Leinholder liability

[snousle]

Dear Lazywebs,

I have loaned a friend money for the purchase of a motor home, with everything taking place in California. I am named as leinholder on the title. If he is uninsured or insufficiently insured and causes an accident, am I liable for damages?

A knowledgeable friend says yes, while several dubious content-farm sites say no. I have been unable to find an authoritative answer.

Comments

[furr-a-bruin.livejournal.com]

I'll put it this way: do you think any bank would tolerate being held liable for an accident with any vehicle they issued a loan on?

I can't give you an "authoritative" answer - but my very strong suspicion is that no, you cannot be held responsible because no bank, credit union or the like is going to be willing to be held responsible and they're the ones who appear most often on a title as lienholder.

[barbarian-rat.livejournal.com]

The registered owner is the one liable, not the lienholder.

[oscarlikesbugsy.livejournal.com]

2-cents? I would say no.

It would take some enterprising uninsured-motorists lawyer to swing it, in almost any state, right?

I suppose they could try to make or 'spin-up' a case that your loan wasn't really a "loan", that you are the "true" owner. To do that, they'd have to have a lot of information, which I don't know how easy it would be to get.

If you wanted to really, really dot "i's", one might take steps to make that case harder. But, I'd have to think that such a case is an uphill battle given that, say, a mother could _give_ a car to her daughter and not be liable for her daughter's operation of the vehicle. Property law wouldn't work smoothly if there was an (expensive) 'look through' to see if every loan transaction was a sham, that your security interest (lien) in the property was really "ownership".

[dorisduke.livejournal.com]

Lien holder just means you can collect the debt, but incurs no liability.

[chef2b.livejournal.com]

If you are the registered owner, then yes you have liability. There is a statutory cap of $15,000, but exceptions exist that can make it limitless.

If by lienholder you mean that you are listed on the title as legal owner then no, you have no liability. About the only thing that you would want to insure the car for is comprehensive/collision coverage so that you get the fair market value of the car if it is wrecked beyond repair.