Legal Question in Credit and Debt Law in North Carolina

Holding title to a car does not expose you to any legal liabilities. the way to avoid that is to have her listed solely as the owner/driver and have her get the car insurance in her name.

Just so I understand - you are taking out a personal loan and using the proceeds to pay for the car in cash so there will be no financing. Your daughter will then get the title to the car, correct? When she does, she then needs to list you as a lienor on the title - there is a blank for that. She might even have to send the title to you to complete the information on the title. Once it is completed, the title needs to either be sent by you or taken by your daughter to the FL DMV (I assume as she lives in FL that the car will be titled and insured there). The title will then be re-recorded and the FL DMV will then send the title to you.

I would suggest a separate agreement between you and your daughter which provides that she will repay the loan, including interest. The agreement will also require your daughter to maintain both liability/collision and comprehensive insurance on the car (which will cover loss from theft or destruction/accident not involving anyone else). When the loan is repaid, you will then have to release your lien and send the title to the FL DMV so it can be re-corded as lien free and a new title issued to your daughter.

This will protect you. If your daughter is in an accident, you are only a lienor, not owner of the vehicle so you cannot have liability for an accidents. Also, if your daughter defaults in the payments you will be able to repossess the car like any other lender. Finally, your daughter will not be able to sell the car as you will have the title.

If you are listed on the title as a co-owner, then you would be exposing yourself to a lawsuit if your daughter was in an accident and the other driver sued. Further, problems may arise - let's say you and your daughter had a falling out and she stopped the payments. You would still be liable on the loan (if you took it out) but you would not be entitled to repossess the car. You would instead have to go through a process called partition.

So I would do the first process I outlined.

Ms. Hunter's advice is correct. I will add that if you want the right to take the vehicle if she does not pay, you also need to clearly state this in the written agreement with her. Make sure you do 3 things

1. Have the vehicle described in the agreement

2. Make it clear you have the right to take possession if she does not pay

3. Make sure she signs the agreement.