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Slow Down! Speed Kills...and Can Cost Dealers Big

By Danny Langfield

After all the time and work that goes into a sale, once the customer finally agrees to the terms a dealer can feel a rush of emotions including relief and excitement. However, dealers must remember not to be overwhelmed by these emotions and forget to complete the deal by finalizing the paperwork. In this blog post, we revisit a story first told in Texas Dealer about a dealer in such a hurry to complete a deal, he nearly lost not only the sale but thousands of dollars of his own money. 

A TIADA dealer member (the hero of our story) was minding his own business when a gentleman appeared at his dealership and expressed an interest in buying a 2012 Ford Fusion the dealer had for sale. Negotiations were made, and a deal was struck. Seems the gentleman had a 2006 Nissan Frontier which he owned free and clear and wished to trade against the Fusion. One small issue, though. The Frontier was currently in a shop where transmission work had been done – and a $2000 repair bill awaited. Our hero, not one to lose a deal over a trivial detail, agreed to take the trade and pay the repair bill as part of the bargain.

So the gentleman presented the title to the Frontier, which had been issued in the name of both he and his wife. The deal was made and the gentleman climbed into his new Fusion, promising to bring the wife back in a few days to complete the signing over of the Frontier's title.

Here's where the scary music starts and the ominous thunderclouds start rolling in.

The dealer paid off the transmission repair, got the Frontier back to his store, and then proceeded to drop about $700 more in recon to get the truck frontline ready. After a few days went by, the dealer called the gentleman to ask when he might expect his wife to stop by to sign off on the Frontier's title.

The gentleman's reply was a bit unsettling.  His wife did NOT care for the Fusion, believed her husband had struck a sucker's deal, and would NOT sign off on the title to the Frontier. The gentleman said, “Sorry Mr. Dealer. Looks like we don't have a deal after all.”

Not a day-brightener.

The dealer contacted TIADA to ask what his options were. He felt (understandably) that he had held up his part of the deal in good faith by paying off the Frontier's repair bill, and that if he were to simply return the vehicle to the customer and unwind the deal, he would be out of pocket not only the repair costs but also the additional recon expense.

We turned to one of the local attorneys in our legal referral program, Patrick Hargadon, to get his take on the dealer's situation.

“It seemed clear to me that if the dealer did not return the Nissan Frontier to the customer as the customer was demanding, then the dealer could be in for a lawsuit that would cost him more than the $2,000 transmission repair bill,” Pat recalled. “The quick and dirty way to solve the problem was to unwind the deal, take back the Ford Fusion, and sue the customer in Justice of the Peace court for the cost of the transmission repairs plus the make-ready costs of $700 that the dealer also spent on the Nissan Frontier.” 

To Pat, the key pieces were: (1) The dealer did not have a good title to the Nissan Frontier; and (2) He did not have any agreement giving the dealer a lien in the Nissan Frontier so that he could apply for a new title (that is, so he could repo the Nissan). Pat also pointed out that two very common sources of customer lawsuits and DTPA claims are an alleged wrongful repossession and an alleged wrongful withholding of a vehicle from a customer.

So how did it end? Before the dealer could move to unwind the deal as recommended, he received an attorney demand letter from his customer's lawyer threatening legal action. Through a combination of good luck, charm, perseverance and old-fashioned customer service, the threat of legal action was averted. The wife decided the new vehicle was actually pretty nice. She came in and signed the Frontier title, thus completing the deal as originally made.

The takeaway here? I think it is pretty obvious:  Speed kills. In a rush to get the trade-in ready for sale, the dealer neglected to get the paperwork finalized and ended up risking a pretty good chunk of his own cash. This story illustrates that the paperwork of a deal is not just a formality; in this case it was nearly the difference between the dealer having or not having recourse against a customer who came down with a bad case of buyer's remorse.

Note: This story originally appeared in the July 2014 issue of Texas Dealer. Danny Langfield is the former TIADA Deputy Director and currently the CEO of the National Mobility Equipment Dealers Association. 

Comments

 
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On: 05/20/2018 01:46:20
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