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The 5 Worst Things You Can Do When You Sell Your Car in Oregon Featured

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Back Side of an Oregon Automobile Registration Back Side of an Oregon Automobile Registration (c) InsureSource Agencies 2013

Selling your car or truck in Oregon is a big deal. You've got to get the paperwork right the first time or you could pay the price later on. Here is a list of the worst things people do when they sell a car, truck, motorcycle or van registered in Oregon to a private party:

1. Forget to print the name in ink of the buyer of the vehicle on the back of the REGISTRATION and turn it into the Oregon DMV.

2. Forget to sign the back of the TITLE as seller, date, and print the name and address of the buyer.

3. Forget to clean out the car of all identifying paperwork.

4. Promising to extend your auto insurance to the new buyer giving them time to purchase their own.

5. Carry the contract to finance the purchase of a car and refuse to sign over the title until the car is paid for.

Let's look at these in in a little more detail.

 

1. Forget to print the name in ink of the buyer of the vehicle on the back of the REGISTRATION and turn it into the Oregon DMV.

We're talking about the REGISTRATION here. Not the title. The registration is that document you keep in the glove box in your car to show the nice police officer who the registered owner of the car is when he or she pulls you over. Yes. That document. It says who the owner is. It has the address you last gave to the DMV. It also displays the year, make, model and vehicle identification number (VIN) on the documents. It'll also indicate if the vehicle has been branded (e.g. reconstructed, flood damaged). It is YOUR RESPONSIBILITY to secure the name and address of the party to whom you sold the car and write it on the back of the REGISTRATION. You then must have him sign below his name and address to acknowledge the date he bought the car from you. YOU, THE SELLER, then have 10 days to turn in that registration signed by the buyer to the DMV. You can mail it or hand deliver it to the DMV.

I would estimate that fewer than 1% of the sellers of cars to private parties turn that completed document in to the DMV. If you didn't do it in your last transaction, you are not alone.

Here are the reasons why you want to complete that form:

  • The DMV recognizes there is a transaction pending and will acknowledge that you are no longer legally the owner.
  • The DMV will record the name of the buyer and will be anticipating the title to be exchanged probably in the next 30 days.
  • The proof that you turned in the registration will mark the time and date you are no longer responsible for any tickets, fines or criminal activity surrounding the use of that vehicle.
  • Law enforcement will use the information when making a stop of the new owner or driver to determine who is responsible for insuring and registering the vehicle.

I have had several insurance clients ask me for advice after receiving a summons, judgment, collection notice or even being arrested because the vehicle they sold months and even years before had been involved in a crime, accident, parking violation or had been towed. The court, government agency or towing company wants to get paid and the registered owner on record is the one who is going to pay the price. You don't have any control over whether the buyer of your vehicle will turn in the title or not to remove you as the registered owner, but you can disassociate yourself from responsibility for future acts involving the car you sold by simply complying with the instructions on the back of your registration.

2. Forget to sign the back of the TITLE as seller, date, and print the name and address of the buyer.

Oregon law requires the owner of a vehicle to immediately sign THE BACK of the title upon sale of the vehicle. You, the seller, must also fill in the DATE of the transaction. This date might just save your legal and financial life! Too many times the buyer will beg the seller to leave the date and buyer information blank. That might just be one of the biggest mistakes you make in your life. A lot of buyers are actually back alley dealers and to avoid the watchful eye of the Oregon DMV and the government agency overseeing the activities of car dealerships, they don't want you to date or complete the buyer section of the back of the title. Why, because they can take your car, fix it up and turn around and sell it again without the proper license or insurance required of legitimate dealerships. They might even talk you into giving them your registration so you don't turn it in to the DMV thus taking it out of your name and alerting the DMV of them as a buyer.

Don't fall into this trap! You could get sucked into an investigation and you could be held responsible for what might happen to that vehicle, the financial damages incurred by someone who later buys the vehicle in a non-legitimate transaction and other criminal prosecution if you are found complicit in a non-licensed dealer transaction. Please. If there is one thing you do when you sell a car that is more important than anything else, PLEASE SIGN, DATE AND PRINT THE NAME OF THE BUYER ON THE BACK OF THE TITLE! Every time.

You may argue that you've sold lots of cars that way and never had any problem. That the legitimate buyer eventually turns the title in and the your name eventually gets taken off the title. Well. You number might just be up and that the one transaction that comes back to haunt you might just be the next one. I've had insurance clients who have been arrested at their door step by federal law enforcement for their involvement in a bank robbery because the car that was used in the get-away was still titled in their name...years after the car was sold. And, they sold the vehicle to someone without signing, dating and printing the name of the buyer on the back and they didn't turn in the registration with the name, address and signature of the buyer to the DMV. Had they followed this step, the fed would have never been on their front door step and they would not have been subjected to hours of interrogation before being released to determine their involvement in the commission of a federal crime.

You want to make sure that the person who is buying the car is doing so with the intention of keeping the car for their own use. If the buyer is actually helping a daughter or son or will be putting the car in someone else's name, find out the name and address of the true buyer, the one who will eventually end up as owner of the car. Again, do not leave the buyer line blank. And, you need that name and address AND SIGNATURE of the final buyer on the registration to turn into the DMV.

Another client failed to turn in the registration with the buyer's information and didn't fill in the buyers name on the title. The car was abandoned or towed by the police two years after he "sold" the car. The tow company sued him in court because his name still appeared on the record as the registered owner. The judgment was for thousands of dollars. The cost of towing, storage, court and DMV transaction fees. He had to pay it. Costly mistake. Please don't forget to complete the back of the title in ink and turn in the back of the registration to the DMV with the buyer's name. Had my client done that, the towing company would not have had a claim in court against him.

3. Forget to clean out the car of all identifying paperwork.

When you sell a car, it is a very good idea to clean out the car thoroughly of any papers that may identify you as the possible owner or insured. The new owner may not have purchased insurance and may use your documents in a police stop to attempt to show proof of insurance. You might be called into an investigation of fraudulently providing false documents to a law enforcement officer. Please remove them.

4. Promising to extend your auto insurance to the new buyer giving them time to purchase their own.

Unless the buyer is a member of your household and an authorized named driver on your policy, the insurance on the vehicle legally ends per most contracts the second you sell the car as defined above. You should never promise to extend coverage to a buyer. Once you sign over the title, print the date and name of the buyer, the responsibility of insuring the vehicle at that moment passes to the new owner.

Suppose for a moment you have promised him to carry the insurance. You wait a week or two to turn in the registration to the DMV. Yes, you have signed over the title and left the buyer name and date blank. The car is still legally registered in YOUR NAME! And, yes, you are still responsible for insuring it. Now, suppose the buyer gets in an accident and causes serious damage or injury or both to someone else. You could be sued by the injured or damaged party simply because your name is still on the title and you have not turned in the registration, taking it out of your name. Harsh, yes, I know. But, lawyers and courts are really good at going after who has the most money. Now, to make matters worse, your insurance company finds out you "sold" the car thereby nullifying coverage under your policy. The car isn't yours any more even though it might still be listed on your policy. They may deny the claim and refuse to provide for you a legal defense because you were not the legitimate owner anymore.

See how messy this could get. It's just not a good idea to wait to turn in the registration, to leave the name of the buyer and date blank on the title and to take the car out of your name. And, for Pete's sake, don't promise to extend your insurance to the buyer. You don't have that authority! In fact, it's a really good idea to make sure the buyer has purchased car insurance or listed the car you just sold him on his policy.

5. Carry the contract to finance the purchase of a car and refuse to sign over the title until the car is paid for.

This happens all the time. You really think you are protecting your asset from loss by refusing to sign over the title to the buyer because the buyer hasn't paid you yet. Worse, you think your responsibility for insuring the car is over because you sold the car. WRONG! You are still the registered owner. You still have the responsibility and right to insure the car. The buyer is not the legitimate owner and most insurance companies won't or can't or shouldn't insure him because the contracts call for coverage only on cars he owns. So, you are in a true dilemma after an accident. Your insurance company doesn't want to pay if an accident occurs because the driver was not listed or authorized on your policy. And, the buyer wasn't truly the owner so the his new company will find out that he didn't have the title yet and hadn't registered the car in his name so the want to wash their hands of the claim. Who's going to pay?

The way you handle the sale of a car to a party who hasn't paid for the vehicle yet is the same way the banks, finance companies and car lots do it. You sign over the title but when you fill out the paperwork to register the car in the buyers name, you put yourself on the paperwork as SECURITY INTEREST. That means when the new title is issued it will have his name on it as registered owner and you are listed as the finance company. That gives you the authority to "repossess" the vehicle if he doesn't pay you. You can then force him to buy the insurance (because he is now the registered owner) and list you as loss payee making him get full coverage insurance. If he wrecks the car, you get paid first for the value of the car. Who fills out that paperwork? You do. Don't rely on him to do it. You must fill it out at the DMV or accompany him when it is completed. Once the loan is paid off, you sign the front of the title (not the back) where it says security interest and you give him the title and all is done.

Every sale of a vehicle in Oregon should be accompanied by a BILL OF SALE. That is a document that spells out the terms of the purchase. The bill of sale should always include:

  • Time and Date
  • Name of the Buyer
  • Name of the Seller
  • Year, make and model of the vehicle being sold
  • Purchase price and terms of payments if any
  • Signature of BOTH PARTIES

 A duplicate copy should be made so each party is leaving the transaction with an original copy. Why? Proof! A record of the transaction. It could save you a lot of legal and cost later on to establish time and date of when your responsibility for that vehicle ended.

 

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