WHAT HAPPENS IF YOU DON’T REGISTER YOUR VEHICLE PURCHASE CONTRACT
Motor vehicles, as movable assets subject to registration, require specific formalities for the transfer of ownership to take legal effect before third parties. According to civil law, acts that constitute, transfer, or modify real rights over these assets only have full effect if they are registered with the corresponding authority. If this registration is not completed, the private contract will be valid between the buyer and seller, but unenforceable against third parties.
Practical example: Juan buys a used car through a private contract, without registering it with the Transit Authority or Real Property Registry. A month later, the seller sells the same vehicle again to another person, Pedro, granting him a new private contract and a notarized power of attorney. Pedro registers the purchase. Although Juan has already paid for the car and is in possession of it, Pedro will be legally recognized as the owner because his purchase was registered. Juan could lose the vehicle without the right to recover it.
RISKS DUE TO HIDDEN DEFECTS IN THE VEHICLE
LIMITATIONS OF THE PRIVATE CONTRACT AS EVIDENCE
Private documents do not have a certain date against third parties unless recognized by a court, upon the death of one of the parties, or due to a verifiable event. This temporal uncertainty can generate conflicts regarding the priority of rights. Furthermore, for a private contract to have enforceable power, it must be recognized by a competent authority or a notary public, which limits its practical use in judicial proceedings (Articles 1301 of the Civil Code; 148, 377, and 379 of the Civil Procedure Code).
Practical example: Lucía sells her car through a private contract and grants a notarized power of attorney to the buyer. They agree to payment in installments. The buyer stops paying, and Lucía wants to recover the vehicle. But since the private contract was not notarized or recognized by a notary, it cannot be used directly as enforceable evidence in court. She needs to initiate an additional process for the contract to gain legal validity, delaying her claim and possibly causing her to lose the vehicle or the money.
RISKS OF BUYING A VEHICLE WITH A NOTARIZED POWER OF ATTORNEY IN BOLIVIA
Using a power of attorney to sell a vehicle involves additional risks. The mandate must be granted through a public document, and any act outside the expressly conferred powers may be nullified. If the power has been revoked, expired, or issued by someone without authority, the sale may be considered invalid and the buyer left unprotected. More seriously, if the agent acts in a conflict of interest, the contract can be annulled (Articles 805, 813, 471 of the Civil Code; Articles 1238, 1241 of the Commercial Code).
Practical example: A father grants a notarized power of attorney to his son to sell his vehicle. Weeks later, he revokes it but does not formally notify his son. The son, unaware of the revocation, sells the vehicle through a private contract to a third party. Since the power of attorney was no longer valid, the sale contract has no legal effect, and the buyer, even if they paid and received the vehicle, will not be able to register it or claim legal ownership.
HIDDEN LIENS WHEN BUYING A USED VEHICLE IN BOLIVIA
Vehicles may be subject to mortgages, non-possessory pledges, judicial seizures, or preventive measures ordered by tax authorities. These encumbrances must be registered to be enforceable against third parties, but in practice, they are often not verified before concluding a private contract sale. If the vehicle is involved in a judicial proceeding, the authority may prohibit its sale from the moment a preventive annotation is entered (Articles 1362, 1395, 1545 of the Civil Code; 887 and 896 of the Commercial Code; 288 of the Family and Family Procedure Code).
In such cases, it is advisable to include a clause in the contract guaranteeing protection for eviction and hidden encumbrances. This clause obliges the seller to be liable if the buyer loses the vehicle due to a final court ruling declaring that the asset belonged to a third party or was subject to an undisclosed lien. Under Article 629 of the Civil Code and Article 901, the seller is liable for eviction and hidden defects. Moreover, the statute of limitations for this action is suspended until the eviction is enforced (Article 1500, paragraph 5).
Practical example: Sebastián buys a used vehicle through a private contract and notarized power of attorney, without verifying whether it had legal proceedings or tax debts. A few weeks later, the Tax Authority orders the seizure of the vehicle due to an outstanding tax debt from the previous owner. The car is confiscated by administrative order. As the contract did not include an eviction clause, and there is no proof that the seller informed him of the issue, Sebastián is left in a complex legal situation that must be resolved through civil litigation to determine responsibilities and possible legal remedies.
IN SUMMARY
The sale of vehicles through unregistered private contracts and powers of attorney may offer apparent administrative simplicity, but it conceals a variety of legal risks. From ownership and eviction issues to legal disputes over hidden defects or undisclosed encumbrances, the buyer is exposed if formal legal requirements are not met, especially regarding asset registration. For the seller, this practice also entails risks, such as nullity claims or civil liability if they cannot prove legitimacy and sufficient authority in the act of disposition.
Our law firm offers specialized services to ensure safe transactions in the purchase or sale of vehicles. If you require legal advice or are facing a legal dispute related to this type of transaction, do not hesitate to contact us.
Frequently Asked Questions (FAQs)
Is a private vehicle sale contract valid?
Yes, it is valid between the parties, but it does not protect against third parties if it is not registered with the corresponding authority.
What happens if the seller is no longer the legal owner of the vehicle?
The buyer may lose the vehicle if the rightful owner claims it through legal proceedings.
Can a simple power of attorney be used to sell a vehicle?
No, it must be granted through a public document and must include express authority to dispose of the asset.
How can I verify if a vehicle has debts or liens?
By consulting public registries and reviewing the vehicle’s legal history with the appropriate authorities.
What is the effect of a private document not recognized by a court?
It has limited evidentiary value and cannot be used as an enforceable title in judicial proceedings.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
