you sign it.

Summary

When buying a used car, it is crucial to check not only its technical condition but also its legal condition. Risks include buying a stolen car, a car in foreclosure or a car with a lien. If the car is stolen, the buyer must return it to the original owner and claim damages from the seller, which may not always be easy. In the case of cars in repossession, the contract is void and the car can be seized by the bailiff. Cars under mortgage can also be problematic, especially if the seller conceals the truth. The best defense is a good purchase agreement and a thorough check of the documents, including the VIN number.