If I’m going to buy a vehicle from a local dealership that a bank had repossessed and given to the dealership to sell, can the vehicle’s owner claim any right to it if they are in bankruptcy?

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If I’m going to buy a vehicle from a local dealership that a bank had repossessed and given to the dealership to sell, can the vehicle’s owner claim any right to it if they are in bankruptcy?

The process was interrupted when the dealership’s finance guy told me that the owner of the vehicle filed for bankruptcy. He said they could not sell me the car until this cleared up. Apparently the bank had repossessed the vehicle and gave it to dealership to sell. They had to put the sale on hold due to bankruptcy filing. Just a day later, the dealership called me to let me know that the issues have been resolved. Can I buy this vehicle safely? Can the owner of the vehicle, who is in bankruptcy proceedings or the bank or anyone else, claim the right to the vehicle? Anything I need to watch for in the paperwork?

Asked on June 2, 2015 under Bankruptcy Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

Unless the dealership can prove that a court allowed the repossession to go ahead (that a court vacated the "temporary stay"), it would be extremely risky to purchase the vehicle--since if the dealership is misinformed (or lying) and the stay has *not* been lifted, then they can't sell you the car, and the original owner can get it back from you, leaving you to try sue the dealership to recover your money. Do not  purchase unless you see court documentation; you should also speak directly to the bank yourself. Or better yet--don't buy this car at all, because that way, there is no risk. Purchase another vehicle.


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