What to do when you buy a second hand car

Team Digit, 04 May 2019

 

Just bought a brand new 2nd hand car? We know how happy and excited you are to hit the road!

However, before you do hit the road you need to finish some important tasks, so you don’t fall into any unwanted situation or face legal issues.

Transfer of your ownership

The first thing to be done as soon as you buy your car from the previous owner, is to also get your Registration Certificate or RC transferred to your name. Doing this proves that the car is under your ownership now and you can take it to the road without any tension.

Note: According to Section 50 of the MV Act, the transfer of ownership needs to be done within 14 days if the vehicle is registered within the same state and 45 days if the vehicle is registered outside the state.

For anyone who wants to know what it exactly states, here’s Section 50 of the MV Act

Section 50.  Transfer of ownership.

(1) Where the ownership of any motor vehicle registered under this Chapter is transferred, —

(a) the transferor shall, —

(i) in the case of a vehicle registered within the same State, within fourteen days of the transfer, report the fact of transfer, in such form with such documents and in such manner, as may be prescribed by the Central Government to the registering authority within whose jurisdiction the transfer is to be affected and shall simultaneously send a copy of the said report to the transferee; and

(ii) in the case of a vehicle registered outside the State, within forty-five days of the transfer, forward to the registering authority referred to in sub-clause (i)—

(A) the no objection certificate obtained under section 48; or

(B) in a case where no such certificate has been obtained, —

(I) the receipt obtained under sub-section (2) of section 48; or

(II) the postal acknowledgement received by the transferred if he has sent an application in this behalf by registered post acknowledgement due to the registering authority referred to in section 48,

together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted;

(b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, and shall forward the certificate of registration to that registering authority together with the prescribed fee and a copy of the report received by him from the transferor in order that particulars of the transfer of ownership may be entered in the certificate of registration.

(2) Where—

(a) the person in whose name a motor vehicle stands registered dies, or

(b) a motor vehicle has been purchased or acquired at a public auction conducted by, or on behalf of, Government,

the person succeeding to the possession of the vehicle or, as the case may be, who has purchased or acquired the motor vehicle, shall make an application for the purpose of transferring the ownership of the vehicle in his name, to the registering authority in whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, in such manner, accompanied with such fee, and within such period as may be prescribed by the Central Government.

(3) If the transferor or the transferee fails to report to the registering authority the fact of transfer within the period specified in clause (a) or clause (b) of sub-section (1), as the case may be, or if the person who is required to make an application under sub-section (2) (hereafter in this section referred to as the other person) fails to make such application within the period prescribed, the registering authority may, having regard to the circumstances of the case, require the transferor or the transferee, or the other person, as the case may be, to pay, in lieu of any action that may be taken against him under section 177 such amount not exceeding one hundred rupees as may be prescribed under sub-section (5):

Provided that action under section 177 shall be taken against the transferor or the transferee or the other person, as the case may be, where he fails to pay the said amount.

(4) Where a person has paid the amount under sub-section (3), no action shall be taken against him under section 177.

(5) For the purposes of sub-section (3), a State Government may prescribe different amounts having regard to the period of delay on the part of the transferor or the transferee in reporting the fact of transfer of ownership of the motor vehicle or of the other person in making the application under sub-section (2).

(6) On receipt of a report under sub-section (1), or an application under sub-section (2), the registering authority may cause the transfer of ownership to be entered in the certificate of registration.

(7) A registering authority making any such entry shall communicate the transfer of ownership to the transferor and to the original registering authority, if it is not the original registering author

Transfer of your Insurance documents

The next important task is to get your insurance documents transferred to your name. For your insurer to process your claim it is imperative that your insurance document and your registration certificate has the same name, it being the person claiming for the damages.

Note: According to Section 157 of MV Act, the new owner should apply for a transfer in the name for the policy document within 14 days of transfer of ownership.

Here’s what Section 157 states

(1)Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.

89 Explanation. —For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.

(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.

What if an accident happens without the transfer?

Now, suppose you haven’t had the time to do these two tasks and unfortunately you met with an accident, you would ask, ‘Can I make a claim?’.

Well, the answer is, "No, you cannot." ☹ This is because of 2 reasons:

1.       For your insurance company to process your claim, your Registration Certificate and the Insurance document should have the same name, i.e. name of the person who is claiming for the damage.

2.       Without the insurance document in your name, you technically do not have a legal contract with the insurance company. Hence, they are not liable to pay the claim unless the documents are transferred in your name.

In the past as well, this has been a point of contention between insurers and customers, often leading to the two parties taking it to court. But in such a case, the Supreme Court has passed a judgement in favour of the insurance company thereby declining the claim.

Let’s look at the judgement of the Apex Court in a case between an individual and an insurance company, on the complaint of claim denial

“Learned Counsel for the petitioner stated that the complainant had purchased the vehicle from the previous owner on 12.4.2012, but he did not intimate about this transfer to the Insurance Company, nor did he get his name mentioned in the registration certificate, whereas, according to the India Motor Tariff, the complainant was required to get registration in his name, within a period of 14 days and to have filed the application for transfer of insurance in his name. Thus, at the time, of incident of theft, neither the policy was issued in the name of the complainant nor the registration was in his name. Thus clearly, the complainant did not have any insurable interest.”

Hope you know everything about the legalities involved with buying a second hand car now. 😊

 

Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.

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