Today I received phone calls from three Missouri consumers who purchased bad used cars. The common theme among all three callers was that when they “bought” the car, they did not receive a title.
I say “bought,” because you cannot buy a car in Missouri without the title changing hands. RSMo 301.210 is the governing statute and says in part:
It shall be unlawful for any person to buy or sell in this state any motor vehicle or trailer registered under the laws of this state, unless, at the time of the delivery thereof, there shall pass between the parties such certificates of ownership with an assignment thereof, as provided in this section, and the sale of any motor vehicle or trailer registered under the laws of this state, without the assignment of such certificate of ownership, shall be fraudulent and void.
The Attorney General’s office has started filing suits against car dealers that don’t turn over title at the time of sale, but the problem remains pervasive.
Why Don’t Dealers Turn Over the Title?
There are several reasons why a dealer may not want to, or be able to turn over the title to a vehicle. Regardless of why, failure to turn over title is a red flag that means you should walk away.
Some dealers will keep the title as part of a plan to do a Yo Yo sale. I plan to write extensively about the Yo Yo sale trap, (Editor’s Note: Read my Yo Yo Sales article Here) but in the meantime, you can read about them Here and Here.
Commonly, dealers cannot provide title because they do not have it. Often times, dealers are financed by floor planners. Floor planners act like the bank for car dealers and will write a check to an auction house or some other source of automobiles for the dealer. The auction house gives the car to the dealership and the title to the floor planner. When the dealer sells the car, he tells the floor planner and asks for the title. But the floor planner will generally not give the dealer the title until the dealer pays back a portion of the loan.
So, some dealerships may not have the money to pay their obligations and the floor planner, so the consumer has to wait in limbo. The dealer will rail on with excuse after excuse, but the truth is the dealer doesn’t have the title.
Sometimes it is even worse. The dealer will owe a floor planner a large sum of money. Rather than report to the floor planner that he has sold the car, the dealer just goes and finds himself a different floor planner to finance his future purchases and tells the consumer that the title is lost.
In some cases, dealers may not want to turn over the title right away because the title shows that the automobile has some form of defect – salvage, rebuilt wreck, or grossly different odometer readings that was represented.
Other times, the dealer will hold on to the title as part of a serial repossession scheme. The dealer doesn’t want the car’s ownership history to reflect that the same dealership has sold the car 5 times to different consumers. The dealer sells the car to people he knows cannot afford it, or people who are vulnerable. The first time a payment is missed, or the consumer cannot show proof of insurance, or any number of other traps, the dealer repossesses the vehicle.
Regardless of why the dealer isn’t turning over the title, it is bad news and means that the consumer is left with a vehicle that cannot be registered in Missouri.
If you have been sold a car and haven’t received the title, you need to contact an attorney immediately. The Missouri Merchandising Practices Act is a powerful tool to use against dealerships. Often times, bad deals can be unwound (because they were never legal in the first place) and in extraordinary circumstances consumers can win judgments against the bad dealers.