Disputes about illegal ownership arise daily in connection with the purchase and sale of cars.
Unlawful possession concerns cases where a person disposes of an object, for example by sale, which he or she cannot dispose of because a third party has a right over the object, either in the form of ownership or a limited right such as a reservation of title, a lien or a rental agreement.
Section 59 of the Danish Sale of Goods Act imposes strict liability on the seller towards the bona fide third party who has purchased the object in the expectation of becoming the owner, if it turns out that others still have rights over the car after the sale.
Unlawful possession can primarily arise when the person you are buying your new car from is not the rightful owner of the car. As a buyer, you can protect yourself from unpleasant surprises by checking the ownership in the car book before entering into an agreement to purchase, but it is a minority of buyers who actually do this – both among private and professional car dealers.
Illegality can also arise if the person selling the car does not have the proper authority to sell.
A car lessee sold the car to a professional car dealer. Part of the purchase price went to pay off the debt on the car, while the remaining purchase price was paid to the lessee, who used it as a partial down payment on a car in his own name. The car dealer then sold the car to a new buyer. It all happened at market price.
In this specific case, the car dealer was well aware that the person selling the car was not the same as the owner of the car, but the lessee convinced the car dealer that he had authority to sell. Because the car dealer did not obtain proof that the lessee had the proper authority to sell the car, the car dealer ended up in a very unpleasant situation. The original owner of the car is still the rightful owner of the car, despite the fact that it has been traded twice in the meantime.
The owner can therefore contact the person who now has the car and demand its return. The holder can then file a claim for compensation against the car dealer. Alternatively, the owner can choose to claim compensation from the car dealer instead of having the car returned. The car dealer can then continue the claim for compensation against the tenant, who turned out not to have the necessary authority, but it is in any case the car dealer who runs the risk that the tenant can and will pay.
It is not only the owner's right to the car that creates a violation of the right to own the car. A common form of violation of the right to own the car is that there are registered liens on the car.
Car garnishments are made when the owner owes money to a creditor that the creditor cannot pay. As security for the debt, the creditor can obtain garnishment of the debtor's car for the debt through the bailiff's court, and if the debtor defaults on the debt or is unable to pay, the creditor can put the car up for auction and have (part of) his debt paid by selling the car.
Attachment means that the owner of the car is no longer legally allowed to dispose of it. This primarily means that he is not allowed to sell the car or give it away.
The attachment must be registered in the car register to be secured in the event that the debtor nevertheless wishes to sell the car. If the attachment is not registered, it will be lost upon sale of the car, if the new owner neither knew nor should have known about the attachment. If, on the other hand, the attachment is registered, it will be transferred to the new owner. In that case, the creditor can demand that the new owner pay the registered debt or hand over the car so that it can be sold at a forced auction.
The attachment will be deleted again when the debt is paid. Attachments can also be deleted administratively by the bailiff. The requirement for this is that the car has been sold with retention of title, and that the seller takes the car back. If the seller can demonstrate that the car is worth less than the seller's receivable, the subsequent attachment will be deleted administratively.
If the debtor does not pay the debt, the creditor, with the help of the bailiff, can collect the car and sell it at a forced auction. The proceeds will go to cover the creditor's claim. If there are several creditors, the creditor whose claim is at the top will be the first to have his claim paid. If the value of the car is greater than the first creditor's claim, the next creditor will have his claim covered, etc.
Another option is for the debtor to voluntarily hand over the car to the creditor, who then sells the car in the open market. The advantage for both the creditor and the debtor is that the car will most likely be sold at a higher price than at a forced auction. However, selling the car in the open market is not without risk. In contrast to a forced auction, the liens on the car also exist after the transaction, which is why the buyer, as mentioned above, risks having to pay off the debt or hand over the car.
The only way a buyer can protect themselves from unpleasant legal surprises is to check the car's registration before buying the car, and only buy the car from the owner personally and not from someone claiming to have a power of attorney. This applies even if you buy the car from your best friend or a professional car dealer.
Imagine that you have bought a car for 200,000 DKK, and then someone shows up and demands the car be handed over because they are the rightful owner. If the owner's claim is justified, there is no other option but to hand over the car. After that, you can of course demand the money you paid for the car back from the person you bought the car from, but who is to say that the seller can or will pay you back the money? Even professional car dealers sometimes close their business, and if the seller refuses to owe you any money, you will be forced to take legal action against the seller to get your money back, which will entail additional costs.
So save yourself the risk of a lot of trouble and always check the car book before buying a car, regardless of who is selling it.
Information in the vehicle registration book is publicly available and can be obtained by checking in Car book.
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