Sold a Car by a Non-Owner – Finding Nemo

Have you bought a car, van or motorhome which, unbeknown to you, has outstanding finance on it, is the subject of a chattel mortgage, is a clone, stolen or the subject of a sale or return agreement with a car dealer who hasn’t paid the owner?

If you have, your internet research would have likely led you to the Latin phrase and legal rule “Nemo dat quod non habet”, which simply means, that no one can transfer better title to goods than they themself possess.

In other words, if you don’t own it, you can’t sell it. This is codified in Section 21 of the Sale of Goods Act 1979.

However, it’s not the rule you need, but finding the Nemo exception- the legal ‘loophole’ which allows you to keep the vehicle. It’s not easy, but it is possible.

The law has a fine and unenviable line to tread. On the one hand, it must protect property rights, and on the other, it must protect innocent buyers. Either way, someone is going to lose out.

As a result, although statute and common law has evolved to cater for some circumstances which give rise to a Nemo Dat exception(s), cases are very much ‘facts specific’.

This car sales law is exemplified for example in:Section 27 Hire Purchase Act 1964This sets out the framework for the potential Nemo Dat exception in circumstances where the vehicle is the subject of a Hire Purchase or conditional sale agreement and the sale is to a private purchaser in good faith, without notice of the finance agreement.Section 21 Sale of Goods Act 1979

While this codifies the Nemo Dat rule it also gives a clue to a possible exception, by adding the caveat “unless the owner of the goods is, by his conduct, precluded from denying the seller’s authority to sell.”

This is commonly referred to as estoppel and arises where the so called true owner represents that the seller is the owner of the motor vehicle and/or ‘negligence’ where the true owner enables the seller to create the appearance of ownership.Section 2 Factors Act 1889This provides for circumstances surround the law of agency. This is where a car dealer, for example, is in possession of the vehicle and the log book and documents with the consent of the true owner. These situations are commonly found in sale or return agreements where the dealer is authorised by the owner to offer the car for sale. A purchaser acting in good faith, without notice of anything which would preclude the dealer from selling the car, can obtain title.

However, be under no illusion that transferring title by a dealer or business who is not the real owner is a legal conundrum, where the words and phrases included in the statutes are themselves the subject of legal cases to properly determine the definitions. This is a legal ‘tug-of-war which is as tough for innocent buyers as it is for the true owner, investor or finance company.

If you’ve bought a car, supercar, classic car or motorhome which someone else is trying to claim ownership of, call Stormcatcher Law, the automotive law experts. Call 0333 700 7676 for a free consultation.

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