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

When you buy a second-hand car, you may feel the money you save compared to buying a new car. At the same time, there is often the stress of checking and verifying the actual condition of the vehicle. Few people also keep an eye on its legal status, which matters just as much or more.

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Hundreds of articles have already been written about speedometer rollovers and similar scams concerning the technical condition of a vehicle. In this regard, we recommend maximum caution, careful verification of all information provided and the help of a car technical expert to help you with verification. In the end, this can save you a lot of money, time and trouble.

Equally important is the legal aspect of the purchase, or the legal status of the car. What is the meaning of this term? For example, whether the seller is actually entitled to sell the car, whether it is a stolen vehicle or a car that is subject to foreclosure. Let’s take a look at the individual cases now.

Tip: We have discussed selling a car and carefully checking its technical condition in our earlier blog article.

Selling or buying a car?

We will draw up a contract of sale for you or check the existing one. We will handle everything quickly and flawlessly, for a predetermined price. We can do it within 48 hours and within the whole country. You do not worry about anything and you can pay only after the service is provided.

What if someone sold me a stolen car?

What 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 or she proves that he or she 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 seller. 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 believe 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 purchase, 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, however, is always a good quality car sale contract prepared by a solicitor. Thus, one should be warned against free designs that often create problems rather than solve them.

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

Tip: When buying a car at a car dealership, some of the detective work may be done by the dealership for you, but even then, don’t let your guard down. This is especially true if the dealership is only a broker and not the owner of the vehicle being sold. Always choose solid car dealerships and, if possible, those that will give you a guarantee as part of the contract that they will refund the purchase price in the event of any legal problems.

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.

Tip: If you suspect that it might be a similar offer (for example, because the car is suspiciously cheap, or if the original owner is unusually willing to drive the car anywhere in the country), check the seller at least in the central register of foreclosures.

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 in pawn

Another trap can be when the seller is guaranteeing 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 making a claim on 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 vehicle will provide youwith 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.

What other legal documents will you use when selling the car? The basis is always a contract of sale prepared or at least checked by a lawyer. This will protect your rights and minimise legal risks. Another necessary document is a power of attorney to sell the car. It should include identification of the principal and attorney-in-fact, a specification of what the attorney-in-fact is authorized to do under the power of attorney, and a specification of the vehicle. You can limit the power of attorney to represent a person to transfer a car to a specific time period and location, but it always expires when the act is performed, in this case, the moment the vehicle is transferred.

Are you solving a similar problem?

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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