I sold my car and it was involved in an accident…

Question:  I sold my car to a guy and got a bill of sale.  A year later, the car was involved in an accident.  I am now getting letters from insurance companies and attorneys because my name is on the title.  What do I do?

Robert’s Answer:  The reason you are being contacted is because the vehicle title was never registered in the new owner’s name.  That is probably because the buyer didn’t want to pay the taxes and registration fees.  So, your name is being dragged into this on the theory of negligent entrustment.

Since you were not the driver and if you have proof that you actually sold the car, then your should be okay.  But that doesn’t mean you can ignore the issue and it will go away.  You might even want to notify your insurance company of the situation and see if there is something they can do to help before things get out of hand.  If a lawsuit gets filed, then you will probably be served with court papers.  If so, then you have to be prepared to present your case and defend yourself in court.

The next time you sell a car, make sure you take down all the information on the buyer: name, address, telephone number, date of sale, etc.  Then there is a form that you can file with the Texas Department of Transportation where you can report the sale of the car.  That will, at least, make a records of the sale in case the buyer doesn’t register the car.

4 thoughts on “I sold my car and it was involved in an accident…”

  1. Would this recommendation hold true if the car that was sold was simply abandoned and towed to the impound lot?

  2. I sold my car to my nephew and five days later he was involved in a DUI accident which caused bodily injury. I released liability at the Department of Motor Vehicle, however, I was informed that it can take up to 30 days to show in their system as they are outsourced.

    At the time of the accident I had insurance, however, I did tell my insurance company the date that the car was sold and to remove it from my policy, thinking that my nephew had his own insurance.

    Now, the insurance company is telling me that they may not be liable.

    Please help.

    1. Make sure to hang on to any paperwork evidencing the sale and transfer of the vehicle. When you say you “released liability” at the DMV, I assume you filled out and filed a “notice of transfer” form notifying the DMV of the sale. That’s good. Everyone should do that when they sell a car. When it gets posted on the DMV records, it will reflect when you signed it and when it was filed.

      As for your insurance company, if you notified them that you sold the car prior to the accident, then they may not provide coverage especially if they took it off the policy at your request.

      Your nephew may have coverage with any insurance he had at the time. Since he bought the car within 30 days before the accident, then the vehicle may be covered as a “newly acquired vehicle.”

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