Legal and traffic experts in the UAE have warned of a rise in legal disputes arising from informal used-car sales. They said excessive trust in sellers, tempting price offers and verbal agreements without an official ownership transfer expose buyers and sellers to serious financial and legal risks.

Some vehicle listings in the UAE offer buyers the option of settling outstanding traffic fines, typically ranging from AED 5,000 to AED 10,000, instead of paying for the vehicle. However, experts warn that paying these fines alone does not give the buyer any legal ownership rights.

Dr Jamal Al Ameri, a traffic affairs expert, urged buyers and sellers to avoid verbal agreements, check for legal restrictions on the vehicle before making any payment and comply with the 14-day deadline for transferring ownership.

Legal adviser Mohammed Al Hais also stressed that buyers should not be swayed by offers to acquire vehicles in exchange for settling fines without first checking the vehicle’s legal status and whether ownership can be transferred.

Court cases arising from informal vehicle deals

A review of UAE court cases shows that some used-car transactions have resulted in financial and legal disputes because the official ownership transfer procedures were not completed.

In one case, a buyer paid AED 4,200 in traffic fines on a vehicle under an agreement with the seller. However, the seller later withdrew from the deal and refused to transfer ownership. The buyer filed a lawsuit, and the court ordered the vehicle owner to reimburse the amount paid in fines.

In another case, a vehicle owner verbally agreed to sell the car in exchange for payment of its outstanding fines. Because of a personal relationship and trust in the buyer, the owner handed over the vehicle before payment and ownership transfer were completed.

However, the buyer used the vehicle without completing the legal procedures and incurred AED 16,000 in new traffic fines. The vehicle was also damaged in accidents, reducing its market value. The owner subsequently took legal action against the buyer.

In a third case, a person bought a vehicle for AED 7,500 and requested two days to complete the ownership transfer. However, the buyer kept the vehicle, committed traffic offences resulting in fines of AED 4,835 and refused either to return the vehicle or transfer ownership.

The court rejected the seller’s claim to recover the fines because there was insufficient evidence that the relevant authorities had been notified to identify the person responsible for the offences.

The registered owner remains legally responsible until ownership is officially transferred

Dr Al Ameri stressed that, under the executive regulations of the UAE Federal Traffic Law, vehicle ownership must be transferred through official authorities.

He explained that until ownership is officially transferred, the registered owner remains responsible for liabilities and offences associated with the vehicle.

He said verbal agreements or handing over a vehicle without transferring its registration can expose both parties to serious legal problems.

He also advised buyers to have vehicles inspected at authorised testing centres before making payment to ensure they have no history of serious accidents or major mechanical defects.

Digital checks for legal restrictions, including court-ordered seizures or barriers to ownership transfer, are also essential before buying a vehicle.

Al Ameri recommended that payment for the vehicle, or settlement of its fines, take place at the same time as the official ownership transfer at government service centres or through official police smart applications.

Paying fines does not remove all restrictions on a vehicle

Legal adviser Mohammed Al Hais warned that some buyers do not understand the difference between traffic fines and other legal restrictions on a vehicle.

He said a vehicle may be subject to bank finance or a court-ordered seizure in addition to traffic fines. In such cases, paying the fines does not necessarily remove the restrictions or make an ownership transfer possible.

He explained that selling a vehicle in exchange for settling its fines does not necessarily constitute fraud, provided the seller has the legal authority to sell it and the existing restrictions can lawfully be removed.

However, an official ownership transfer requires the settlement of fines, the discharge of bank finance and other legal rights or restrictions, and compliance with vehicle licensing and registration requirements.

Al Hais also stressed that purchasing a vehicle does not transfer criminal liability for previous offences to the buyer, as criminal liability is personal.

He added that an unregistered transaction is not necessarily invalid, and a distinction must be made between the validity of the contract between the parties and the official ownership registration process.

Warning over fraud in the used-car market

The legal adviser highlighted common forms of fraud in vehicle transactions, including forged documents, impersonating the owner, selling rental vehicles, concealing bank finance or serious accident history, tampering with odometers and posting fake advertisements to obtain deposits.

He explained that under Article 451 of the UAE Crimes and Penalties Law, obtaining another person’s property through deception or false representations is punishable by law.

This may also include selling vehicles with legal restrictions that cannot be removed when the seller conceals the issue and deceives the buyer.

Risks of selling vehicles for post-dated cheques

Al Hais also warned against selling vehicles in exchange for post-dated cheques, saying that handing over a vehicle before the funds have cleared exposes the seller to financial risk.

He explained that a bounced cheque does not necessarily constitute fraud on its own unless deception and criminal intent are also present.

However, under the UAE Commercial Transactions Law, the holder of a bounced cheque may, where the legal conditions are met, use it as an enforceable instrument to pursue direct recovery of the funds.

Actions such as deliberately issuing a cheque in a way that prevents it from being cashed or closing the bank account before the cheque is presented may also be punishable.

Key recommendations for buying a vehicle safely in the UAE

Experts advised used-car buyers to verify the identities of the seller and legal owner before completing a transaction and to match the vehicle’s chassis number against its documents.

The vehicle’s mechanical condition, accident history, outstanding fines, bank finance and any judicial or legal restrictions should also be checked through official authorities.

Al Hais said ownership must be transferred by submitting an official application to the relevant authorities, including Dubai’s Roads and Transport Authority (RTA) or traffic departments.

He stressed that relying on paper contracts or payment transfer receipts without officially registering ownership could leave the previous owner liable for legal responsibilities associated with the vehicle.

The legal adviser recommended documenting all financial agreements in writing, including refund terms if the ownership transfer is not completed.

Payment should also be coordinated with the removal of legal restrictions and completion of the ownership transfer to prevent buyers from discovering, after settling the seller’s debts, that the vehicle cannot be registered in their name.

He said receiving cash or confirming that a bank-guaranteed cheque has fully cleared before signing the transfer document are among the safest options for sellers.

What should you do if you suspect fraud?

Al Hais urged buyers who notice signs of fraud to retain all advertisements, messages, correspondence, contracts and payment receipts and report the matter to the relevant authorities as soon as possible.

He concluded that the safety of a used-car purchase should not be judged solely by a low price or an attractive advertisement. The authenticity of the documents, the seller’s identity, whether restrictions can be removed and whether ownership can be legally transferred should be the main considerations.