Swapped a car with outstanding finance
Discussion
Hi all.
I recently made a straight swap with my Audi A3 for a damaged Fiat 500. The Fiat is much newer than my Audi, but with the damage I deemed it to be worth about the same. At the time, I performed a MyCarCheck on the car to see that it wasn't written off, which it wasn't. The damage was purely cosmetic but I wanted to be sure.
What this check didn't reveal, was that the car was actually outstanding finance. I'll never be making that mistake again..
This was some weeks ago. I've now had the car fixed at a local bodyshop at my cost with the intention of keeping the car. Only now has the previous seller been in touch to say there is outstanding finance. I panicked and fully HPI checked to confirm this is the case.
I am now the third owner. The seller was the second owner for a short period. The finance is with the first owner.
I've been in contact with the finance company to check that they are interested in the car still, which they are.
From reading up on legislation, I believe I need to prove that I acquired the car in good faith.
http://www.legislation.gov.uk/ukpga/1974/39/schedu...
I have details of the advert screen-grabbed (no mention of finance), the V5 green slip, the seller's details, and the mycarcheck from the time. I also have various messages from the seller when we arranged to meet.
I want to keep the car, but now I don't know where I stand. I'll speak to a solicitor if I need to, but ideally this would be settled out of courts. The previous seller has no intention of taking the car back, and my Audi is apparently gone elsewhere.
Any advice would be more than welcome!
I recently made a straight swap with my Audi A3 for a damaged Fiat 500. The Fiat is much newer than my Audi, but with the damage I deemed it to be worth about the same. At the time, I performed a MyCarCheck on the car to see that it wasn't written off, which it wasn't. The damage was purely cosmetic but I wanted to be sure.
What this check didn't reveal, was that the car was actually outstanding finance. I'll never be making that mistake again..
This was some weeks ago. I've now had the car fixed at a local bodyshop at my cost with the intention of keeping the car. Only now has the previous seller been in touch to say there is outstanding finance. I panicked and fully HPI checked to confirm this is the case.
I am now the third owner. The seller was the second owner for a short period. The finance is with the first owner.
I've been in contact with the finance company to check that they are interested in the car still, which they are.
From reading up on legislation, I believe I need to prove that I acquired the car in good faith.
http://www.legislation.gov.uk/ukpga/1974/39/schedu...
I have details of the advert screen-grabbed (no mention of finance), the V5 green slip, the seller's details, and the mycarcheck from the time. I also have various messages from the seller when we arranged to meet.
I want to keep the car, but now I don't know where I stand. I'll speak to a solicitor if I need to, but ideally this would be settled out of courts. The previous seller has no intention of taking the car back, and my Audi is apparently gone elsewhere.
Any advice would be more than welcome!
The finance company cannot just come and take the car, it's not the USA.
Simply inform the finance company you have purchased the car, they will send you documentation that you complete showing you bought the car in good faith, for fair market value and have no connection to the (in this case) first owner.
Happened to me on a VXR I bought, auto trader check did not pick it up!
No hassle really, didn't even know until I came to sell a year or two later.
Simply inform the finance company you have purchased the car, they will send you documentation that you complete showing you bought the car in good faith, for fair market value and have no connection to the (in this case) first owner.
Happened to me on a VXR I bought, auto trader check did not pick it up!
No hassle really, didn't even know until I came to sell a year or two later.
Trexthedinosaur said:
The finance company cannot just come and take the car, it's not the USA.
I expect what you mean is that there is no legal basis for their doing so, not that they 'can't' do it. I don't know the legalities of it, but I should think it's not unknown for them to collect cars and then argue about it afterwards.swerni said:
Jasandjules said:
swerni said:
and............
Does that mean he can keep it or does that mean he can seek compensation from the person he purchased it from?
Sorry yes that does mean that the car should be his.Does that mean he can keep it or does that mean he can seek compensation from the person he purchased it from?
Is it not owned by the finance company still?
The wiki URL above (about bona-fide purchasers/equity's darling) isn't relevant here.
The protection that could apply for the OP stems from the Hire Purchase Act 1964, section 27 of which says that if a motor vehicle under a hire purchase agreement is sold to a private purchaser in good faith and without (actual) notice of the HP agreement, the buyer gets good title. Because the vehicle wasn't sold in the usual sense here though, it might well not apply. s27 provides a very specific exception to the usual rule that you cannot give somebody better title to something than you have yourself (i.e. you can't sell something that's not yours).
I'm no expert in this area but have just looked into it very briefly. Ordinarily I would have said that the vehicle that the OP gave in return was just as good consideration as cash so he'd be alright. Unfortunately though there is a high court case (VFS Financial Services Ltd v JF Plant Tyres Limited). The case was about a vehicle that had been given in satisfaction of a debt, rather than for cash. The court decided that this was not a sale, so therefore not a disposition for section 27 and the protection did not apply. I haven't read the case in full but it's probable that this narrow definition of what constitutes a disposition for s27 would be applied in the same way here.
OP, if I was you I'd be saying to the finance company that s27 applies and they no longer have an interest in the car, strongly. But be ready for the fact that it's not cut and dry in the circumstances and if they pick up on the above then you might have quite a fight on your hands!
Fluid said:
The HPI adverts currently on TV, show this happening. Are they using scare tactics, to get you to use their services?
Pretty much. If you are a purchaser in good faith you are protected.Bladebloke - a gift/exchange for debt is not a purchaser. That is a different ballgame.
Jasandjules said:
Pretty much. If you are a purchaser in good faith you are protected.
Bladebloke - a gift/exchange for debt is not a purchaser. That is a different ballgame.
I disagree. The commentary on the case says that if it's not for cash, it's not a sale. And therefore there's no protection under the act. Bladebloke - a gift/exchange for debt is not a purchaser. That is a different ballgame.
Your reference to equity's darling is not relevant because
1) unless the the exception in the act applies, the OP was not a purchaser of the legal title
2) the OP would be deemed to have constructive knowledge of the HP agreement
3) equity's darling, if that is what the OP was, would only take free of equitable interests. The finance company's interest would be legal, which binds the world.
If s27 does not apply, the legal maxim of nemo dat applies. A seller can't give somebody better legal title than he has.
With respect, you are oversimplifying the principle you refer to.
Edited by bladebloke on Monday 28th March 14:15
bladebloke said:
I disagree. The commentary on the case says that if it's not for cash, it's not a sale. And therefore there's no protection under the act.
Without reading the case, a bona fide purchase even applies to promissory notes (i.e. the same place Nemo Dat Quod Non Habet (or non quid habet I can never remember the right way around) came from). It is possible to obtain title to such things which are, to all intents and purposes, cash... The law of equity is not based in statute.
The only way I suspect a court would alter than is if the OP undertook a HPI which showed outstanding finance. The finance company has a remedy against the vendor of the car - whomever sold it to the OP.
ETA - a swap will be an interesting issue as well as in effect it is a barter of the equivalent price...A pity it was no a straightforward purchase.
Edited by Jasandjules on Monday 28th March 14:53
Jasandjules said:
Without reading the case, a bona fide purchase even applies to promissory notes (i.e. the same place Nemo Dat Quod Non Habet (or non quid habet I can never remember the right way around) came from). It is possible to obtain title to such things which are, to all intents and purposes, cash...
The law of equity is not based in statute.
The only way I suspect a court would alter than is if the OP undertook a HPI which showed outstanding finance. The finance company has a remedy against the vendor of the car - whomever sold it to the OP.
I'm not sure quite what we're disagreeing about. Are you still maintaining that the OP will be protected because he's equity's darling?The law of equity is not based in statute.
The only way I suspect a court would alter than is if the OP undertook a HPI which showed outstanding finance. The finance company has a remedy against the vendor of the car - whomever sold it to the OP.
Assuming not, his only protection is under the 1964 act. Which for the reasons mentioned above, might well not apply. The court, presumably quite deriberately, kept the definition of what constituted a sale which should benefit from the protection offered by the act very narrow.
As I said in my first post, I would ordinarily say that whether the consideration is money or money worth then that's a sale, but the case seems to say that's not applicable in these circumstances.
I believe that to benefit from the protection of an innocent buyer the OP would need to show that he took all reasonable steps to check the car out.
The fact that the OP does not appear to have done a proper HPi type check, reading the post it looks like he opted for the cheaper one, may in fact harm any defence he has if the finance company decided to pursue the matter.
The fact that the OP does not appear to have done a proper HPi type check, reading the post it looks like he opted for the cheaper one, may in fact harm any defence he has if the finance company decided to pursue the matter.
bladebloke said:
I'm no expert in this area but have just looked into it very briefly. Ordinarily I would have said that the vehicle that the OP gave in return was just as good consideration as cash so he'd be alright. Unfortunately though there is a high court case (VFS Financial Services Ltd v JF Plant Tyres Limited). The case was about a vehicle that had been given in satisfaction of a debt, rather than for cash. The court decided that this was not a sale, so therefore not a disposition for section 27 and the protection did not apply. I haven't read the case in full but it's probable that this narrow definition of what constitutes a disposition for s27 would be applied in the same way here.
HHJ Mackie made specific reference to a p/ex deal in paragraph 19 of his judgement - http://www.bailii.org/ew/cases/EWHC/QB/2013/346.ht...Red Devil said:
HHJ Mackie made specific reference to a p/ex deal in paragraph 19 of his judgement - http://www.bailii.org/ew/cases/EWHC/QB/2013/346.ht...
Interesting there is no defence applied of a bona fide purchaser.Red Devil said:
HHJ Mackie made specific reference to a p/ex deal in paragraph 19 of his judgement - http://www.bailii.org/ew/cases/EWHC/QB/2013/346.ht...
It does. Unfortunately for the OP though, it wasn't a part exchange, it was a straight swap. No money changed hands. So I think the most relevant part of para 19 is"The distinction may become more difficult when the value of the car to be traded in reaches or exceeds the price of the car being acquired"
after having said in para 18:
"I conclude that 'disposition' is limited to the specific types of transaction described in the section where the vehicle is transferred in return for money."
Interesting stuff, far from cut and dry on these facts. Not that this helps the OP
Edited by bladebloke on Monday 28th March 23:02
The OP did not buy it from the person who had took out the finance so the relevant first transaction was from the first owner to the OPs vendor, if that person paid cash, was not a trader and was un aware of the finance than they had clean title which they can pass to the OP, if they did not the OPs claim is against them.
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