I found my dream crotch rocket...

June 12, 2007 11:51 AM

I found a motorcycle I want to buy on craigslist. The listing says, "I have the titles for both of these bikes with a lean on them from kawasaki credit through HSBC. Therefore, when you buy you get the title but it will take a week or two to get the lean release b/c the money I get is just going to pay off my loan." Is it just me, or does this sound sketchy? How do I do this legally, while protecting myself?

I could give this guy $2200, and he gives me the title, but what is to guarantee that he ACTUALLY pays off the lien? FYI, we're both located in St. Louis, MO.

Here is the ad

Help or suggestions are appreciated!

posted by misswiss to Work & Money (19 answers total)

Ask him if he would hand over the title if he could observe you sign and mail a money order to the lien holder. Or even better, maybe you could pay off the lien at a branch of a HSBC bank.
posted by exogenous at 11:57 AM on June 12, 2007

No, it's not just you - it sounds sketchy.

Granted, I know nothing about motorcycles or loans and have never made any large purchases off of craigslist.... but yeah, to me it sounds sketchy.
posted by Zephyrial at 11:58 AM on June 12, 2007

In MA, in order to sell a vehicle that was under manufacturer financing, I had to pay the thing off first, then get a letter from the finance company so I could get a title that didn't refer to them.

I wouldn't give him a dollar until he can offer you a clean title. AFAIK, it's not within his rights to sell the thing until he pays it off.
posted by rxrfrx at 12:00 PM on June 12, 2007

And he can't pay it off until he sells it. See the problem?
posted by smackfu at 12:03 PM on June 12, 2007

I've sold two cars in similar circumstances. Several potential buyers walked away because they didn't trust me.

I took the (eventual) buyers with me to the bank and to FedEx so they could witness all the subsequent paperwork being taken care of. After a week, the release paperwork arrived and we met again so I could hand it over.

I think you're just going to have to discuss it at length with the seller and see what reassurances they offer. If you get any bad vibes, don't do it.
posted by daveleck at 12:03 PM on June 12, 2007

Best answer: This is worse than sketchy; it's just not how these things are done.

The way it is done is to subtract the amount of the lien (not lean) from the seller's asking price of the bike. If the bike is for sale for $5000, and there is a $1000 lien, the result is $4000. So, you give HSBC $1000 to pay off the lien. HSBC in exchange gives you a certificate of clear title. Meanwhile you give the seller $4000, in exchange for the title on the bike. Now you own the bike with the clear title and you're out $5000.

If you give the guy $5000 for the title on the bike, you've just taken possession of the security on the existing lien. Effectively, then, you've taken possession of the lien; even though it may be the seller's responsibility to pay it off, if he doesn't do so the bank will just come seize the bike - and they'll seize it from you, not from him. That's why it's the buyer's responsibility to make sure (CAVEAT EMPTOR, let the buyer beware) that the title on the thing he's buying is clean!

The seller no longer has any incentive to pay off the bank once he has your $5000 in hand and you should expect that he will not do so.
posted by ikkyu2 at 12:16 PM on June 12, 2007 [2 favorites]

There's a lean on the vehicle, because he has a loan. What should happen, is you should go to the bank that has the lean with him, and then do some paperwork, which will sign the title over to you. AFAIK, this is fairly standard stuff when someone finances their vehicle.
posted by !Jim at 12:18 PM on June 12, 2007

When my dad sold me his mini-van, he had to do something similar. I would try to work out some sort of system with the seller to ensure you get the cleared title.
posted by drezdn at 12:20 PM on June 12, 2007

So to sum up, either the guy doesn't understand how things are done, or more likely he's trying to scam you. Don't do the deal the way he's offering to do it; offer to do it the way I described, and if he refuses, forget it.

(One way for this to be a serious pitfall is that the bikes may in fact be "underwater;" in other words he may owe more on them than they're actually worth. Giving someone like that money to take the bike (and the lien) off their hands is a stupid transaction. And in fact, it's not hard for a bike owner to be in that position if he buys a bike on credit and then lays it down, reducing its value. In that case you'd be best off buying the title from him for $1 and paying off the lien yourself.)
posted by ikkyu2 at 12:25 PM on June 12, 2007

This sounds a bit odd.
If he owes money on the bikes, he shouldn't have the titles in-hand. The title isn't released until the debt is paid-off. At least that's how it works in my neck of the woods.

What, exactly, is the nature of the liens?
Sounds like the bikes were collateral for a personal loan.
posted by Thorzdad at 12:34 PM on June 12, 2007

This sounds like a scam.
posted by chunking express at 12:36 PM on June 12, 2007

The prices for the bikes don't seem too out of line. Most 250 ninja's go in the $2k range.

I'm also not sure why someone would have a lien on two bikes at the same time though, unless it was a his/her thing.

It could be totally legit of course, but even if so, sounds like a bit of a paperwork PITA.
posted by alikins at 12:55 PM on June 12, 2007

It's not a scam -- this is pretty common when selling a vehicle on which you still have a loan.

I've sold two vehicles this way, both of which I just didn't like anymore.

For instance, one was a Subaru Forester. It was probably worth $8,000 and I owed $3,000. So I priced it very low as an incentive to put up with the added hassle, sold it the next day, provided a written contract guaranteeing that I would pay off the loan, obtain the title and send it to the new owner. I also let him drive with my plates on it until he had the title, as it was impossible to register otherwise. I took it off my insurance, however. It took about 2 weeks for the title to arrive, I dropped it in the mail, and everyone was happy.

This sort of transaction happens all the time. It's not pretty, but it's sometimes a cheap way to get a cool vehicle from someone who just wants out from under the payments. Of course, the risks outlined above do apply, so make sure you're covered as much as possible.
posted by M.C. Lo-Carb! at 1:10 PM on June 12, 2007

Oh, I should add, however, that you can use this for leverage to haggle the price down. The seller knows it's a PITA.
posted by M.C. Lo-Carb! at 1:25 PM on June 12, 2007

Seconding Thorzdad. I purchased my motorcycle with a loan from my bank. I did not get the title until I paid off the loan. I would be quite surprised if he had the title AND had a loan out on the bike. The title proves ownership of the bike; if it is not paid for in full, then the bank still owns it --> has the title.

ikkyu2 has laid out the sequence of events, but even then you need to be wary of paying off his loan and him then backing out of the deal.
posted by iurodivii at 2:51 PM on June 12, 2007

Thorzdad: in the state of Missouri, when you purchase a vehicle you get a title, regardless of whether there is a lien on it or not. There is a be a lienholder secton on the front of the title that will be filled out if the vehicle is subject to a lien. In order to properly transfer the title, the back of the title must be signed by both the lienholder and the "owner," or be accompanied by a lien release letter, or else the Department of Revenue won't let you retitle the car.
posted by marionnette en chaussette at 3:19 PM on June 12, 2007

... There is a be a lienholder...

... won't let you retitle the car vehicle.
posted by marionnette en chaussette at 3:20 PM on June 12, 2007

Instructions for reassigning a Missouri title, in which the "VEHICLE SUBJECT TO THE FOLLOWING LIEN(S)" section is visible. It looks like I misremembered; the lienholder can't have the back signed to show their release release of the lien; only a notarized lien release letter will do.
posted by marionnette en chaussette at 3:27 PM on June 12, 2007

I've done several deals like this the way MC LoCarb mentions. However, ikkyu's procedure strikes me as the best way to go - never occurred to me to do it that way.

Usually, if the lienholder is a local institution, you just do the deal there - bonus because they can notarize the bill of sale should anything go sideways. Dunno if HSBC has a branch there, but if they do, that strikes me as the cleanest way to go.
posted by TeamBilly at 7:17 AM on June 13, 2007