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  1. #1

    Default Private Car Buyer Backed Out and Stopped Payment on His Deposit

    My question involves a consumer law issue in the State of: Georgia

    I am a private party in the state of Georgia. On Saturday a buyer came to see my car and agreed to purchase it for $15,500, contingent on a wheel bearing repair and a satisfactory PPI (pre-purchase inspection). I asked for a non-refundable deposit and he wrote a personal check for it. He was in a hurry to leave, but I insisted we have a written document of some kind and created a purchase agreement that states:

    "I (my name) accept a non-refundable deposit of $500 towards (vehicle) at a purchase price of $15,500 pending nothing major showing on a PPI. This is inclusive of the front wheel bearing repair. to be made by seller. Also pending clean car fax. Minus $150 for the rear tires, making the final price $15,350.

    (my signature, printed name, date)
    (his signature)

    this agreement expires July 7-24-13 if a formal agreement can be agreed"

    We wrote it as we talked as he was in a hurry as he was running late for something. I realized there was no expiration so I asked him to write in it expires Wednesday, so he wrote that in below the signatures. I'm not sure what it means, except that there seem to be two explanations. The reasonable one being that a formal agreement made by Wednesday supercedes this agreement, and the unreasonable one being that I will hold the car for him until the end of time.

    Either way, I offered to let him take the car. Since I needed to have the repair done immediately, I am unfamiliar with the local shops and would need time to research them, and I was happy with the sale price, I agreed to let him have it repaired at the Toyota dealership near his house. It made sense to us as it would be convenient for him, as he told me he wanted to take it there for a PPI. He left the car there Monday morning and they repaired the wheel bearing, which cost me almost $700. I could have done it myself for far less ($150 I think) or had a smaller shop do it for considerably less.

    Tuesday he picks the car up, declines the PPI at Toyota that he is supposed to pay for, and tells me he needs to talk to his wife. Later that day he calls me and lets me know that they do not want to purchase the car. In the conversation he explains he had his cousin at Firestone do a PPI, and the only things they found were a scratch on the front bumper, a loose mudguard, and a barely audible ticking from the HVAC fan. Seeing as this was nothing new nor major wrong, I asked why they don't want to buy it, and he told me they simply wanted to purchase a new car.

    I met with him to receive the vehicle, and he demanded his check be returned to him. I refused to return it as our agreement states it is non-refundable. Also because I have told other buyers that the car is sold and they have gone elsewhere or moved on. We got into an argument about it where he began to pretend it was refundable if he did not buy the car and he continued to refuse to give me the deposit we had agreed upon. I received the receipt for the over-priced repair and left. He put a stop payment on the check he gave me.

    Now I am out $700 for a repair I made based on a purchase agreement we had. I would have made the repair for far less on my own time. I am also out my other buyers who have moved on and out my non-refundable deposit of $500. He is saying that the deposit is towards the purchase and because he did not purchase the car, the document is now "void." Sounds like BS to me. What are my options here?


    TL;DR

    I took a non-refundable deposit contingent on a $700 repair and successful PPI.
    I had the vehicle repaired and the buyer refused a PPI. He had a PPI done by his cousin informally.
    He then changed his mind and returned the vehicle, saying he wanted to purchase a new car instead.
    He put a stop payment on the deposit check and is telling me he does not have to pay me.

  2. #2
    Join Date
    Oct 2006
    Posts
    5,457

    Default Re: Ga: Buyer Backed Out, Stopped His $500 Check and and Left Me with a $700 Bill

    Lesson to future readers with similar situations:

    Do not accept a check for a non-refundable deposit. Cash only.

  3. #3

    Default Re: Ga: Buyer Backed Out, Stopped His $500 Check and and Left Me with a $700 Bill

    Or if you do, cash it immediately. It was an intra-bank check so it would have cleared same day. Now it will be a large hassle to accomplish the same thing, if at all. :\ I'm currently researching Google Scholar for similar cases in GA and will update if I find something.

    Can a mod please change the title from "Down Payment" to "Deposit?" Thanks!

  4. #4
    Join Date
    Sep 2005
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    73,787

    Default Re: Private Car Buyer Backed Out and Stopped Payment on His Deposit

    Quote Quoting jacqueshaugh
    View Post
    On Saturday a buyer came to see my car and agreed to purchase it for $15,500, contingent on a wheel bearing repair and a satisfactory PPI (pre-purchase inspection). I asked for a non-refundable deposit and he wrote a personal check for it. He was in a hurry to leave, but I insisted we have a written document of some kind and created a purchase agreement that states:

    "I (my name) accept a non-refundable deposit of $500 towards (vehicle) at a purchase price of $15,500 pending nothing major showing on a PPI. This is inclusive of the front wheel bearing repair. to be made by seller. Also pending clean car fax. Minus $150 for the rear tires, making the final price $15,350.
    Quote Quoting jacqueshaugh
    Later that day he calls me and lets me know that they do not want to purchase the car. In the conversation he explains he had his cousin at Firestone do a PPI, and the only things they found were a scratch on the front bumper, a loose mudguard, and a barely audible ticking from the HVAC fan. Seeing as this was nothing new nor major wrong, I asked why they don't want to buy it, and he told me they simply wanted to purchase a new car.
    If you intended that deposit to be non-refundable even if a pre-purchase inspection turned up serious problems, what you have is a poorly drafted clause. Frankly, it's difficult to imagine a buyer intentionally agreeing to a clause that made the deposit non-refundable in the event that a serious mechanical problem was detected with the vehicle. You appear to agree that the outcome of the inspection is a contingency, with the deposit being refundable if a "major" issue is identified. The question thus becomes, "What is 'major'?" You can argue that the problems he identifies are not major, and I am not going to make any attempt to argue that they're significant - at least from your description - but with no definition of major opinions can vary as to what that means. Is a "scratch on the front bumper" minor because it's small and has no impact on the performance of the vehicle, or is it "major" because the car would have to be in a body shop for two days to repaint the bumper? It's not open and shut.

    You're not going to recover the cost of the wheel bearing repair, as it's still your car and it was always understood that the cost of that repair would come out of your pocket. Your agreed sale price was effectively $14,650.

    What you need to do in the short-term is to mitigate your damages by continuing your effort to sell the vehicle. In addition to a potential claim for the deposit, you have a potential claim for the difference between the ultimate (arm's length, market value) sale price and the $14,650 you would have netted from the sale of the vehicle to the buyer who backed out.

  5. #5

    Default Re: Private Car Buyer Backed Out and Stopped Payment on His Deposit

    Mr. Knowitall,

    The wheel bearing was a known issue and I intended to repair it before selling the vehicle. The only thing I care to sue him for is to get my $500 deposit back, as it was intended to cover costs should he back out. These costs include the difference between an acceptable repair ($400) and the Toyota repair ($700). I don't really care to sue him for the difference in sale prices, that seems somewhat uneccessary to me as I have time to wait for someone else.

    The scratch, mudguard, and HVAC sound were all easily determined on the test drive. There is no documentation of this aside from the mudguard and scratch, visible in the photos from the vehicle ad. The car is back up for sale and will sell to someone else, but the deposit was intended to make up for buyers I turned away as well as the increased repair cost should he back out.

    I intend to take him to small claims court for the deposit, and am wondering if the case is clearly in my favor. The inspection report from when the car was repaired shows absolutely nothing wrong with the vehicle aside from the rear tires, and I am aware it is in nothing short of excellent condition with the exception of flaws mentioned here. If there's a possibility I might not be successful, it may not be worth it.

    - - - Updated - - -

    Thanks again, and to answer the previous question, I intended for the deposit to be refundable should a major item come upon an inspection. All three issues he cited are clearly notable without even driving the car anywhere. Two visual (visual inspection) and one simple noise when the car is on and still (fan noise). I am in the automotive industry and in the industry these issues are not regarded as major, especially when it comes to a 7 year old vehicle.

  6. #6
    Join Date
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    Default Re: Private Car Buyer Backed Out and Stopped Payment on His Deposit

    Again, you are free to take him to court and try to convince the judge that your measure of what is or is not "major" should govern, not his. He is free to respond that the provision is ambiguous, the measure is subjective, and that in his view the defects identified are "major".

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