Purchased a car, Moneybarn threatening to repossess due to previous owner's outstanding finance

what707

macman wrote: »

The contract you made with the vendor was in Scotland, so Scottish law will have jurisdiction.
Did not the ownership history shown on the V5C ring any alarm bells, with such quick reselling?

No. The seller said that he and his girlfriend had decided that the car was impractical and because he brought his three small children with him when he sold it, it seemed clear that such a small car was indeed impractical.

jonesMUFCforever

I'll just say one word 'GUMTREE' !! and nobody thought it suspicious?

My own opinion on the law is that the lender has ownership of the car and that nobody has a right to sell until the HP is repaid.
I think that the OP has been stitched up and will find it difficult to keep the car.

what707

Just spoke with the legal team with out insurance company (thank you for the suggestion Hermione Granger!) and they said that once we register the dispute with the finance company, they cannot repossess the car unless they have a court order.

DoaM

This was a private sale. There are two key elements that apply to private sales:

1. The goods are as described
2. The seller has good title to sell the goods

It seems that point 2 is the issue - as there was outstanding finance then the seller did not have good title. (Registered Keeper <> Owner)

Whether the feedback from the OP's insurer has any weight I've no idea.

what707

There's another key element, which is

if the person who is the first private purchaser of the motor vehicle after that disposition (the “first private purchaser”) is a purchaser of the vehicle in good faith without notice of the relevant agreement, the disposition of the vehicle to the first private purchaser shall have effect as if the title of the creditor to the vehicle had been vested in the debtor immediately before he disposed of it to the original purchaser.

I can't post the link on the UK gov site, but if you google the above text you'll find the complete legislation.

The question here is whether the person who sold it to us bought it in good faith, I guess. If he did, then I think he gained good title to the car, and thus sold it to us fairly. If he didn't buy it in good faith and then sold it on to us, I still assume that because we bought it in good faith we would qualify as the first private purchaser. This is the part I do not understand completely.

I am not from the UK so all of this is a bit confusing, because it seems to me that it would make sense to put the actual car owner on the log book, so if the finance company was indeed the owner it would have been abundantly clear.

I understand now that we should have run an HPI check (we didn't know about it). We took the car, with the seller, to a trusted garage and got advice from a mechanic who checked the MOT. And I guess all of this was very stupid on our part, but because we are honest people and we didn't see any red flags when this nice family man with this three children with him sold us the car at fair market value. But we did buy it honestly and in good faith, and I think the finance company is trying to come down hard on us and scare us, but their real concern is with the person who owes them money and illegally sold their car.

We've now run an HPI check and it was a conditional sale with a 48 month loan taken out in 2016 (this is on a 2008 Golf, mind). So it appears that it was the buyer before the one who sold it to us is the one with the financing.

My only question now is if it hurt us or help us to contact the person who sold it to us. I am not sure if it's better for us if he bought the car innocently or not. I am fairly sure he sold it on to us once he found out there was this financing issue, but that doesn't mean he didn't buy it in good faith.

waamo

This might be useful https://www.hpi.co.uk/content/outstanding-finance/buying-a-car-with-outstanding-finance-on-it/

wesleyad

jonesMUFCforever wrote: »

My own opinion on the law is that the lender has ownership of the car and that nobody has a right to sell until the HP is repaid.
I think that the OP has been stitched up and will find it difficult to keep the car.

That's not what the law says at all. The already quoted section 27 of the HP act shows that when bought in good faith the title can be passed on. The lender will then have to pursue the original debtor for costs. This has been tested many times in court the last few years and I've yet to hear of a case lost.

For example even this case where the defendant paid massively under the market value for the car, he still won:

http://www.carterlaw.co.uk/client-wins-repossession-dispute/

The only bad part for the OP is the lack of HPI check. That said I'd find it hard to believe that a court would insist every car transaction needs a mandatory paid HPI check, if that's the case it would have to be provided by the seller as standard.

Uxb

But most probably the T&C's of the HPI agreement has a clause forbidding the sale without their consent then surely no legal sale can occur and therefore the car has not been "bought" at all with or without in all good faith.

shaun_from_Africa

Uxb wrote: »

But most probably the T&C's of the HPI agreement has a clause forbidding the sale without their consent then surely no legal sale can occur and therefore the car has not been "bought" at all with or without in all good faith.

It doesn't matter if the T&C's of the HP agreement forbid the sale as the HP act is statutory legislation and this takes precedence over the T&C's.
This act clearly states that providing that the purchaser bought in good faith and with no knowledge of the outstanding finance then the effect of the sale would be the same as if the person selling the vehicle had the legal right to sell it.


"S.27 (2) Provides that where the disposition of a motor vehicle has taken place to a private purchaser in good faith and without notice of the hire-purchase agreement or conditional sale agreement, that disposition shall have effect as if the title of the owner or seller to the vehicle had been vested in the hirer or buyer immediately before that disposition"

Uxb

So why does anyone conduct HPI checks then?
Why does the HPI check system exist
What is the point of them?
You see, it would seem more sensible to NOT conduct any HPI check ever under any circumstances as you can then say you bought the vehicle without one which amounted to good faith and have good legal title.