Buying a used motorbike on Craigslist with the title to be mailed after?
May 18, 2014 7:51 AM   Subscribe

I'm considering purchasing a used motorcycle from a Craigslist seller (in Virginia/Washington DC). There is a lien on the title which he is to pay off after purchase. Am I being naive?

Hi guys. Thanks for reading.

I've done a fair bit of research about this, and it's a bit frustrating because while this is a very common issue, it's apparently also a common scam with used motorcycles on Craigslist. It's worth noting that motorcycle in question is for all intents and purposes my "dream bike", so I want to be doubly sure that I've considered the various ins and outs of the situation before I make a decision.

The seller is located about 3.5 hours away from me. I believe he lives in northern Virginia where the motorcycle is registered, but he may live in DC proper. The bike is a 2013 Suzuki GSX-R 600 with only a couple thousand miles. We have agreed on a price of $8,000. As is apparently very common on craigslist, the only issue with the bike is that he is still making payments on the bike. He says that I can give him the money, and we will complete a bill of sale at a bank and have it notarized ("this should be the proof that you bought the bike"); then he will pay off the lien and the title will be sent to him within 5 days at which time he will express mail it to me. I asked him if we could just pay the balance of the loan off in person to have the lien removed so I could ride away with the title, but he said that the finance company is located in Ohio as far as he knows, and that he has checked whether they have a local office and they don't.

He is articulate in his emails and has been very communicative. He provided me with a phone number a few emails into our conversation (though I've not yet had need to call him). I tend to be a bit untrusting of people, and there is nothing about him in our communications thus far that I've found to be sketchy or which has made me uncomfortable. My only fear here is simply never receiving a title (taking the obvious precautions against being robbed with that kind of cash on hand). Perhaps the bike has been stolen and rebuilt? Perhaps he's just going to wait a few days and mail me a title which still shows a lien? I'm not sure what exactly could wrong, but in perusing the internets, people seem to frown on these sorts of transactions within the motorcycle community.

My girlfriend is confident that as long as we are able to meet him at his actual residence to check out his bike and get a notarized bill of sale which specifies that he is to pay off the balance of the loan and mail me a non-salvage title and a lien release, as well as checking the bikes registration against a photo ID of his, that should be sufficient to protect ourselves. But is that enough?

In truth, I don't know much about any of this. I suppose my questions are as follows:

1. Are we able to write specific stipulations/details on the bill of sale and have that notarized as a contract of sorts (my intention being to clearly represent what it was that the parties were agreeing to buy and sell with regards to the condition of the motorcycle and the title being clear & non-salvage).

2. Is there any way (apart from the pre-purchase inspection) to verify that the bike is not a salvage/rebuild without seeing the title?

3. Is there anything else I haven't thought of, or some other way in which we can be irrevocably scammed?

Following my own logic, I do feel that checking a photo ID against the bikes registration, and getting the notarized bill of sale should be sufficient, so long as there is a clear indicator there of what we are receiving at the time of the sale, and what we expect to receive shortly after (which, again, is a non-salvage and lien-free title for the bike). I'm just not sure whether the bill of sale alone is an appropriate document to encompass all of that information. I'd really like to feel that I have something to stand on if weeks pass and I never receive a title and the guy disappears somehow.

Thanks very much for your help!
posted by austere to Law & Government (15 answers total)
Wow, I totally wouldn't do this. I'd ask for the name of the lien-holder so you can inquire yourself if there are any places locally where you could meet and discharge the debt. If that is not possible, use an online escrow company - you put the money into the escrow account and the escrow company facilitates payment to the lien-holder.

So what if he has something notorized that says that he's selling you the bike? This mostly sounds like a setup to a difficult question about small claims court litigation. Do you really want that kind of headache on your hands? Here's another fun question: what if he has more than one lien on the bike? I'd strongly recommend if you do go ahead with this insisting on getting a lien release stating that there are no further liens on the vehicle.

If the guy acts sketchy about this or reluctant I'd totally bag the whole deal. This sounds very much like common scams on craigslist, as you mentioned in your question - and as my granddad would say "If it walks like a duck and quacks like a duck, you probably don't have a cow".
posted by arnicae at 8:17 AM on May 18, 2014 [8 favorites]

A bill of sale is not a title transfer, and I don't think you legally own the bike without the title. I, personally, would not do this, but I'm also the type of person who only buys cars from dealerships, being fully aware that I pay a premium for that over sales by owner.
posted by Ms Vegetable at 8:20 AM on May 18, 2014

Another vote for "no".
posted by Chocolate Pickle at 8:39 AM on May 18, 2014

Very simple--you do not want to do this without assuring the transfer of the title at the time the cash moves from you to him. This can be arranged by escrow--While the sellers intent may be honorable it is the actual execution of the transaction that is important . Too many unforeseen possibilities
posted by rmhsinc at 8:41 AM on May 18, 2014 [2 favorites]

What's to stop the guy just taking your money and never giving you anything?
posted by katrielalex at 8:44 AM on May 18, 2014 [2 favorites]

what rmhsinc said. This is how real estate is sold (the lien is paid off basically by the sales price and that's what allows for immediate transfer of free & clear title, protecting everyone with an interest in the property) because you can't transfer title if there is a lien--the lien remains superior in interest to everyone until it is satisfied and released--and the proposed transaction does nothing to effect or guarantee the release of the lien, which is what you need to own the bike.

Personally, I would not accept a promise of a free & clear title some point in the future in exchange for my 8K, which is all you are getting: the promise--even with a notarized bill of sale. The seller may well be trustworthy and may absolutely use your money to pay off his loan and release the lien. But a lot can go wrong and you could end up with nothing. You might be able to sue the guy successfully, based on your bill of sale, if you don't get a free & clear title eventually, but it won't be cheap and it won't be easy.
posted by crush-onastick at 8:48 AM on May 18, 2014 [1 favorite]

When I bought a car that had a lien on the title, we met at the bank, and the bank did a bunch of paperwork, and it all went fine. I would only proceed after seeing the title, and requiring a closing at that institution. Your own bank may be able to advise you on the appropriate forms. Dream bike at an okay price? Strong likelihood of a scam. An honest seller won't mind when you tell them you want to transact the sale in conjunction with the lien holder.
posted by theora55 at 8:49 AM on May 18, 2014 [1 favorite]

By the way - I buy ALL my vehicles used, and almost all from private owners. But I do my homework, have the vehicles inspected by the dealership, and choose the right seller and the right vehicle. So I'm not against buying used from a private seller, I just think you have to do it in a smart way. I'm frequently tempted by the deals that seem too good to be true - the perfect package, the perfect miles - but I try to remind my id that if they seem too good to be true, they often are.
posted by arnicae at 9:54 AM on May 18, 2014

How much is the lien? Less than 8k, I'm guessing.
Let's say its $4k as an example.

Tell him:

Ok. I think $8k is fair. But it also has that $4k lien on it. So how about if I pay you $4k, and take of the lien myself? We could go to the lien holders right now, and I'll pay it off in front of you, after I sign all the docs. How about it?

And that's it.

And of course, everything is verified before any money changes hands, or signatures are done.

Enjoy your gsxr!
posted by hal_c_on at 10:25 AM on May 18, 2014

after we die, we will be transported to a new world full of love and trust where everyone acts in good faith, and one can rely on a seller with cash in hand to pay off an encumbrance, without the need for an escrow company.

unfortunately, this is earth. don't do this deal the way you have described.
posted by bruce at 10:28 AM on May 18, 2014 [2 favorites]

I tend to be a bit untrusting of people, and there is nothing about him in our communications thus far that I've found to be sketchy or which has made me uncomfortable.

You cannot know for certain that he is the only person on the receiving end of the email. Even if he is, he could be an incredibly skilled con artist who knows every psychological trick in the book on how to gain someone's trust.

Please don't move forward.
posted by invisible ink at 11:21 AM on May 18, 2014

No and NO! Judge Judy features several cases every week involving Craigslist vehicle sales and lien/title transfer issues. So many trusting buyers ended up finding out that after paying X amount they never legally owned said vehicle... and quite often the vehicle in question turns out to have been stolen at some point, and the poor trusting schlub who bought it in good faith with the title to come at a later date ends up in jail. According to JJ, a notarized bill of sale means nothing.
posted by Oriole Adams at 11:22 AM on May 18, 2014

I bought a Ducati from a dude across the country (I couldn't resist -- it came with a free cross-country ride!) He still had a loan on the bike, so when I flew out, he picked me up at the airport, we looked at the bike, then we drove over to his bank, where I paid off his loan and gave him the difference in exchange for the title and a release from the bank, and then back to pick up the bike.

That's the only way I'd do a transaction like that, and I wouldn't recommend doing it any other way. If he balks, then something is hinky. It's not actually his bike, or there's some other encumbrance on it, or something.

Don't offer to take over his loan, and don't agree if he suggests it.
posted by spacewrench at 12:49 PM on May 18, 2014 [2 favorites]

So, I've actually done transactions on motorcycles a couple of times this way, and it was never a big deal - we just decided to trust each other and that was that. Suggestion here if you're really worried:

Call around to a couple of bike dealers and see if they'd be willing to handle brokerage/escrow services. Most dealers can and will do consignment for 10%, which is a lot in this case, but maybe they'd come down a bit on the fee since it's a one-time transaction and the bike isn't really being done on consignment? If you're going to need some parts for the bike or some accessories, perhaps commit to buying those things from that dealer. They do better on accessory/parts sales than they do bikes.

It will cost you more to do it that way, but it depends on what your threshold is for feeling secure.

One more thing - depending on WHO the lienholder is, they may have an escrow service for exactly this process. Talk to them.

Third option is to wait and find one with a clear title. Suzuki made a TON of GSXR 600s - another one will most assuredly come along.
posted by Thistledown at 7:33 AM on May 19, 2014

I just last week encountered this very situation with a car I bought. In that case, the seller had a loan from the manufacturer (like GMAC) that was just a few thousand less than the purchase price. Here's how we did it:

1. Seller got a "10-day payoff" number from his lender, along with instructions on where to send the final check. He sent me that info.

2. I made a bill of sale that listed seller, buyer, purchase price, and specific allocation of purchase price between lien payoff and cash to seller. I included a term in there where seller swore that was the only lien/encumbrance on the title and promised to indemnify me for costs and expenses if there were others. We both signed and dated the bill of sale to establish the sale of the vehicle. I figured that the bill of sale would hopefully keep me out of trouble if I got pulled over on the way home, in that I could establish that I had just then bought the vehicle and was transporting it home.

3. We went together to my bank, where I got 2 cashier's checks - one for the payoff amount to the lienholder and one for the balance to the seller. That made the seller happy in that he saw that I was indeed paying full price, and it was good money as it came right from the bank counter.

4. I drafted a letter to the lienholder (signed by the seller) saying "this is the final payment for the car; please send lien termination information to me and to AgentRocket." I had a pre-paid FedEx envelope ready to go, and we slipped in a copy of the letter and the final check. We then went together to a FedEx box and dropped it in.

5. I took the car home with me.

You still have to trust the seller to make this work, as he could invent a payoff number or lender, or refuse to actually mail the title when it arrives. But I'd suggest that you should talk to and develop some level of trust in ANY seller, particularly if you are buying on Craigslist. If you have a decent sense of things, your gut will get you there 90% of the time.
posted by AgentRocket at 10:38 AM on May 19, 2014

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