Vehicles are generally considered marital property which must be distributed in the event of a divorce. It is common, however, that the divorcing couple will fail to transfer title to the vehicles to reflect the terms of the property distribution. Many dealers have encountered a buyer seeking to trade in a vehicle based on a settlement agreement or judgment in lieu of proper title. In this situation, the dealer should walk away from the deal. Under Florida law, a copy of a settlement agreement or judgment from a court is insufficient to protect the dealer from liability associated with any claims made by the former spouse or other interested parties.

Another common scenario involves a demand made upon the dealer to return a vehicle that was taken in on trade, by a person claiming he or she was awarded the vehicle in a settlement agreement or judgment. The dealer will be protected from the claim based on its status as a bona fide purchaser for value (“BFP”), as long as the original transaction was made based on proper title and the dealer was unaware of the settlement or judgment. A BFP is a buyer who purchases something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in, claims or equities against the title. Therefore, the person making the demand must look to their former spouse, not the dealer.

Kelley Lester is an associate with the firm and concentrates her practice areas on commercial litigation and family law.