Legal Question in Real Estate Law in California
We sold a car we owned outright to a friend with a very brief contract. The contract was signed and executed in California, but our friend has the car now in Arizona. The contract states the payment must be made on the first of each month for 60 months. It states that complete insurance must be maintained to pay for any and all (or full price) loss if the car is stolen or totalled.
Every month the payments is late. The insurance obtained is the least amount available, and only includes 2 drivers in the house not 2 others that are also driving the car.
The car was not registered in Arizona for close to 4 months after it was purchased.
There are also 3 outstanding photo radar tickets (in MY name, not hers) due to the lack of registering it.
Although we sent paperwork to CA DMV it has taken several trips and phone calls to get CA DMV to reflect we are only lien holders.
Needless to say, this has severed a very long standing friendship and we still need to have a resolution to the matter.
Is the contract enforceable under California or Arizona laws?
What is the procedure for getting our car back since it isn't being paid for on time, there are outstanding tickets where the car is scheduled to be impounded and the insurance isn't being maintained as required under our contract?
2 Answers from Attorneys
I am very hesitant to advise you how to proceed, for several reasons. First, the usual process for enforcement of motor vehicle financing is repossession, but the right to repossess is dependent upon a valid lien, and although the DMV has been convinced to record you as a lienholder, I can't be sure of it without seeing your contract with the buyer. Next, its enforcement in Arizona may invoke Arizona's laws on repossession, which may require something different in the way of procedure, notice, etc. I am pretty certain your contract is enforceable in California and and to be interpreted under California law, and it may also be enforceable in Arizona courts since the buyer has moved there and taken the car there, but repossession is an extrajudicial remedy. Finally, the financing and respossession of cars is regulated in California by, principally, the Rees-Levering Automobile Sales Finance Act, Civil Code sections 2981 through 2984.6, which is pages and pages of fine print designed to keep buyers from dealers from being taken advantage of by unscrupulous dealer lending tactics. Among other things, this law requires certain language in the financing agreement and, at least sometimes, certain notices to the buyer before repossession. I think you might come under this law because it may (or probably) cover private deals as well as dealer-generated transactions. Perhaps your best bet would be to contact a repossession company in the appropriate Arizona city, explain your situation in some detail, and ask what they would need from you to carry out a repossession and auction sale, or to return the car to your possession. This is probably not the first time these companies will have encountered a situation like yours.
The whole thing sounds like a giant scam to me. You should not have been allowed to transfer title if you had outstanding tickets that were unpaid. The fact that you mention that the car was impounded makes me think that you owe these tickets, and not the person you transfered the car too.
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