Contrary to popular opinion a vehicle CAN be transferred to a new owner with an lien (embargo) against it, this depends on the type of debt and also the stage proceedings to recoup the debt have reached. This can cause problems for the new owner so it is essential to obtain a report (Informe de vehiculo) before handing over any money.
If you have already purchased or the debt is your own, what can you do about the embargo? Firstly you need to distinguish between two types of debt – to private creditors and to a government agency. Depending on the case, the procedure is different.
When money is owed to a private creditor, for example, a finance company, a bank, an individual … only a court can order the removal of the good. Once a judge orders an embargo, there is an established order of seizing goods and vehicles are in sixth position. The list is: cash and accounts; bonds and securities or other financial instruments; jewellery and art objects; interest and other income of all kinds apart from salaries; chattels (which includes vehicles); real estate (homes, premises …); salaries, wages, pensions and income from independent professional and commercial activities.
If the debt is to Government agencies and administrations (traffic fines, tax debts, social security…), there is no requirement for a court order, but there are 2 stages -the lien or embargo of the asset and then seizure of the asset (precinto).
Until the seizure order is emitted, the actual owner (even if the debt was not their’s) can continue to use the vehicle and is responsible for it until the vehicle is passed to a new owner at auction. This means the registered owner will have to keep paying car insurance, applicable taxes and possible fines, even if the vehicle has been seized and they can not use it.
If the embargo was not registered at Trafico at the time the new owner buys the car then the new buyer is not liable for that debt, but if the debt was reflected in the vehicle register at the time of purchase the new owner is responsible for the debt, trafico will advise of the embargo at the time of transfer and a paper will be signed to say the new owner accepts the transfer of the embargo. This is why it is so important to request vehicle report from the DGT.
If the vehicle has passed from the lien to seizure stage the vehicle could be transferred but a new Permit to be on the road will not be issued (Permiso de circulación) to the new owner.
If the original owner knowingly sells the car to avoid paying the debt they may be guilty of concealment of assets punishable by imprisonment of one to four years and a fine of a minimum of 720 euros.
In the case of a driver who buys a car without knowing its was embargoed, they may denounce the seller for fraud and in fact standard bill of sale contracts state that the vehicle is free and clear of encumberments and is anulled if this proves not to be the case.
In practice as far as the authorities are concerned, the seizure of a vehicle is more cumbersome than other goods: you need to have a pound to store it, its value deteriorates over time and if the administration does enforce the embargo and seizes the car and then auctions it, they get little money for it unless the car is high end, seizure could take years if it happens at all.