Man billed $1,500 for vehicle he didn’t own, insurer says he still has to pay

When Darrell Nash sold his used SUV last spring, he thought the deal was done.

After all, the 66-year-old retired trucker who lives near Langley, British Columbia, describes himself as a “car guy” who says he has a lot of experience buying and selling vehicles.

A couple of months later, Nash says he was blindsided by a $1,500 towing and storage bill for a vehicle he no longer owned, thanks to what he calls a “scary loophole in the way vehicle transfers are handled.”

“It’s a problem,” Nash told Go Public. “A very strange situation… I didn’t know what to do.”

While Nash was in the hospital recovering from open-heart surgery in March, his grandson, with permission, sold the family’s 2004 Acura MDX to a stranger.

It wasn’t worth much. The old vehicle had more than 300,000 kilometers and had mechanical problems, so they sold it for $500 in cash. The buyer filled out the appropriate transfer forms, brought his own license plates, and left.

“Two grown people made a deal, shook hands, signed papers and transferred money… that should be the end of it… but it doesn’t appear to be that way,” Nash said.

About three months after the sale, the RCMP called. The vehicle had been found abandoned about 35 miles away, uninsured and still registered to Nash.

“I got a call saying this vehicle was in Surrey on the side of a road with no license plate,” Nash told Go Public.

“And I said, ‘Oh, I sold that car a couple of months ago and I have the papers for it.’ And he says, ‘Oh, so you’re good.'”

But it wasn’t.

SEE | A British Columbia man billed $1,500 for a vehicle he didn’t own:

British Columbia man receives tow bill for SUV he sold due to registration loophole | Publicize

A retired British Columbia trucker was left with a $1,500 tow bill for a vehicle he had sold months earlier because of what a legal expert says is a loophole in vehicle transfer laws that could leave almost anyone selling a vehicle at risk.

A couple of weeks after that police call, Nash opened a letter from a towing company demanding payment. Since the buyer never registered the vehicle, it legally still belonged to Nash.

“The towing company pretty much said, ‘Well, we’ll just send it to collections,'” Nash said, adding, “‘and you’ll end up paying for it because it’ll ruin your credit.'”

Loophole leaves sellers exposed

Experts say Nash’s situation could happen to almost anyone selling a vehicle in most of Canada.

Scott Stanley, an auto insurance lawyer and partner at Murphy Battista LLP in Vancouver, said Nash’s case exposes a serious loophole in most provincial vehicle laws, one that leaves honest sellers on the hook for someone else’s disaster.

He said the issue is simple: only buyers need to transfer the registration at the vehicle registration office. The seller doesn’t have to be there.

So if a buyer never completes the paperwork, the seller’s name remains on the record and, with it, responsibility for tickets, towing, insurance or possibly criminal liability, Stanley said.

Nash is not alone. Rob Fournier, an independent vehicle examiner in Langley, BC, says he believes many people skip confirming that their buyer completes registration.

“Most people just skip over that step, not realizing how crucial it can be.”

Stanley said the gap puts honest people at risk because they rely on buyers to do the right thing, without any system to ensure they do so.

He said the seller may be liable if the vehicle is involved in a crime, accident or “any type of mischief or damage that can occur when someone has a vehicle.”

SEE | How to protect yourself if you sell a used vehicle:

Sell ​​an old car? Here are some steps to protect yourself

Independent vehicle inspector Rob Fournier talks about how owners can ensure they don’t suffer any harm from selling an old car.

It’s different if you buy a car from a dealership. In British Columbia, for example, used car dealers typically have someone on site who completes the registration transfer before the buyer leaves.

Nash learned this the hard way.

Even with proof of the sale, British Columbia’s provincial insurer, the Insurance Corporation of British Columbia (ICBC), told him he was responsible for towing and storage costs.

He said he has not been able to locate the buyer and does not blame the towing company or the police. He blames the system.

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“They said until you have a seal it’s not a binding contract,” Nash said.

He said even his local insurance agent was shocked.

“My Autoplan dealer was horrified,” Nash said. “He told me he’s been saying for years that once you have the seller’s copy, you’re good. But it’s not true.”

The solution

Nova Scotia and Newfoundland and Labrador are among the few provinces that have closed the loophole. Those jurisdictions have a built-in safeguard that protects vehicle sellers, a system that experts say other provinces and territories could easily copy.

In most provinces, the seller fills out a paper or online form to transfer the title and then leaves the rest to the buyer, trusting that the new owner will register the vehicle in their name.

Many provinces recommend that the buyer and seller go together to officially seal the transfer forms, but do not require it.

But in those places that have closed the loophole, the law adds a crucial step: Sellers must submit the notice of sale portion of the registration certificate and send it to the registry of motor vehicles, indicating the name of the buyer.

That simple step instantly removes the vehicle from the seller’s registration, transferring responsibility to the new owner. There is no confusion.

“How simple is that?” Nash said. “I could totally get behind that. You would be protected, the buyer is protected, everyone is covered.”

Change is not on the radar

Fournier says the solution could easily be implemented in other provinces, but motivation to change things is lacking.

“It makes a lot of sense. I think it’s a great idea,” said Fournier, who acts as a consumer advocate for people buying and selling used cars or dealing with insurance claims.

Stanley agrees, saying a small change could prevent major headaches across the country.

“It seems to me that would be a pretty simple legislative solution. Many provinces have the same gap… It would be a simple solution to make it a mandatory transfer at the time of sale.”

In jurisdictions that have closed the loophole, the buyer and seller must sign a bill of sale or special transfer agreement and submit it to the vehicle registry, in person or online.

There is a deadline to complete this transfer, which ranges from 10 to 30 days, depending on where you live.

The stress was pretty intense for a while.-Darrell Nash

Legal experts say it’s an easy fix, but the CBC of the province under review (including BC, Alberta, Ontario, Saskatchewan and more) isn’t taking steps to adopt it.

In a statement to CBC News, British Columbia’s Ministry of Transportation said it is not considering any changes.

Stanley said that leaves too much responsibility on individual sellers.

“It doesn’t happen very often, but when it does, it’s a big problem for the seller because they have remedies to fix these problems, but that means hiring lawyers, paying a lot of legal fees, and often it’s easier to just deal with the cost of the damage rather than paying for [it]”.

For Nash, the experience has been stressful and potentially costly. Now he’s hoping his member of the provincial legislature can help.

“The stress was pretty intense for a while,” Nash said. “It’s a nightmare because of my age, I don’t need my credit rating ruined or legal fees, and it’s just not worth it.”

While Nash may ultimately get relief on his towing bills (that’s yet to be determined), he’s not off the hook just yet.

Until the law changes, you have a warning for Canadians who sell used vehicles privately.

“The car doesn’t leave my yard until it’s no longer in my name. That’s the rule now.”