Many people are unaware of this term but it is very present when a car has been financed, we are going to finance it or if we opt for the purchase of a second-hand car. The concept of reservation of title appears in almost all hire purchase transactions. If you ever financed your car with a bank or financial entity, it is likely that you have this concept as a clause in the contract you signed.
The retention of title is a legal action that means that the seller property is reserved about the object that has sold you. In this case, it becomes a legal tool that the financial or banking entity with which we are dealing will not cede full rights to the sold car. until we pay the full amount correspondent.
This concept should serve to clarify that when a car is financed, the seller does not transfer ownership and ownership of the product to us until we pay everything agreed. The seller only offers us the possession and use but not property and domain. Once we finish paying the financed amount, it is advisable to eliminate the reservation of title to avoid future problems in case we want to sell, give away or cancel a product such as the car.
How to cancel a car that has a reservation of title?
When the time comes to cancel the retention of title, the process is assigned to the buyer of the car. If we do not have much free time, it is best to go to an agency to carry out all the paperwork for us, although obviously it will be more expensive than doing it on our own.
Cancel the domain reservation on our own
The first of all will be locate the financing contract that we sign with our financial institution or bank. If you do not have the contract, we can go to the nearest Traffic Headquarters so that they provide us with a few digits that will help us locate the entity.
The next step will be to go to Registry of Movable Assets province in which our car was registered. There, we will ask for a simple vehicle note. To save this step, it is recommended that we have an electronic ID since it prevents us from traveling and we can request the note from home.
When we have located the entity and we have the simple note of the car, we have to send the note together with our DNI data and request a original payment letter. The entity will take about a week and a half to send us a domain cancellation letter (a procedure that costs between €10-80).
At the time we receive the cancellation letter, we have two ways to complete the process.
- One will be to go in person to the Registry to present the original payment letter, the domain reservation cancellation form, DNI, car papers and the payment of fees. We will have to wait about two weeks for the Registry to update the property charges.
- Another way is by sending the aforementioned documents by ordinary mail or by courier indicating our personal data, signature, date, photocopy of the ID or passport and an original authorization from the person who presents our documents in case of opting for the courier route.
Finally, you will have to go to the nearest Traffic Department to see if there was a correct update of the car’s situation. It should be remembered that this process is always the responsibility of the owner of the car, which must be carried out as long as the financing amount has ended.
Sell the car with retention of title?
Not impossible. Ownership cannot be changed if there is a valid domain reservation. It is recommended to go to the Traffic Department with the buyer and check the situation of the car and find out what charges the car we are going to buy or sell may have. Do not make any payment of money or formalization of a contract until check charges and reservation of title of the car.
To find out the status of retention of title or charges that the car may have, you can request a DGT report or go to the Registry of Movable Property in which the car was registered.
This way, we will be notified if the car was ever repossessed or sealed although this is not an obstacle to the transfer of the car. It will also indicate if you have any domain reservation, leasing, renting or any chattel mortgage. In this case, the transfer of the car can be hindered and we will have to carry out the steps mentioned above.
Purchase-sale or cancel a car with reservation of title
Definitely can’t be done no purchase-sale process of car. If we are the buyers, we have to take into account that the Traffic Department will not put the papers in our name if there is a reservation of ownership in the car we have bought.
the car will follow Technically belonging to the financial or banking entity and not seller. In this situation, it will be necessary to notify the seller and his entity to fix the situation of the retention of title. If we decide to deregister the car, first of all, we have to cancel the reservation of title.
If we have bought a car and when we change ownership, we are denied it for having a valid reservation of ownership, we must follow the steps mentioned above. The normal thing is to request a report from the Traffic Department or information from the Movable Property Registry where it was registered in relation to the reservation and possible charges. With this information we will know the financial or bank entity and find out the reservation of title and if there is any pending payment.
If the seller does not have any outstanding debt, you have to notify him to lift the reservation of title, although we can also do it on our own in case the seller does not give any response. If the situation of any pending debt arises, the seller and the entity must be notified of the situation at the same time that we prepare the legal procedures related to the process.
