4 Tips Before Buying a Car

The automotive business and its development are undoubtedly among the primary business sectors in Georgia; however, this industry has its own specific characteristics. Buying a car is not a daily routine, and what needs to be considered from a legal perspective when purchasing one is an inexhaustible topic. Here, the focus will be on the 4 most crucial tips that a buyer and/or seller must take into account;

1.a. Question: Is it mandatory to register the car as your property after purchasing it?
1.b. Answer: It is not mandatory. Since a car is considered movable property, it is sufficient, for example, for one person to transfer possession of the car to another by handing over the keys, while the latter pays the agreed amount. It is presumed that a sales contract has already been concluded and is valid. However, refusing to register the vehicle can lead to the following problems:
1.c. Possible problems in the absence of registration: If the buyer does not register the car as their property at the Service Agency of the Ministry of Internal Affairs (MIA), the vehicle will remain the property of the previous owner. Consequently, any potential fines will be issued to the previous owner. Furthermore, if enforcement proceedings are initiated and/or are already underway against the previous owner, the car may be seized and impounded, leaving the new owner with the burden of initiating a legal dispute. This is merely a short list of the potential challenges.
1.d. Tip: It is essential that immediately upon purchasing the car, on the very same day, it is registered as your property at the MIA Service Agency;

2.a. Question: Is it possible to purchase a car using a so-called general power of attorney ("they will grant me a power of attorney, and I will transfer the ownership later when I have time")?
2.b. Answer: In law, anything is possible, including obtaining a power of attorney from the seller and subsequently registering the vehicle as the buyer's property. However, this entails significant problems and/or risks, which can lead to the following issues:
2.c. Possible problems when buying a car with a power of attorney: For lawyers, a power of attorney is an agency agreement that the principal can revoke at any time without your knowledge. For instance, if they grant it at 9:00 AM, they can revoke it at 9:20 AM. This creates the risk that no one knows whether the power of attorney will still be valid when you finally decide to register the car. Additionally, if the car remains the property of/registered in the name of someone else, the same problems related to not registering the property continue to apply.
2.d. Tip: Using a power of attorney is possible, but it should be strictly short-term, and you must absolutely register the car as your property as soon as possible;

3.a. Question: Should I verify the legal status of the car? Including that of the seller (alienator)?
3.b. Answer: It is not just a matter of "should," but it is absolutely mandatory to first verify the seller: specifically, whether they are listed in the Registry of Debtors, whether there are ongoing litigations against them, whether the car is pledged (mortgaged), and/or whether there are any unpaid fines on the vehicle.
3.c. Possible problems if the legal status is not verified: You check the seller of the car by their personal ID number in the Registry of Debtors and request the relevant certificate from the MIA Service Agency. All of this must be checked because the car might already be pledged (used as collateral for a loan) and/or already seized (under enforcement proceedings and/or by a court). This directly puts you in a legal predicament where you might pay money for an already seized vehicle; such a transaction is void, meaning the money will be paid for nothing.
3.d. Tip: Be sure to always verify the legal status of the vehicle, including the legal standing of the seller;

4.a. Question: Should the car be inspected by a qualified auto mechanic?
4.b. Answer: This is, of course, a purely technical matter. However, there are both external damages and internal ones that are not visible. From a legal standpoint, it is better if the car is inspected. For example, if the car breaks down on its own within 1 week, you gain the right to demand withdrawal from the contract. However, this right is also time-limited and differentiates between external and internal defects. Therefore, if you end up in a dispute, it is better to have conducted an inspection from the very beginning in case a legal battle arises.
4.c. Possible problems if the purchased item (car) is not inspected: If the sales contract is executed at the MIA, unfortunately, there is a direct clause in the standard draft of the contract stating that the parties have agreed on the quality of the item. This means that you are aware of any existing defects (if any). Accordingly, no one will alter the standard draft at the MIA Service Agency. Nevertheless, an inspection will give you the opportunity to avoid purchasing a defective item. And if a purchase with an internal defect does occur, you will need the results of this inspection to present in court to carry the burden of proof.
4.d. Tip: Be sure to inspect the car for defects, as this will help you bear the burden of proof in the future, proving that you exercised a minimum standard of due diligence and could not have known that the item had a defect;

In addition to the above, issues may also arise when purchasing a car through a company, where it is highly recommended to pay the amount directly at the point of purchase rather than to the intermediary company. Also, in the case of buying an uncleared (un-customed) vehicle, it is necessary to ascertain its history, including any debts it may have, for example, to the state. Furthermore, each arising issue requires verification from a legal standpoint. Considering all this, if such issues arise, it is better to consult an attorney;