outstanding finance

Ad Idem

Does anyone know if the factors acts are of any application in a situation where one buys a car with outstanding finance? i.e. a finance company is still the legal owner of the vehicle as the seller who sold it didn’t have title to pass in the first place.

I would imagine that if the seller didn't have the finance company's consent to sell the car the Factors Acts are of no use.

What do unfortunate buyers do in this situation? They would seem to be in a difficult position as they have no privity of contract with the finance company and therefore cannot get any details of the contract. They also seem to leave themselves open to an action in conversion from the finance company if they hold onto the car. But any action against the seller will usually be fruitless unless the seller is, if a private individual, a mark or if a company, SIMI registered. Usually any company in this position that is not with SIMI would fold over night if proceedings are brought and would begin selling again under the cloak of another limited liability company.

Any suggestions?

Maximilian

I would have thought it doesn't matter. Provided the buyer had no notice of the fact there was outstanding finance, he would be in the clear. The Bank would be limited to seeking damages from the seller.

If the registration documents showed the registered owner as being some Bank, then I think you would be on notice.

If that weren't the case buying cars would be extremely hazardous with huge potential for fraud.

GerardKeating

Maximilian wrote: »

I would have thought it doesn't matter. Provided the buyer had no notice of the fact there was outstanding finance, he would be in the clear. The Bank would be limited to seeking damages from the seller.

If the registration documents showed the registered owner as being some Bank, then I think you would be on notice.

If that weren't the case buying cars would be extremely hazardous with huge potential for fraud.

If there is outstanding finance (HP) then the seller does not own the car, and cannot legally sell it and the buyer is technical in receipt of stolen property and does not/cannot own it, the finance company would be well within their fights to reprocess the car since they still own it.

Reloc8

Actually there are specific statutory terms which govern and protect the position of a bona fide purchaser for value of a motor vehicle in those circumstances...time permitting I will find them.

Our man in Havana

Yes indeed, the only recourse for the bank is against the original person who signed the agreement. If the car is purchased in good faith the bank cannot repossess it.

Jo King

Reloc8 wrote: »

Actually there are specific statutory terms which govern and protect the position of a bona fide purchaser for value of a motor vehicle in those circumstances...time permitting I will find them.

Those only apply to vehicles sold by dealers. There is an warranty as to title implied by law. If there is outstanding finance the purchaser can sue the dealer from whom they bought the car. The owner of the car owns it at all times. The purchaser only gets a voidable title on purchase. Unless it is sold on before the transaction is avoided the purchaser is stuck.Buying a car on the street outside someone's front door is hazardous.

Our man in Havana

Would the bank have to put the receiver on notice? Can they seize the vehicle without notice and/or a court order?

dermot_sheehan

http://www.irishstatutebook.ie/1995/en/act/pub/0024/sec0064.html#zza24y1995s64

If vehicle is sold by dealer in ordinary course of sale, transfer to purchaser in good faith is valid.

Vehicle can be repossessed without court order but if more then 1/3 of hire purchase amount is paid it can only be for an interim period.
http://www.irishstatutebook.ie/1995/en/act/pub/0024/sec0070.html#zza24y1995s70

Ad Idem

The Consumer Credit Act doesn't apply here as the innocent buyer has no privity of contract with the finance company and certainly isn't privy to the Hire-Purchase agreement. Therefore the thirds rule of Hire purchase is of no application. The Finance Company can repossess the car at any time without notice to the innocent buyer.

The buyer of a car in this position leaves themselves open to an action by the finance company for conversion. The only option for the buyer is to seek an injunction pending the outcome of the case. In Hanley -v- ICC Finance Ltd the defendant sought to repossess the car and Mr. Hanley brought an action to seek return of the car.

The Court looked at the Factors Acts 1889. However this is only relevant where the true owner is aware that the seller (who is a mercantile agent) has the car for sale and "consents" to same. This consent is very hard to prove as the true owner will very rarely consent to their property being sold.

Therefore the buyer in this situation isn't equities darling and is stuck between a rock and a hard place. Bona fide purchaser for value isn't enough on its own.

The implied term as to title is a condition and not merely a warranty as stated in a previous post. If there is a breach of condition then the buyer is entitled to rescision of the contract and return of the purchase price. Or he can accept the breach and treat it as a breach of warranty and sue for damages instead of the purchase price. The case could also be run simply on the basis of a total failure of consideration. Consideration in a car case being title to the vehicle.

dermot_sheehan

Im interested how you think there's a requirement of privity before section 70 kicks in:

Where goods of any class or description are let under a hire-purchase agreement to a dealer who deals in goods of that class or description and the dealer sells the goods when ostensibly acting in the ordinary course of his business, the sale shall be valid as if the dealer were expressly authorised by the owner to make the sale:


Provided that the buyer acts in good faith and has not at the time of the sale notice that the dealer has no authority to make the sale

Ad Idem

gabhain7 wrote: »

Im interested how you think there's a requirement of privity before section 70 kicks in:

Section 70 deals with a situation where the lessee/hirer is a dealer and has a contract of HP with the finance company who owns the good.

If this dealer sells the good then the innocent buyer is protected.

However, the situation that I am talking about is where the innocent buyer is not buying from a dealer who has a HP agreement with a finance company.

To deal with Section 64. It only covers the hirer who has paid a certain portion of payments. It doesnt cover an innocent third party who buys the car from the hirer.

Section 64 Consumer Credit Act 1995
(1) Subject to subsection (3), where goods have been let under a hire-purchase agreement and one-third of the hire-purchase price has been paid or tendered by or on behalf of the hirer or any guarantor, the owner shall not enforce any right to recover possession of the goods from the hirer otherwise than by legal proceedings

kerryman10

I just found out that i bought a car with finance outstanding.:(

The car was bought privately and paid for with bank draft. The guy that sold it to me was not the registered owner.

The seller sent the reg. cert to the dept. of transport but it came back to me as I never signed it. The registered owner didn't sign either.
I now have the (unsigned) reg cert but have no contact for the registered owner (except the address on the cert). The seller won't return calls but i do know his address.

What do i do next???

Our man in Havana

Gardaí are your next port of call.

ceilishark

I have found myself in this situation this week. I bought my car privately 2.5 years ago and everything seemed fine until last week.

I got a letter from PTSB stating that this car was legally theirs, and to contact them as there is outstanding finance on remaining on the car. I have tried to contact the person that I bought the car off but so far have been unable to.

Eventhough I still have my receipt for the car from the persons company receipt book, I have been told that I will have to settle the outstanding amount myself. Is this correct?

Our man in Havana

Yes. You were had.

ceilishark

Our man in Havana wrote: »

Yes. You were had.

Does your original post not count?

"Yes indeed, the only recourse for the bank is against the original person who signed the agreement. If the car is purchased in good faith the bank cannot repossess it."

maximoose

ceilishark wrote: »

Does your original post not count?

"Yes indeed, the only recourse for the bank is against the original person who signed the agreement. If the car is purchased in good faith the bank cannot repossess it."

Afraid not, that would only apply if the car was purchased from a dealer. You bought this privately and the onus was on you to check if the car was on HPI or not.

I'd contact the finance co and see if you can negotiate a price to release title, they won't always be looking for the full balance from you.

Ms Minnie Mouse

Youch. I assume you paid cash then.

I know it's a little late and I know it costs a little bit of money but checks such as HPI etc really are worth their weight in gold when buying a second hand car privately.

Keep trying them, you might be able to negotiate something. I don't work in PTSB but I'm in the industry and know quite often finance companies are as accommodating as they can be...