Can a private lienholder repossess even though he refuses payment?

I purchased a vehicle from an acquaintance and have the title and registration in my name with him as the lienholder. Verbally agreed to a monthly payment with a witness. In my state, a verbal contract is legally binding. No other paperwork was signed besides the paperwork to transfer the title and registration in my name. Said lienholder accepted the first month of payment in December then went overseas for 2 months was only supposed to be gone one month. I sent through an online transfer for the second monthly payment so I could have documentation of the transfer and told him to let me know when he had accepted it. A few days went by and I received an email from my bank that the transfer had not been accepted, so I attempted to contact him but received a notification that my message had been blocked. I attempted to contact him a few more times but still got the same message, that my communication with him was blocked. A little over 2 weeks later, and after the transfer had expired because it expires after 14 days of not being accepted, he contacts me with no explanation for the blocking or of where he had been for the last month and gets upset that there is no money in his account. I explained what happened and told him I would send him another transfer again on Monday and he continued to get even more upset and said that the $150-300 a month we had previously agreed on was not enough and that he wanted $200 a week, so $800 a month. I refused, stating that was not what we had agreed on and then he demanded the car back. He wanted me to voluntarily surrender the vehicle disguised the wording, hoping I would not know better and I told him I would not, that I would continue giving him the payments that we had agreed on. Keep in mind, he originally sold me the car for $2,100 and then increased it to $3,100 but I let that slide because it was still a good deal. He then got enraged and threatened legal action against me. He is refusing my payments, I have since sent another one through and it’s about to expire because he refuses to accept it. I’ve been on time with my payments and my insurance has not lapsed once, but he’s refusing to accept my payments. I feel like he was hoping to scam me because throughout this whole discussion he was angry that I had not just deposited cash directly into his bank account while he was MIA overseas. What can he legally do? He’s technically refusing payment and is in violation of our original contract but since he’s refusing payment it could make it appear that I am in lapse. I have documentation for everything and it’s all printed out and stored safely, but I’m also worried because this is my only means of transportation and I was doing everything right and on time, but he doesn’t want my money, he just wants the vehicle back.

Asked on February 22, 2016 under Business Law, Texas


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

He is not a lienholder if there is no written security agreement giving him a security interest in the car and the right to possess: while you are correct that an oral (that is the better term than "verbal") agreement is enforceable, selling someone property (e.g. a car) with payments over time does *not* by itself create the right to repossess the property unless there is an actual security. All it creates is an agreement to pay certain amounts in exchange for a car. Rather, he certainly has the right to sue you for the money you owe him, if you are behind on payments, but that is his recourse: not to simply repossess. Rather, he has to sue you and get a monetary judgment in his favor, if you owe him money; then if not paid, he could convert that into a lien.
Furthermore, he can't refuse payments--he has to accept them since his cause of action is for money. Or rather: he can refuse them, but can't use his own refusal as grounds to hold you in breach. 

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