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Ask Law Educator, Esq. Your Own Question
Law Educator, Esq.
Law Educator, Esq., Lawyer
Category: Consumer Protection Law
Satisfied Customers: 118074
Experience:  Attorney experienced in commercial litigation.
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I am a vehicle dealer in Michigan. I bought a car through

Customer Question

I am a vehicle dealer in Michigan. I bought a car through auction. I have the vehicle but the auction has the title because I havent paid the balance owed. Am I able to apply for a title through Secretary of State and set up arrangements for the balance owed to the auction? As I understand Michigan law an auction cant own a vehicle or have any interest in a vehicle that is sold through its auction. So once the seller(other dealer) is paid by the auction, the title and ownership passes to my dealership, the money owed to the auction is a separate matter from the vehicle ownership. Is there anything they can do stop me from obtaining title or take any action against me or my business after I do since Michigan says it is against the law for them to ever have any ownership or security interest in that vehicle?
JA: What state is this in? And how old is the car?
Customer: .
JA: Has anything been filed or reported?
Customer: No
JA: Anything else you want the lawyer to know before I connect you?
Customer: No
Submitted: 4 months ago.
Category: Consumer Protection Law
Expert:  Law Educator, Esq. replied 4 months ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
While the auction company cannot have interest in the vehicle, they legally do not have to surrender title without payment for the vehicle. Also, the MI Secretary of State cannot issue a new title without proof you purchased and paid for the vehicle. Right now the auction company holds what is known as a form of a mechanic's lien, since you have not paid for the vehicle, they do not have to provide you the documentation and title required for you to change ownership. This is not a security interest, it is a matter of contract and you owe them money for the car and they do not have to release anything until you pay them what you owe them. If this were not the case, people would simply not pay for vehicles purchased at auction and take them and sell them off with the auction company having no way to collect payment other than perhaps suing in court.
If you have a dispute over the price, you can sue the auction company for the documentation, but legally if you owe them the money they do not have to turn over documents unless they receive payment for the vehicle.
If you want to go to the dealer who received payment from the auction company and they are willing to apply for duplicate title you can do so and then the auction company would have to sue you for breach of contract to seek their money and if they win the suit, then they can put a judgment lien on the car and that could also prevent you from selling it without paying them off what you owe.
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Customer: replied 4 months ago.
The Secretary of State had told me they will issue me a resale title if I post a surety bond. Would the auction be able to make a claim against the bond at some point?
Expert:  Law Educator, Esq. replied 4 months ago.

Thank you for your reply.

Yes, if you fail to pay them and you obtain title, then the auction company can file a claim against the bond for payment of the money you owe them for the car.

Please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page , as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Thank you.

Expert:  Law Educator, Esq. replied 4 months ago.
Did you have any further questions? If so please ask.
If not, please do not forget to leave positive feedback by clicking on the 5 stars at the top of your page, as the experts are not employees of the site and get no credit for spending time with customers unless they leave positive feedback. Failure to leave positive feedback on any questions you ask can lead to you not being able to receive an expert's assistance in the future. Thank you for understanding.