Fraudulent changes of ownership hidden in a car’s history may see it suddenly being repossessed despite current owners being under the impression that they legally own the vehicle.
A recent Sunday Times report shed light on the issue, when a Joburg man’s used Maserati was repossessed by a previous owner’s bank.
The owner, an avid car collector, made sure that the 2018 Maserati GranCabrio was clean before he purchased it from a dealer for the hefty sum of R1.3 million.
What he didn’t find was that the clearance letter a previous owner supplied to his bank, which declared the car paid off, had been forged.
The bank caught up to this after he took ownership and suddenly repossessed the vehicle.
Afterwards, it informed the now ex-Maserati owner that he “unfortunately bought a vehicle where there was a fraudulent change of ownership before he acquired it.”
What’s more, he was told the outstanding balance on the car is an enormous R4 million, more than triple what he got it for.
Instead of backing down, though, the victim is escalating matters.
“We went to court on an urgent basis but the judge decided our matter lacked urgency and it was removed from the roll,” he told the Sunday Times.
“We applied for a new date on the normal roll but haven’t received it yet.”
The owner said he and the sales agents were already corresponding with the bank when it received an ex parte court order allowing it to seize the car.
An ex parte application is a legal process where a court considers a case and issues an order without the knowledge or involvement of the respondent.
“In this case the bank had no need to do this,” said the owner.
“We were already talking with them. In their application they said they were scared I would take the car out of the country.”
He said this could be construed as defamation, given the fact that he is very much established in South Africa with a good business, no criminal history, and a family to care for – none of which he’ll throw away for a convertible sports car.
The owner is adamant that he did his due diligence, as he confirmed that the Natis (National Traffic Information System) documents and the settlement letter were legit before he signed the purchase agreement.
The salesman from who he purchased the Maserati also contacted previous owners and dealers who were involved with the vehicle, all of whom naturally denied wrongdoing.
A spokesperson for the bank that repossessed the vehicle told Sunday Times that the sports car had been through the hands of several people.
“The original fraud was perpetrated against [the bank], resulting in arrears on the asset being built up since 2021,” they said.
They explained that the original purchase for the Maserati back in 2020 was about R3 million, and the outstanding balance owed is therefore about R4 million.
“While [the bank] is sympathetic towards the situation in which [the owner] finds himself, the issue of ownership of the vehicle has been tested in the courts and found in [the bank’s] favour,” said the spokesperson.
“As the rightful owner of the vehicle, [the bank] has taken possession of the asset. [The owner] should approach the broker or dealership from which he purchased the vehicle for legal recourse.”
What banks can and cannot do when repossessing a car
With the current cost-of-living crisis in South Africa, it is more important than ever that consumers know their rights when it comes to car repossessions.
The Ombudsman for Banking Services (OBS) notes that finance houses cannot repossess a vehicle without following the procedure set out in the National Credit Act 34 of 2005 (NCA).
Before instituting legal action, a bank will normally exhaust its internal debt collection processes first to collect the arrears.
This may include a bank representative who will try to contact the client with the aim of settling their debts.
It is only if this process is unsuccessful that the institution will resort to litigation.
“In South Africa, a bank can only physically repossess a financed vehicle with a court order or with the consumer’s consent,” said the OBS.
The court order will only be issued once the bank has complied with the following:
- Issued a section 129 notice (letter of demand) which can only happen after the account has been in arrears for over 20 days
- A summons has been served by a Sheriff of the Court to the consumer
- A judgment has been granted against the consumer declaring the vehicle executable
- The Sheriff of the Court has delivered the original warrant of execution to the consumer stating that the vehicle can be repossessed
“If the bank cannot show that it sent you a section 129 notice, a court will not grant judgment against you,” said the OBS.
“However, the bank’s only obligation is to send this letter to your chosen address by registered post; there is no legal requirement on banks to prove that you received it.”
This is one of the more important reasons to keep your contact details with your creditors up to date.
It’s also advised to avoid changing addresses and neglecting phone calls or emails from banks in an effort to evade paying debts.
“In the event of a repossession, if the person intent on taking your vehicle fails to provide you with proof that they are the Sheriff of the Court as well as the original court order stating that the vehicle can be repossessed, you are not obliged to sign any documents they present to you, nor are you obliged to hand over the vehicle,” said the OBS.
It is also important to note that there is such a thing as a “voluntary surrender.”
Section 127(1) of the NCA gives consumers the right to terminate a vehicle finance agreement by giving the bank written notice. The vehicle will then be sold on auction to offset the debt owed.
“This affords over-indebted consumers an opportunity to alleviate their financial pressures by voluntarily surrendering the vehicle to the bank,” said the OBS.
“Voluntary surrender should be a consumer-initiated exercise, free of any undue pressure or threats from the bank or its representatives.”
To save on legal costs, banks may try to obtain a client’s consent to voluntarily surrender their vehicle by sending its representative, who may be a debt collector, to their home.
“It is important to know that these representatives are not allowed to use intimidation, threats, or violence to force you to surrender the vehicle,” said the OBS.
You also have the right to refuse entry to anyone who is not a Sheriff of the Court and who does not have an original court order.
“Should unlawful techniques be used, consumers are advised to record them and report them to the OBS and the SAPS,” concluded the OBS.
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