Problem getting title to a vehicle because the Dealer didn't pay its lender?

Have you purchased a car or truck and had problems getting the dealer to release the title? Often the problem is because the dealer's inventory lender (known as a "floorplanner") is holding the title until the floorplanner gets paid either for this car or for a different car.

There are some statutes that you ought to know about when confronted with this problem in the Uniform Commercial Code which has been adopted by almost all states.

In Article 9, the article covering secured transactions (the rights of lienholders):

§ 9-320. BUYER OF GOODS.

(a) [Buyer in ordinary course of business.]

Except as otherwise provided in subsection (e), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

(b) [Buyer of consumer goods.]

Except as otherwise provided in subsection (e), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(1) without knowledge of the security interest;

(2) for value;

(3) primarily for the buyer's personal, family, or household purposes; and

(4) before the filing of a financing statement covering the goods.


In Article 2, the article covering sales of goods, there is the doctrine of entrustment, 2-403.

§ 2-403. Power to Transfer; Good Faith Purchase of Goods; "Entrusting".

(1) A purchaser of goods acquires all title which his transferor had or had power to transfer except that a purchaser of a limited interest acquires rights only to the extent of the interest purchased. A person with voidable title has power to transfer a good title to a good faithpurchaser for value. When goods have been delivered under a transaction of purchase the purchaser has such power even though

• (a) the transferor was deceived as to the identity of the purchaser, or
• (b) the delivery was in exchange for a check which is later dishonored, or
• (c) it was agreed that the transaction was to be a "cash sale", or
• (d) the delivery was procured through fraud punishable as larcenous under the criminal law.

(2) Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him power to transfer all rights of the entruster to a buyerin ordinary course of business.

(3) "Entrusting" includes any delivery and any acquiescence in retention of possession regardless of any condition expressed between the parties to the delivery or acquiescence and regardless of whether the procurement of the entrusting or the possessor's disposition of the goodshave been such as to be larcenous under the criminal law.

[Note: If a state adopts the repealer of Article 6-Bulk Transfers (Alternative A), subsec. (4) should read as follows:]

(4) The rights of other purchasers of goodsand of lien creditors are governed by the Articles on Secured Transactions (Article 9) and Documents of Title (Article 7).

[Note: If a state adopts Revised Article 6-Bulk Sales (Alternative B), subsec. (4) should read as follows:]

(4) The rights of other purchasers of goodsand of lien creditors are governed by the Articles on Secured Transactions (Article 9), Bulk Sales (Article 6) and Documents of Title (Article 7).

[Note: As amended in 1988.]


In almost every case, these statutes give the buyer of vehicles from dealers a right in the vehicle and the title that is superior to the floorplan lender.  Unfortunately, floorplan lenders often ignore these statutes and still withhold titles.  You might need a letter from a lawyer to shake loose the title from the floorplan lender.  In my practice, in Indiana, I take the position that the wrongful withholding of the title by a floorplan lender is an unfair and deceptive act that is covered by the Indiana Deceptive Consumer Sales Act. I believe the consumer can ask for $500 as a statutory penalty in the initial demand to the floorplan lender.  This should be enough to cover the attorney fee for the initial letter. In the alternative, if your state's bureau or department of motor vehicles has a titles department or a consumer assistance department, that agency may be able to help you secure a title.