Let’s say you just sold a car. The sale went smoothly and you hand the buyer the keys and signed title. The buyer leaves with your car. However, the car is still titled in your name with the Department of Motor vehicle. How so you protect yourself if the buyer gets into a car accident and the vehicle is still registered in your name?
Are You Responsible for an Accident that Involved a Car that You Previously Sold?
As a Dallas car accident attorney, I get calls from people getting sued for an accident involving a car that they sold. Sometimes the buyer doesn’t transfer the title. Mainly because they don’t want to pay the taxes and fees. In fact, the buyer may even flip the car for a profit and sell it to someone else. That person doesn’t transfer to the title either. Meanwhile, a title is still registered in your name.
Then, one day, you get call or letter from an insurance company or lawyer. They want you to pay for damages for a car accident involving the vehicle you just sold. They are looking to you under the theory of negligent entrustment since the car accident was with a car that you used to own and is still registered in your name. I’ve seen situation like this come up years after a car is sold.
But you had sold it some time before the accident. The buyer never transferred the title. Now you are being pursued for the accident. Are you responsible?
The Simple Answer is “No.”
When you sell a car, you release all control of it. Therefore, you are not responsible for anything that happens after the car leaves your possession. But it’s not always that simple. Although you are not legally liable, proving your innocence is a different matter.
It may not be as simple as that.
Hopefully, you got a signed “bill of sale” and kept a copy along with the signed title. This will help you identify the person you sold the vehicle to as well as the date of the sale. Also, make sure you have the name, address, and contact information for the buyer. These items can help you prove that you sold the car.
Instead of a “bill of sale,” you can also use Texas Application for Title (Form 130-U), It has spaces where you would fill in the names, addresses, and telephone numbers of the buyer and seller, vehicle information, price or the sale, date of the sale, etc.
Reporting the sale to the Texas Department of Motor Vehicles
After the transaction is complete and the buyer leaves with the car, it would be smart to report the sale of the vehicle to the Texas Department of Motor Vehicles. There is a form you can use, or you can simply do it online. You can even get a copy of the online form and a receipt showing the date you reported the vehicle sale. All this information can be used to show proof of the sale.
Do Not Agree to Pay or Sign Any Agreement to Pay.
If you are contacted by an insurance company or their attorney, they will put a lot of pressure on you. They will even go so far as to say that you are responsible for the damages regardless of whether or not you sold the car. They will try to convince you that you are automatically responsible because the title is still in your name.
Don’t fall for it!!! But, most importantly, do not sign anything or agree to pay for the damages. If you do, then your agreement to pay may be enforced against you even if you are not legally responsible.
What if you can’t show proof of sale?
It still doesn’t mean you are responsible. However, the other party may not go away and leave you alone.
You have to picture yourself in court trying to convince a judge or jury that you sold the car.
If you have solid proof, then everything should be fine.
Here are some things you can do to protect yourself when you sell a car:
Get a Bill of Sale: It doesn’t have to be anything too fancy. Just a document that:
- Identifies the names, address and telephone numbers of the seller and buyer;
- The year, make, model, license number, and vehicle identification number of the car;
- The date of sale;
- Sale price; and,
- Signatures of the seller and buyer.
You can find many bill of sale forms online that you can use.
Fill out and sign an Application for Title: You can also use Texas Application for Title (Form 130-U), as a “Bill of Sale” since it has all the information in it anyway. It has spaces where you would fill in the names, addresses, and telephone numbers of the buyer and seller, vehicle information, price or the sale, date of the sale, etc.
File a Vehicle Transfer Notification: By reporting the sale to the Texas Department of Motor Vehicles, you are providing them with the proof of the sale along with the identity and contact information of the buyer. This will help you prove that you sold the vehicle.
Remove and keep the license plates: One other thing you can do is to remove and keep the license plates. This will force the buyer to register the vehicle in order to get new plates. Before the buyer leaves with the car, you can fill out and print a temporary permit that allows the buyer to transfer the vehicle without the license plates. It acts sort of like a temporary tag, but is only good for the one-time transport of the vehicle.
Keep Copies of Everything: Yes, it may be a hassle, but saving copies can prove to be invaluable if you ever get that dreaded call. Make sure you get a copy of the application and notification forms, as well as a copy of the front and back of the signed title. It would also be good to get a copy of the buyer’s driver’s license or state-issued ID for further identification.