What a car's reservation of title is and how it affects us

When buying a car from a private seller, you must check that it is not subject to any kind of encumbrance. To do so, the most advisable thing is to request a full vehicle report from the DGT, which can be done very easily through the institution’s website. One of the things you may find in that report is that the vehicle has a reservation of title. But what exactly is a car’s reservation of title?

On some occasions, when a vehicle is bought through a financial institution, which manages the vehicle’s instalment payments, this clause appears, because in reality it is the financial institution that actually buys the vehicle from the dealership and sells it to the final buyer. This means that the vehicle does not belong to the user, but to the financial institution. At least, until the vehicle is paid off in full.

Effects of a car’s reservation of title

The effects of a car’s reservation of title are significant and can cause certain problems when selling or buying this vehicle. To begin with, the car’s owner is not the user, but the company that sold it. The user only has the right to possess and use the vehicle, but is not really its owner.

For that reason, they cannot sell it to any other person. The change of name cannot be carried out unless the debt with the owning entity has been cancelled. This operation can be carried out in two cases: if the debt is cancelled, and if authorisation is requested from the owning company. The company must grant permission for the change of name, but in this case it may require that the debt be transferred to the new user, having them sign the documents that certify this change of user.

Cancelling the reservation of title

Once the car’s debt has been settled we face a problem. The thing is that the reservation of title is not removed automatically. Nor is it carried out by the original selling party and owner of the vehicle’s title and ownership, so the buyer has to do it. It is important to complete this procedure in order to remove this encumbrance on the vehicle and avoid problems.

The most common way to remove the reservation of title is to use a gestoría (administrative agency), which will handle this procedure. But it is also possible to do it without going to an agent. These are the steps to follow to remove the reservation of title on your own.

• Locate the vehicle’s sales contract: This way we will know the identification of the financial institution, which allows us to determine ownership of the asset being checked. In this case, the vehicle.
• Request a simple report from the Movable Property Registry in the province where the car was registered: Here you will find all the data related to the car, including who the owner of the vehicle is and any other encumbrances it has.
• Send that simple report, together with your ID card (DNI), to the financial company, asking it to send a payment letter for the debt: The institution will carry out the procedure and within a reasonable period will send the document certifying payment of the debt.
• This documentation must be submitted to the Movable Property Registry, together with a photocopy of the ID card, the completed form for cancelling the reservation of title, the car’s documentation and proof of payment of the fees. It can also be sent by post or courier service.

After a reasonable time, the status of the car must be checked by requesting a simple report from the DGT to verify whether the procedure was completed successfully.