Business & Real Estate

How to deal with a car dealer who fails to deliver the title

I am a local resident and business owner, and my law office, which currently employs three attorneys, handles consumer issues on a statewide basis.

Most of our matters revolve around automobile issues, ranging from lemon laws, where the manufacturer makes a bad car, to auto fraud, where a selling dealer rips off a consumer.

  I find the internet to be a bit of an odd place, for any number of reasons. Years ago, I blogged about the rule requiring the seller of an automobile to make sure that it passes a smog check (in most instances) prior to the sale. It seemed like a nothing blog until about a year later, when it appeared that every single person in the state of California with any type of smog-check problem contacted my office. The activity has since, thankfully, died down.

Following up on this instance, approximately 18 months ago I was featured in an NBC Bay Area story about a client of mine who had spent nine months trying to get the license plates and title to the Acura she had purchased from the nation’s largest automobile dealership chain, AutoNation. Again, while it was cool for my kids to see me on TV, I thought nothing of this four-minute spot.

Fast forward to around September of last year and calls started to come in to my office regarding cars that were sold in California to consumers, and for one reason or another dealers simply were unwilling or unable to get the license, tags or title to the consumer. At first, I’d get a call a week, then two a week and currently, not a day goes by that I do not get such an inquiry. I am still, as you might be, quite surprised at how often this happens. If I hear about one daily, there are obviously many more that happen that I do not hear about.

The risks of taking short cuts

The reasons for these cases seem to be many, ranging from sloppy paperwork inside the dealership to lost records at the DMV and out-and-out fraud. As an attorney, while I like to get to what is in fact behind the failure to deliver the title, the only thing that really matters to me is that some business has sold my client something it cannot legally deliver ownership to. This is a simple concept: If you are going to sell something to someone, you need to be able to deliver full and complete lawful ownership to them.

As I began to handle these matters more often, I found one common thread to the failure to deliver the title: Someone – usually the selling dealer – tried to take a short cut somewhere along the line.

I also found a little-used law in the California vehicle code, section 5753, that requires car dealers to deliver the title to a consumer no more than 15 days after obtaining full payment for the car. Failure to do so, after demand by a consumer, could lead to a $25-per-day fine up to $2,500. If dealer fails to pay that amount within 60 days, the amount can be tripled up to as much as $7,500. This law, which should get a dealer’s attention, also requires that the dealer pay for a consumer’s attorney fees.

Other than the vehicle code section, a standard lemon-law claim for breach of warranty of title comes into play here, which also may call for up to triple damages of the cost of the car as well as attorney fees.

All in all, these title cases can work out very nicely for the consumer who is patient enough to work his or her way through the system. Consumers do not have to go it alone, as the laws protecting them in these matters require, in most cases, that the bad guy suffer the consequences of taking those short cuts.

Scott Kaufman is a consumer-protection attorney and founder of California Lemon Lawyers. For more information, call (408) 727-8882 or visit his office at 140 Third St., Los Altos.

How to deal with a car dealer who fails to deliver the title

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