“Do or do not. There is no try.” This famous quote from the diminutive Star Wars Jedi Master may seem like an unusual way to begin a column on transferring titles…and it probably is. However, let’s see if we can tie it in to a discussion of how, when and under what conditions a vehicle must be transferred.
The facts are these: If a vehicle is sold by a dealer, the title must be transferred into the customer’s name or the deal must be unwound, period. It is one or the other. Why?
First let’s look at the more common scenarios where this could be an issue. After all, we all know the dealer must transfer the title on behalf of the customer (with the exception of export, out-of-state sales and vehicles with a gross weight in excess of 11,000lbs). So what would motivate a dealer to NOT transfer a title?
In the BHPH world, the obvious situation is a first or second payment default. Why, the reasoning goes, would a dealer transfer a car they are about to repo, or already have repo-ed? More on that in a moment.
In the retail world, the situation is more likely to revolve around a customer’s failure to provide stips (paycheck stubs, proof of address, etc…) to the finance company after the contract is signed. In that case the finance company rejects the deal and the dealer never gets funded. The end result is essentially the same; why transfer when the deal is dead and the vehicle must be repo-ed?
The answer to, “Why transfer?” is this: A sale either has or has not occurred. If a sale has occurred, state law provides that a dealer must collect and remit motor vehicle sales tax as well as apply for registration and title on behalf of the customer. In the scenarios described above, a sale has clearly occurred.
Transfer or Unwind:
There Is No Try
By Danny Langfield
Deputy Executive Director
Texas Independent Automobile Dealers Association