the buying process

[donk]

First of all, thanks for all your responses on my "? for the early car guys" post. Keep 'em coming, the more advise I can get, the better.

I thought of another question about the buying process (just in case) for those who have bought a car recently. These cars (early cars) seem to be in pretty high demand, with good cars typically being spoken for in a matter of days. I'm just wondering, once I look at a car, if I like it, I will want a PPI. What is the best way to go about having the seller hold the car for a few days or a week? Is a deposit the norm? If so, are these deposits typically refundable if the PPI turns up something bad?

thanks,
j

[Grady Clay]

I think this is a good possible agreement:
I AM NOT AN ATTOURNEY.

Seller agree to hold for Buyer this Porsche VIN xxxxxxxxxxxx for so many Deposit days and allow Buyer to have the car inspected at said Buyer’s expense. This is in return for non-refundable deposit of xx$50xx to Seller and receipt of returnable Cashier’s Check for x$5000x made payable to the said Buyer but not endorsed to Seller.

Seller agrees to not commit to sell to or take a deposit for this car from anyone else until after some date or said Buyer relinquishes his rights in writing.

If said Buyer decides to not purchase the car or the Deposit time expires, Seller agrees to immediately return the Cashier’s Check upon demand and retain the xx$50xx as liquidated damages. Seller agrees that Seller has no other claims on the said Buyer. Upon return of Cashier’s Check, Buyer agrees to have no other claims on the said Seller.

If said Buyer and Seller agree to Buyer purchasing the car, then the xx$50xx and the Cashiers Check will apply to the purchase price at closing.

Seller agrees and warrants to produce good and valid title and other required documentation at closing. The Seller agrees to produce and deliver the car in the same kind and condition as viewed by the Buyer. The Buyer agrees to produce Certified Funds or a valid Sight Draft at closing.

Should the sale not close, the Seller and Buyer agree that the xx$50xx goes to the Seller as liquidated damages and the Seller returns to the Buyer the Cashier’s Check on demand. Seller agrees that Seller has no other claims on the said Buyer. Upon return of Cashier’s Check, Buyer agrees to have no other claims on the said Seller.


SIGNED
Buyer Seller
Signature & date
Address
City, state
Phones
Driver’s license numbers.

You can always have this notarized. I'm sure there is more to add.

I am not an attorney, you should have your attorney review all legal documents you intend to sign.

Best,
Grady

[Jadams1]

Do you play one on TV? That sounds pretty thorough.

[donk]

Originally posted by Jadams1
Do you play one on TV? That sounds pretty thorough.

He must have slept in a holiday inn express last night

seriously though, i think that will suffice. Thanks Grady.

john

[john_colasante]

I kinda like Grady's approach - or at least the idea. I believe the idea of a totally refundable deposit is silly. There needs to be something at stake for an irresponsible buyer who causes the seller to loose opportunity because he made a deposit and then backed out on a whim.

Minor comment, the language is corny. Why write it with the "said" stuff? Just write a contract in decent, plain English. You're not a lawyer so no need to try to sound like one.

[304065]

Grady, that's a very good basic agreement. It does a few things agreements are supposed to do:

1. Identifies the parties to the agreement;
2. Identifies the property to be sold (including the VIN);
3. States the consideration to be given for the property;
4. Specifies the deposit, inspection period and procedure for refunding the deposit (in part) if the sale is not consummated; and
5. Obligates the Seller to deliver good title.

When I have bought or sold cars, I like to add a few other things too.

Disclaimer of warranty. If I'm SELLING, I'm going to disclaim every warranty with the exception of good title. The car is going to be sold on an "as-is" (meaning in same condition as viewed), "where-is" (I'm not going to ship the car to Australia unless we agree to that specifically) and "with all faults" (an extension of as-is, implying that the car has problems and the buyer KNOWS that there are problems). I'm also going to disclaim other legal warranties like fitness for a particular purpose (if it's a race car, I don't want you claiming that I told you that you would take the pole position in qualifying, and because you don't, it's the car's fault and you want to unwind the sale now that you raced it all season) and merchantability (if you buy it to flip to another buyer and he doesn't like it, that's not my problem) and anything else I can think of from first year Contracts.


Another pretty important thing is the FORM of consideration. While a racing buddy of mine once sold his Carrera for CASH, most folks prefer to pay with some form of negotiable instrument, like a check, etc. The problem is that there are so many good forgeries of cashier's checks floating around that you can't be sure you've got a good one until it actually clears your account. So I would put in a clause that said that physical possession of the vehicle would transfer upon receipt of the consideration, but that TITLE would not transfer until such time as the funds had cleared the Seller's account. That way, you got the money (you HOPE!) he's got the car, but you still own the car until you can be SURE you have the money. If the check bounces, you report the car stolen and notify your insurance company. If you never send the title to the Buyer, he's still got the car, and can sue you pursuant to his rights under the, guess what's coming, PURCHASE CONTRACT that I am rambling on about, to make you deliver good title!

I read about sight drafts but I never actually saw one. I don't think they are very common. Use "Cashier's Check" instead.

I personally wouldn't take a cashiers check, I would make the buyer wire transfer the money to my account, and agree to pass physical possesion of the car and good title on the same day. ALWAYS, ALWAYS, ALWAYS close on a business day, no matter how inconvenient it may be for you, and RUN AWAY from a buyer who says, "I gotta close on Saturday, the check is good and you can deposit it on MONDAY!"

One more reminder and that is this: contract language is basically about memorializing the intent of the parties in a document, so that if somebody sues claiming they haven't received the benefit of their bargain, the court will look to the document to try to determine the parties intent, and will assign damages or order specific performance of the contract along the lines of what it thinks the parties wanted. That said, the more clearly you can articulate what the heck this transaction is supposed to accomplish in the writing, the better off you will be.

Have you guessed that I am admitted to the Bar in New York State? NONE of the above should be construed to be legal advice, you aren't paying me a dime for it! If you feel uncomfortable, go down to your local stationary store, you can get form agreements for selling a car that include a lot of the relevant language, and can walk you through how to set them up. That's probably better than drafting something on your own, and certainly less time-consuming.

Remember also, if you don't feel comfortable, HIRE A LAWYER. The $500 you spend to have a professional guide you through this procedure is money well spent, maybe not compared to the amount of money involved, but in terms of LIMITING your LIABILITY and allowing you to SLEEP AT NIGHT, I say, "Lighten your wallet, ease your mind!"

Good luck, class is ended!

[Eric Coffey]

Originally posted by john_cramer
....Another pretty important thing is the FORM of consideration. While a racing buddy of mine once sold his Carrera for CASH, most folks prefer to pay with some form of negotiable instrument, like a check, etc. The problem is that there are so many good forgeries of cashier's checks floating around that you can't be sure you've got a good one until it actually clears your account....

Wow, that's some good info John!

Also, just to add to the rampant "forged cashier's check" issue: The most common identifier of a forgery is the lack of a perforated edge. Most, if not all banks issue their checks with a detachable check ID "receipt". If the bank draft doesn't have at least one perforated edge, be VERY suspicious.

[john_colasante]

Originally posted by john_cramer
The $500 you spend...

Being a lawyer himself, John has obviously not had to hire one within the past decade.

[304065]

John has obviously not had to hire one within the past decade

Nor a prostitute, either! Hmm . . .

[real550A]

Being "street wise", but not a lawyer, I make the buyer aware from the beginning that neither the car, nor the title will leave me until the funds have cleared my bank. Most legitimate buyers are O.K. with that.
Also, CASH IS KING!

[mwbaum]

real....exactly......cashiers checks are VERY easily forged...and they take time to really clear (some dont reject for 6 weeks) ...make damn sure its good money.

[Eric Coffey]

Originally posted by mwbaum
real....exactly......cashiers checks are VERY easily forged...and they take time to really clear (some dont reject for 6 weeks) ...make damn sure its good money.

Yeah, you would think in this day and age, a cashier's check could be verified as legitimate in a matter of minutes. IMO, the new banking privacy laws have contributed quite a bit to the cashier's check fraud problem. Most times cash is impractical or not an option (to avoid an advance fee on a credit line for instance). I would prefer a bank-to-bank wire transfer over cashier's check. Then still hold the title until everything officially clears.

[JCR]

Most legit dealers will refund a deposit. Agreement is a must - it should state the agreed upon price, which is contingient upon a sucessful PPI. Should also state what a sucessful PPI is. You should get a detailed PPI report IN WRITING in case you need to re-negotiate. I have a form, email me if you want it.

If you can put a large chunk or all of the purchase price on a credit card, you are well protected (and get air miles to boot).

If buying from a private seller, it's best to go to the bank and then the DMV together.

[expat]

Oh...never mind...sorry

If buying from a private seller, it's best to go to the bank and then the DMV together.

This is exactly what I do and was typing.

[Jadams1]

I bought my car out of state and I brought cash to give the buyer peace of mind. I agree, cash is king!

[304065]

Cash is King. . .?

What about the possibility of counterfeiting? I suppose you could request the new $20.

It does make it interesting. . . the thought of carrying a Zero-Halliburton aluminum briefcase full of money to exchange for that 2.8 RSR! I would probably be sure I was packin' heat for the closing of that transaction!

[mjshira]

Cramer you are killing me!!!! too funny! the guy is going to have a 3K legal bill on an 8K car! ;-)

James

[85Gold]

Interesting comment on cashiers checks. I as a buyer would want possession on transfer of money, ie cashiers check. If the seller has a concern, he can have his bank call my bank and verify that the check is legitimate. I agree that transactions should always take place on a business day and I prefer title to transfer on the spot at the local tag agency.

Looking for a good 1995 993 coupe to put the above in practice.

Peter

[Zeke]

Wire transfers are the cat's ass. Anything over $10,000 requires IRS paperwork anyway. You may never see it, but it's reported.

[HawgRyder]

I look at the deal slightly differently.....
When I sell a car or bike, I explain the rules of the deal to the buyer....if the deal disolves for whatever reason, the object will be returned to me in exactly the same condition as sold.
The consequences of not complying are evident in the 9mm that I show him.
I play fair...by the golden rule if you will...but the buyer must also play by the same rules...if not prepared to do so...don't offer to purchase.
It may seem over the top....but for more than 30 years it has worked very nicely.
Bob