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David Walters
David Walters,
Category: Legal
Satisfied Customers: 741
Experience:  Attorney at The Walters Firm, PLLC
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Contract help. Texas. None

Customer Question

contract help
JA: What state is this in? It matters because laws vary by location.
Customer: texas
JA: What steps have been taken so far?
Customer: none
JA: Anything else you want the Lawyer to know before I connect you?
Customer: no
Submitted: 13 days ago.
Category: Legal
Expert:  Olivia Kent replied 13 days ago.
Hello and welcome to Just Answer. My name is Olivia and I’m an attorney. I’ll be happy to help you. Please note that while I do strive for real time responses there are occasions where I am called away from my desk or on a call or in court and cannot respond in real time. Please be assured that you will receive a response. Also, you might be offered a phone call, but you’re under no obligation to accept; the phone call requests don’t come from me (they’re a pop-up offered by the site; feel free to ignore if you don’t’ want a call) - but if you do want a phone call I’d be happy to do that.
With that out of the way, what can I answer for you?
Customer: replied 13 days ago.
i have a car i am making payments on
Customer: replied 13 days ago.
i gave the car to friend, and they are making the payments on it, but the loan is still under my name.
Customer: replied 13 days ago.
we made a contract between us that she would continue making the payments, but now i realize this was foolish and want to be out from under it
Customer: replied 13 days ago.
Does she have any rights even though we made a contract and the loan is still under my name? can i got get the car back regardless of how many payments shes made?
Expert:  Olivia Kent replied 13 days ago.

I'm a bit confused... you want to get out of what contract? The one where your friend makes payments for you?

Customer: replied 13 days ago.
yes
Customer: replied 13 days ago.
i wanted her to get the car under her name, but she says that since we have a contract she owns and it and will keep making the payments on my loan
Customer: replied 13 days ago.
i figured since the loan was in my name it was still legally mine and could take it back.
Expert:  Olivia Kent replied 13 days ago.

Who has the title to the car?

Customer: replied 13 days ago.
state farm bank. they are who the loan is through
Expert:  Olivia Kent replied 13 days ago.

So, the important thing to know here is that the title and the loan are two different things... one can be on the loan and not own the car - and vice versa.

Expert:  Olivia Kent replied 13 days ago.

I understand that the bank technically owns it - but is everything in your name?

And are you saying there's a separate contract where you sold her the car?

Customer: replied 13 days ago.
yes and yes
Expert:  Olivia Kent replied 13 days ago.

So technically if you have a separate contract where you sold her the car she can sue you for breach of contract.... I wish I could tell you otherwise...

Customer: replied 13 days ago.
sue me for what exactly though? If i do a voluntary repo on the car, then theres no car to give and the loan was in my name so ill be liable to the bank
Expert:  Olivia Kent replied 13 days ago.

Well, so, she can sue you for payments she made on the car...

Customer: replied 13 days ago.
but thats it?
Customer: replied 13 days ago.
shes only made 2 payments
Expert:  Olivia Kent replied 13 days ago.

And technically she can sue for specific performance - meaning transferring of the title of the car to her - if there's a contract that gives her ownership.

Expert:  Olivia Kent replied 13 days ago.

Sorry... please don't shoot the messenger...

Customer: replied 13 days ago.
but with the loan under my name...
Customer: replied 13 days ago.
there has to be something i can do
Expert:  Olivia Kent replied 13 days ago.

Right, I understand... so the fact that the actual loan is your name wouldn't really impact the analysis I'm afraid, if there's this contract you entered into with her. Any attempts not to honor it can cause her to sue for breach of contract - and ask the court to enforce the terms of that contract.

Customer: replied 13 days ago.
ok, but if i pay her back what shes paid on it...then thats it
Customer: replied 13 days ago.
i mean if i owe money on the car then its not really mine and if it gets repoed then...i dont understand what else i would owe her
Expert:  Olivia Kent replied 13 days ago.

I'm afraid that's not how a contract works... you can't just give the other person their money back and say 'we no longer have a contract'... She would technically still be able to go to court to enforce the terms of the contract. I'm sorry. Can I answer anything else for you?

Customer: replied 13 days ago.
enforce what terms
?
Customer: replied 13 days ago.
im confused.
Expert:  Olivia Kent replied 13 days ago.

The terms of whatever contract you signed with her.

Customer: replied 13 days ago.
im still confused. The terms were that she would make the payments
Customer: replied 13 days ago.
so what would i owe her?
Customer: replied 13 days ago.
other than what shes already paid, i dont understand what else she could sue for
Expert:  Olivia Kent replied 13 days ago.

Did the contract state that you were transferring ownership to her?

Expert:  Olivia Kent replied 13 days ago.

Or just that she would be making your payments WHILE she was driving your car?

Customer: replied 13 days ago.
it stated that it would remain my car untill the loan was paid off. it states that she is taking possession of the vehicle
Expert:  Olivia Kent replied 13 days ago.

Right so that's what I figured... so you'd be breaching the contract BY NOT allowing her to continue to pay it off until she takes ownership. Does that clarify?

Customer: replied 13 days ago.
Ok but what could she sue for? If the cars gone and I pay her back what she's paid...what else can she possibly get?
Expert:  Olivia Kent replied 13 days ago.

She can sue for breach of contract - the value of the car, the payments she has made - or anything in between.

The only way the car would be 'gone' is if the car was destroyed (at which point she can ask for her money back). Otherwise she can seek specific performance... meaning the court requiring you to continue accepting payments and then transferring the car to her.

Can I answer anything else for you? Please let me know. I’m always happy to answer follow ups and I'd be happy to answer any other questions you have. Just please consider the fact that we have no control over the law. Also, if there's anything I'm misunderstanding about your question, please let me know. If you don’t need any additional information at this time, a “THANKS FOR THE INFO” will allow me to record that I’ve answered your question. It won’t close out the question or anything like that, so if you think of anything else I’ll be able to help you with that as well :-) Thank you.

P.S. YOU CAN IGNORE ANY PHONE CALL REQUESTS YOU GET... THE SITE AUTOMATICALLY SENDS THOSE OUT.

Customer: replied 13 days ago.
How can she sue for the value of a car she doesn't own?
Expert:  Olivia Kent replied 13 days ago.
Because there is a contract stating that she will be permitted to buy it after she pays off the loan, so by not permitting her to pay off the loan that would be a breach of contract. Does that make sense?
Customer: replied 13 days ago.
No
Expert:  Olivia Kent replied 13 days ago.
OK, so at this point you and I have been talking for a full hour, and I have tried to the best of my ability to tell you the same thing over and over again. I think it would be best for somebody else to make the attempt. I wish you the best of luck.
Customer: replied 13 days ago.
K
Expert:  David Walters replied 12 days ago.

Here is what is going on in a situation such as you have described:

YOU:

  1. breached agreement with bank giving them a cause of action to sue you
  2. transferred secured collateral in violation of the agreement with the lender giving rise to another cause of action against you
  3. actually may have committed a misdemeanor by selling a car that you could not deliver full title to the buyer on

BUYER:

  1. Is obligated to pay because is indeed receiving a benefit
  2. Is not able to transfer title unless they get a loan and properly purchase the vehicle with a title transfer

LENDER:

  1. Would be within its right to repossess the car and sue you for the amount owed after selling the car.

In summary, a situation such as the one you have described puts you in a terrible situation. What is your exit strategy given the above factors? Will the "buyer"(in quotes because they are basically renting a car in violation of a secured agreement) work with you?