Can a car be sold with financial encumbrance or reservation of ownership?

What is a financial charge or reservation of domain?

A reservation of domain is a common clause in financing contracts that prevents the sale of a car until it is fully paid off. Although the car is in the buyer's name, legal ownership remains with the financing company until the reservation is lifted.

This charge is usually registered in the Register of Movable Property and appears as an administrative limitation in the DGT report. We explain it very well in this article.

How to check if a car has charges (DGT report)

Before buying a car, request the complete DGT report. This document indicates:

• If the vehicle has an active reservation of domain

• Who the creditor is (financing company, bank, leasing company)

• If there are liens, seals, or limitations on the transfer

You can also consult the Register of Movable Property in your province to confirm the charge and request its cancellation.

What to do if the car still owes money?

If there is an active reservation:

1. The owner must settle the debt with the financing company.

2. Request the cancellation letter from the entity.

3. Submit the letter along with the corresponding form to the Register of Movable Property.

4. Once the charge is lifted, request a new DGT report without charges.

You should never buy a car with an active reservation if you do not have documentary proof that the cancellation process is underway and within your contractual control.

Frequent cases: banks, leasing, financing companies

• Traditional banks and financing companies: in most private financing, the reservation remains active even if the car is paid off unless it is lifted by someone.

• Leasing: the car is owned by the leasing company until the purchase option is signed and the reservation is lifted.

• Leasing / fleets: often include buyback conditions and cross charges. Beware of cars that come from companies with financial problems.

How to legally protect yourself as a buyer and seller

• Always request the complete DGT report before closing the purchase.

• Include a clause in the sales agreement stating that the vehicle is free of charges.

• Do not pay the total until you have documentary proof of cancellation.

• Work with agencies that can verify and process the cancellation quickly.

Practical summary

A car with a reservation of domain cannot be legally transferred until the charge is lifted. Detecting and managing it correctly is key to avoiding blockages and losses.

If in doubt, always check the DGT report and protect your transactions with clear documents and timelines.

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