What 'buyer beware' really means when buying a classic car
Concerned about the legal perspective of buying a classic? In the first of a new series, our expert steers you through the process, starting with the basics
In the UK, negotiations for the purchase of a classic car are governed by the Latin maxim ‘caveat emptor’ – buyer beware.
In other words, it's for the buyer to decide what enquiries need be made regarding the intended acquisition – and a buyer who makes little or no enquiry will become the author of his or her own misfortune.
By value, the principle purchase made by most individuals is their home, closely followed by a classic car, should that be where their interests lie. Interestingly, however, legislation treats these respective purchases in very different ways, as you'll see.
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The purchase of land, whether freehold or leasehold, has been governed by laws based on custom and practice that have developed over many centuries. Meanwhile, cars came into being relatively recently, in the 1890s – and arguably they didn’t become collectible and thus valuable until the past three or four decades. Consequently, there’s been little time or impetus for a specialist body of law to develop.
Comparative consideration of the main aspects of property and classic acquisitions reveal how differently the process of each such acquisition works in practice. HM Land Registry keeps and maintains a publicly accessible register of all land registered in the UK. The DVLA keeps a register of all vehicles intended for use on the road, but this is accessible to individuals only in certain limited instances.
The land register identifies the land in any title, both by description/address and with reference to a plan. The DVLA records a general description of a model of car with a VIN number if the car is recent enough to have one.
Furthermore, the owner of land is named on the land register, and that owner’s address is also noted. The DVLA only records the name and address of the keeper of the car. The identity of the legal owner is not recorded.
Then there’s the fact that the land register shows details of financial charges, such as mortgages, that are secured on the property. There is no Government register of finance, and therefore no way of checking whether a particular car is being used as security for a loan.
The land register also contains details of anything of an historical nature that affect the land regardless of ownership, such as rights of way. Matters of an historical nature relating to a particular vehicle aren’t presently required to be registered.
Lastly, there’s a crucial difference between the effect of registration at HM Land Registry and registration at the DVLA. The content of the land register is expressed to be accurate in every detail. If a mistake occurs and a buyer thereby suffers a loss, then HM Land Registry is bound to compensate the buyer in full.
To the extent that the DVLA register records details of a car and its keeper, a mistake in those details does not given rise to any liability for any consequential loss. The recent case of Seddon vs DVLA states that the DVLA does not owe any party any duty of care.
Given the multi-layered complexities attendant upon all land purchases, some 99 of 100 purchasers decide to appoint solicitors to look after their interests. In contrast, most buyers of classic cars rely on their own instinct and knowledge. Again, the way in which land and car transactions proceed depends very much on whether solicitors are instructed on behalf of the respective buyers, which in turn will affect the outcome of each purchase.
The Law of Property Act 1925, s.40 requires all land purchases to be evidenced by agreement in writing. Solicitors routinely advise upon one of two forms of standard agreement, which will set out the main terms of transaction. Extensive written enquiries are made of the sellers regarding every aspect of the property.
Surveyors are instructed, along with other experts. Those instructed will also act for lenders in securing their interests. Completion arrangements will be put in hand, searches made and monies transferred. Things can go wrong – but they infrequently do, as the process of the purchase is regulated each step of the way.
Conversely, as already stated, classic buyers rarely instruct solicitors, save in case of very high-value transactions. As a result, the question of a contact is rarely considered. At best the deal may be settled with a handshake; occasionally the seller might provide a note saying ‘as seen, tried and tested’, sometimes with mention of the price paid.
So, no written terms – though ideally there should be written terms that include a detailed description of the car, its condition, mileage, warranties and service history, deposit arrangements, secure delivery and payment price. In this unregulated world there are countless ways in which the transaction can end with a less-than-satisfactory result.
Clearly the private classic buyer must be very active in undertaking their own due diligence to ensure they understand every aspect of the transaction that’s being embarked upon. Ideally they should take professional advice where necessary, to ensure that no unpleasant surprises intrude at any point.
This advice was compiled in association with Healeys LLP, solicitors with specialities in classic and collectors cars.
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