A bill aimed at shielding vehicle owners from liability after they legally transfer ownership to a buyer passed out of the House Committee on Transportation with a recommendation for approval Thursday morning.
Senate Bill 1522 would clarify that an owner selling his or her vehicle would not be liable for any violations resulting from the operation of a sold vehicle if the seller complies with state law in transferring ownership of the vehicle.
In public testimony on the bill, Shaun Pinard of Pacific Auto Auction said the current system (under Hawaii Revised Statutes 286-52) puts an “undue burden” on the seller of a vehicle who transfers it to a new owner.
Former owners can comply with the letter of the law and still find themselves liable for the actions of a buyer of the motor vehicle, he said.
“This bill hopes to clarify the law that is already in existence for the purpose of releasing the seller of liability once the vehicle is transferred from their end,” Pinard said.
As an example, he said that, when a person sells a vehicle, he or she first signs the vehicle title, then files a notice of transfer with the Division of Motor Vehicles. Then the former owner hands the title over to the buyer of the vehicle and the process is now out of his or her control.
The buyer is supposed to report to DMV and have the title transferred into his or her (the new owner’s) name.
“However, there are many failures that can occur here which are beyond the sellers’ control despite them having done everything to the letter of the law,” Pinard said.
If the new owner gets a parking ticket or is involved in a hit-and-run incident, police seek out the last person on the vehicle ownership title.
“If the vehicle wasn’t transferred by the buyer, then the seller, despite having complied with current law, is put into a position of having to defend themselves against such claims, sometimes in perpetuity,” he said.
Pinard said the bill is “a good first step in alleviating undue burden on the seller of a motor vehicle, (but) more can be done.”
“Clarifying the release of liability is exceptionally important, but to truly rectify the problem, there must be a mechanism by which the last person on title of the vehicle isn’t whom the tickets are posted to,” he said. “Instead, posting those tickets to the buyer of the vehicle, once a notice of transfer has been submitted, would close the loophole that allows the buyer to operate the vehicles while transferring the liability for their decisions to the previous owner.”
The legislative finding of Senate Bill 1522 agrees with Pinard’s assessment.
“This situation is unfair and frustrating for transferors, and ripe for abuse and exploitation by transferees,” the bill says. “Years’ worth of news reports… demonstrate that this problem continually plagues motorists.”
Glen Hayashida, president and chief executive officer of the National Kidney Foundation of Hawaii, said the vehicle transfer problem also complicates matters for nonprofits, such as the Kidney Foundation, that accept used vehicles as part of a car donation program to support their mission.
“While the majority of donated vehicles are processed without issue, there have been instances where donors — who generously contribute their vehicles for a good cause — face unnecessary liability due to delays or failures in the title transfer process,” Hayashida said. “Car owners who donate their vehicles to NKFH or other charitable organizations should not have to worry about experiencing liability after their donation. Senate Bill 1522 would provide these donors with peace of mind, ensuring that their act of generosity does not result in unintended legal or financial consequences.”
Voting in favor of the bills in committee were House Transportation Committee Chair Darius Kila, Vice Chair Tina Nakada Grandinetti and Reps. Tyson Miyake, Luke Evslin, Lisa Kitagawa and Christopher Muraoka. Reps. Elle Cochran, Trish La Chica and Elijah Pierick were absent and excused.
The bill originated in the Senate, and has passed first reading in the House. The measure has been referred to, but not yet heard, by the House Committee on Judiciary & Hawaiian Affairs, chaired by David Tarnas of Hawaiʻi Island and vice chaired by Mahina Poepoe of Molokaʻi.
