Legal Files (84)

  The long legal battle over ownership of the #1 Briggs Cunningham 1960 Le Mans Corvette is over. When we last wrote about this fascinating case (January 2014, p. 42), the parties were about to argue a motion to dismiss the lawsuit entirely, which was not granted. A few weeks ago, they went to court to argue another motion about storage of the Corvette. The judge, in a surprise move, took them into his chambers and told them they should find a way to settle the case. Just 4½ hours later, they reached a final settlement under which the Corvette…
  We’ve read about many court cases involving collector cars, but here is a new one — a father and son in a bitter court battle over the ownership of a four-car Lancia Stratos collection. The cars are a 1971 HF, a 1975 HF Silhouette Turbo, a 1975 Stradale street car and a 1975 Safari. After successfully defending himself against criminal charges in Austria and Germany, the son lost the ultimate battle in the London High Court, which ruled that the father was the rightful owner of the Lancias. The disappointed son has vowed to appeal, and to seek redress…
  Last month, “Legal Files” focused on ways that a buyer can protect himself in a collector car purchase transaction. This month, we are focusing on how the seller can protect his interests. In today’s hot collector car market, the seller’s main problem is not getting the car sold, but keeping it sold — that is, not having to buy it back when the buyer complains that the car is not “as it was represented to be.” Watch what you say and write Be very careful about how the car is described and what is said about its nature, condition,…
  The collector car market has been very strong the past few years, and many cars are trading at prices that were unheard of not long ago. An unfortunate consequence of today’s market is that mistakes can cost a lot more than they did before. There also is a perception that good cars sell super quickly, so you have to move fast to get the car. In this situation, trouble can come very quickly indeed. Savvy collectors need to balance their enthusiasm with care and intelligence. This month, we’ll look at ways that a buyer can protect himself. In a…
  Collector car insurance policies are the coverage of choice for car collectors. The premiums are very low, and you get better service and claims treatment. But while collector car insurance policies, as a class, are almost always superior to your basic consumer auto insurance policy, they are not all created equal. Are you covered? Here’s a few examples of what to check in your policy: Other Drivers: With one notable exception, all insurance policies cover you for anything that happens when your car is being driven by someone you have authorized to drive it — a “permissive user.” The…
  A recent Federal District Court decision in Illinois should be of serious concern to auction bidders. If it stands, we might all have to take a full coterie of mechanics and consultants with us to each auction. Our plaintiff, “Ted,” was a successful bidder at a 2011 auction. (“Legal Files” won’t identify the auction company because, as will be explained later, it isn’t particularly unique in this regard.) Ted purchased a 1967 Corvette 427/435 coupe at a hammer price of $68,500 — $72,610 after buyer’s commission. The Corvette was in beautiful condition, and it was displayed with an NCRS…
We all know that it’s going to be windy when a low-pressure area bumps up against a high-pressure area. The difference in air pressure sucks air into the low-pressure area until the pressures are equalized. “Legal Files” recently reported (June 2014, p. 54) how this same principle applies to economic disequilibrium, resulting in an industry that buys new cars in the United States and exports them to countries where the same cars typically sell for much more due to manufacturers’ pricing policies. Now the U.S. government has taken action to stop the reverse situation — the illegal importation of used…
Legal Files” gets a lot of questions, but the most frequent is: “How can I do a 1031 exchange with my collector car?” This is not much of a surprise. Many readers who have owned their collector cars for some time have realized significant appreciation they want to cash in on. Then they discover that income taxes will take a very large bite out of the successful sale. Fortunately, for those who have owned their collector car for at least a year, the profit on the sale is taxed as a long-term capital gain. That allows the collector to take…
  George felt his time was coming. He was through with his studies and was just getting established in his career. Unburdened by a wife or kids, he had been able to save up some money and he was ready to have some fun with it. His interest in collector cars beckoned, and he was quite a fan of the Mercedes-Benz “Pagoda” cars. A lengthy Internet search led him to the website of a dealer a long airplane ride away. The dealer prided himself on a reputation built upon many years of successful business. He claimed expertise in classic cars…
One unexpected consequence of today’s hot collector car market has been that many SCMers have been buying and selling more cars more quickly than ever before. They — and their accountants — have wondered if they have crossed the line from a collector to a dealer, which would carry some significant tax and legal consequences. Dealer licensing All states require car dealers to be licensed. The most obvious consequence of dealer licensing is the cost. Not only do you have to file an application and pay a licensing fee, but you need to carry appropriate insurance, post a bond and…
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