Scrumptious Word Morsels

For a moment, let’s assume that I went and looked at a bike very similar to the one in the previous post. Oh, what the heck—since we’re just assuming, let’s say I went and looked at that exact bike, down to the year and the color. Now let’s assume that the aforementioned hypothetical bike was in perfect condition with only 1700 miles on it, and for a moment, let’s assume that I put down a $100 cash deposit towards the total purchase price of $3700. [Assumptions are fun, aren't they?]

Now suppose that the seller told me that there’s a lien against the title of the bike. If you’re not familiar with how loans work, this essentially means that the institution financing the current owner still owns the bike because it hasn’t been paid off yet. This presents an obvious problem for me in the area of titling. When I give the seller a certified check for $3600 (the price we agreed upon minus the deposit), I expect to receive the title in return. Well, since the seller doesn’t own the bike “free and clear”, she doesn’t have the title in her possession, either.

On the surface, it seems like the only way to resolve this is to have the seller take possession of the bike through whatever means she can. If that entails borrowing money from friends or family to pay off the remainder of the loan, then I think that’s what needs to happen. The heart of the issue is that she’s trying to sell something she doesn’t own! OK, but I really want the bike, so I’ve been scheming and trying to come up with a solution that will work for everyone. Even though I graduated from one of the best business schools in the country, they don’t teach stuff like this (useful stuff, that is) in the classroom. Here are my options as I see them:

1. Subtract amount of seller’s outstanding lien from sale price of the bike and pay this amount to seller. Pay balance of lien directly to lending institution and receive title in return. Example: seller still owes $2000 to her bank. Subtract that amount from $3600 to get $1600. Seller gets check for $1600, bank gets check for $2000, and I get a notarized title.
2. Go with seller to one of her bank’s branches and complete all paperwork on the spot. This could work, but it presents several problems:
   1. The transaction would have to be completed during normal banking hours, meaning everyone would have to take time off work.
   2. The lending institution could be located out-of-state or even online.
   3. The lending institution might not have the title on hand if, for example, it’s stored at some central location.
3. Give the seller a check for $3600 and trust that she’s going to make good on the lien and mail me the title when she gets it from her lender (usually within 15 days). Unfortunately, even though I like to think of myself as a nice guy, I’m no idiot. Remember, I’m the one who carried my pistol to our initial meeting after hearing about people using Craigslist to bait unsuspecting victims into armed robbery.

So what am I supposed to do? Does anyone have experience with dealings of this kind? I’m going to call my credit union tomorrow and find out how situations like this are normally handled, but I appreciate any and all supplemental input.

Gracias.