When selling a car, you must ensure transfer of ownership in govt records

If you sold your car and did not bother to change the ownership in Regional Transport Office’s (RTO’s) records, you would also be liable for compensation claims arising from accidents involving the vehicle, according to a recent ruling of the Supreme Court.

Experts say that the seller needs to ensure that the transfer has taken place and the RTO records are updated. “If there’s an accident and a liability arises, the person who is the owner according to RTO records will also be liable according to the Supreme Court order,” says Sajja Praveen Chowdary, head of motor insurance at Policybazaar.

The responsibility, therefore, is of the seller to ensure that the car is transferred. “It is better if the seller gets an affidavit from the court with complete sale details while selling the car. In addition to that, it is important for the seller to have valid insurance throughout the entire transfer process of the vehicle. This will help in managing any financial liability during the process,” says Atul Tewari, COO, Quikr.

Sometimes, when buying a new vehicle, car owners tend to give the old car in exchange. The dealer who takes the car issues a note, stating that the original owner has given the car to the dealer and will not have any responsibility thereafter. “But such notes will not hold good in court as it finally comes down to the ownership, based on the RTO records. When giving a car in exchange, the original owner needs to keep following up with the dealer on the status of the vehicle. There is no other option,” says Chowdary.

If you are selling your car through an online platform, check whether the service provider offers assistance to make sure that the vehicle is transferred to the new owner as soon as the decision to purchase the vehicle is made. Quikr, for example, offers this service under its Quikr Assured Cars programme.

If the seller is dealing directly with the buyer, the original owner can keep the car in his custody until the buyer completes the formalities and provides a proof that the transfer has happened. According to an RTO agent, transfer applications can now be made online at parivahan.gov.in. Once the seller completes the documentation, he gets an application number, government fee receipt and also a message on mobile stating that the application is in progress.

The RTO agent also points out that if the transfer has not happened, it can lead to other problems. If the buyer misuses the car, the original owner would be held liable. If the buyer doesn’t pay a penalty, over time the penalty attracts interest, and the RTO will hold the original owner responsible.

In the case mentioned above, the apex court made the original owner as well as the new owner liable for the compensation, and they had to pay the money jointly. 
“Merely because the vehicle was transferred does not mean that such registered owner stands absolved of his liability to a third person. So long as his name continues in RTO records, he remains liable to a third person,” observed the Supreme Court.  

What SC said
  • The ‘owner’ of a vehicle is the person whose name appears in the RTO record
  • Victim of accident or his family cannot be burdened with following a trail of transfers
  • While the law allows transfer within 30 days of sale, the seller needs to report it within 14 days to the RTO
  • If the owner doesn't report the transfer within the stipulated period, he will be liable to pay compensation to accident victims 

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