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1.2.11 Stolen Vehicles and Defective Title

A car sold to a consumer can have a defective title for any number of reasons. One is that the car is stolen or the vehicle identification number is fictitious. Another is that preexisting liens are not satisfied or the title was never transferred to the consumer. Sale of a car with defective title presents the consumer with a number of special legal claims.

  • • A discussion of a dealer’s failure to disclose that a car has been stolen is found in § 2.1.8, infra.
  • • The nature of a car’s title is described in § 2.4 and Chapter 3, infra.
  • • How to investigate a defective title is examined in §§ 2.2–2.5, infra.
  • • Automobile auctions are examined in § 2.6.4, infra.
  • • Defective title will breach the Uniform Commercial Code’s warranty of title. See § 9.2.2, infra. Defective title may also involve a breach of implied or express warranties, which may lead to revocation of acceptance, withholding of installment payments, and a claim for damages, even if the seller had no knowledge of the defective title. See § 9.2, infra.
  • • A breach of an implied or written warranty in a defective title case may also lead to a Magnuson-Moss Warranty Act claim, which would provide for attorney fees. See § 9.2, infra.
  • • Another way to challenge defective title is under a state UDAP statute, which will often provide attorney fees, minimum, multiple, or punitive damages, and which may not require proof of the defendant’s intent or knowledge. See § 9.4, infra.
  • • Defective title may involve common law fraud, which may lead to punitive damages. See Ch. 8, infra.
  • • Sale of a car with defective title may violate a state titling statute, which may void the sale. See Ch. 3, infra. It may also violate a state’s automobile dealer licensing statute or regulations, which will either provide a cause of action, leverage with the dealer, or an indirect cause of action under a UDAP, warranty, or fraud claim. See § 7.7, infra.
  • • Sale of a car with defective title may also violate the federal or state RICO statute. The federal statute provides federal jurisdiction, attorney fees, and treble damages. See § 9.5, infra. The state RICO statute may provide similar remedies in state court. See § 9.6, infra.
  • • How to litigate a defective title case is examined in Chapter 10, infra, including: advising the client, who to sue, what claims to plead, jurisdictional issues, res judicata, class actions, evidentiary issues (such as how to introduce evidence of the defendant’s misconduct against other consumers), trial of defective title cases, damage issues, settlements, attorney fees, and collecting judgments against the defendant, the defendant’s surety, related lenders, and auction companies.