Explainer: How incomplete transfer of vehicle ownership can land previous owners in legal trouble

Hyderabad: Selling a bike or car may seem like a simple deal, but even a small lapse in the ownership transfer process can drag former owners into serious legal and financial trouble.

From traffic challans and insurance disputes to criminal investigations, authorities warn that failure to update government records can prove disastrous.

Recent incidents from Hyderabad and Delhi have once again exposed the hidden dangers of selling vehicles without completing the legally mandated transfer of ownership.

Previous owner held responsible for new traffic challans

Rajesh Kumar (name changed), a resident of Hyderabad, sold his motorcycle nearly 10 years ago after a middleman assured him that ownership transfer would be taken care of. Trusting the intermediary, Rajesh accepted the cash and handed over the bike.

However, three to four years ago, traffic violation challans linked to the same bike began arriving at his home. When he tried to trace the middleman, the person was untraceable. Since the vehicle was never officially transferred in transport records, Rajesh remains legally responsible even today.

Delhi car explosion highlights ownership risks

After a recent car explosion near the Red Fort Metro Station in Delhi, investigating agencies first tracked the registered owner of the vehicle.

Based on registration records, a person was detained and questioned. The incident served as a reminder that law enforcement goes strictly by the RC records, not by private sale agreements.

Payment does not end responsibility; name change in RC is a must

According to transport department officials, many people believe that once they receive money and hand over the vehicle keys, their responsibility ends. Transport officials clarify that this assumption is legally incorrect.

Until the new owner’s name is officially entered into the RC, the old owner is held accountable for traffic violations, road accidents, insurance claims and criminal misuse of the vehicle.

Even one overlooked document can keep legal liability firmly with the seller.

Why old vehicles attract criminal use

Police sources reveal that criminals often prefer old vehicles for illegal activities because ownership is rarely transferred properly.

Such vehicles are commonly used for drug trafficking, smuggling, robberies and violent crimes. When caught, the first person to face questioning is always the registered owner, not the actual offender.

Loan vehicles: Clear hypothecation before you sell

If a vehicle has been purchased with a bank or finance company loan, hypothecation is mentioned on the RC.

Before selling such a vehicle, owners must obtain Form 35, collect a No Due Certificate (NDC), submit EMI repayment proof and remove hypothecation officially at the RTO. If the new buyer stops paying EMIs, banks and finance firms will legally proceed against the original owner.

Agreements and delivery challans offer limited safety

Many sellers rely only on stamp-paper agreements or delivery challans after selling a vehicle. While these may help in civil disputes, they do not change ownership in government records. Legally, the person whose name appears on the RC will continue to be treated as the owner.

Exchange of old vehicles during new purchases can also backfire

During the purchase of a new car or bike, dealers often take old vehicles in exchange and resell them. In the excitement of buying a new vehicle, many owners skip confirming the RC ownership change. This negligence later becomes the root cause of challans, tax dues and police complications.

Insurance transfer is often ignored, at a heavy cost

If a vehicle insured for one year is sold after a few months, the remaining insurance period must be formally transferred to the new owner. If this is not done, insurance claims may be rejected, compensation may be denied and legal disputes may arise after accidents. Several policies are valid only for the original insured owner.

What to do if your sold vehicle is still in your name

If your sold vehicle is still registered in your name and the present user is unknown, immediately approach the Transport Department and police, submit all known details such as vehicle number, chassis number, year of sale and buyer’s name and contact, if available.

If even the vehicle number is not remembered, approach the nearest RTO and request a search in the ‘B Register’ after paying the prescribed fee. Knowing the original registration office makes recovery easier.

Former owner bears full legal liability

Joint Transport Commissioner Chandrashekhar Goud said, “Transferring ownership after selling a vehicle is the responsibility of the old owner. If any crime or accident occurs, the registered owner will face the consequences. Also, a person owning two vehicles must pay an additional 2 per cent tax on the second vehicle. Once the sold vehicle is officially transferred, this tax burden is removed.”

Goud also said that one rule every vehicle seller must remember is never hand over a vehicle without completing RC ownership transfer, hypothecation clearance, insurance transfer, and written acknowledgement. One careless sale can result in years of legal suffering, he added.