Buying or selling a car by proxy remains one of the most controversial ways of using transport, despite the spread of electronic services and stricter requirements for property registration. This issue still arises in practice, despite the fact that legally such a scheme is not a way of acquiring ownership. A person pays money, receives a technical passport and a notarized power of attorney, but does not formally become the owner of the car. This approach is chosen for various reasons: to avoid re-registration, to save on taxes, to bypass certain legal restrictions or simply due to ignorance.
The editors of IA “FACT” turned to the lawyers of the “Repeshko and Partners” Bar Association to get professional comments. They explained what power of attorney means in the legal field, why buying a car by power of attorney is not equivalent to a sales contract, what risks and legal consequences it has.
As evidenced by legal practice, this once very common question still arises to this day. How appropriate is it to sell or buy a car by proxy? The answer is unanimous – the sale of the vehicle should be carried out only according to the sales contract! However, sometimes there are exceptions and nuances for both the seller and the buyer, as well as for the car owner.
The main category of persons who deal specifically with a power of attorney on a car are the so-called “repurchasers”. This category of citizens lives on the fact that they buy cars from owners who want to sell them quickly, even for a small amount, the main thing is that they get them here and now (situations in life are different), or whose owners have no desire to fix them (in this case, the buyer repairs the car at his own expense and brings it to the state of candy). Of course, it does not make sense to issue the right of ownership of a car for such a category of citizens, because several cars can pass through the hands of such a dealer in a month. In this case, the power of attorney will be executed by a Ukrainian notary public. At the same time, the notary can be from any region of Ukraine, because bargains are not limited to work in a certain region – wherever there is a more favorable offer, they take the car there.
Another category of citizens who are justified in having a power of attorney are car owners who are abroad, do not intend to come to Ukraine in the near future, but have a car here that they want to sell. In this case, the power of attorney will be issued either at the Ukrainian consulate or at a foreign notary in the country where the car owner is staying. In some cases, an apostillation of a power of attorney is additionally required – a special stamp that confirms the legalization in Ukraine of a power of attorney issued on the territory of a foreign citizen. We still advise you to make a power of attorney at the consular institution, but if there is no such possibility, then it will work out there. At the same time, a power of attorney written in a language other than Ukrainian must still be translated. The power of attorney must clearly state the powers of the authorized person. She should have the right to sell the car, deregister it and receive the proceeds from the sale.
In any case, the person selling the car under power of attorney must have a technical passport for this vehicle.
Currently, all actions related to the re-registration of the vehicle into ownership take place exclusively at the service center of the Ministry of Internal Affairs. When a power of attorney is drawn up, ownership is not transferred. It is the sale of the vehicle that involves drawing up a sales contract and obtaining a new vehicle registration certificate (technical passport).
According to Article 244 of the Civil Code (hereinafter the Civil Code), a power of attorney is a written document issued by one person to another person for representation before third parties. Based on the content of the legal norm, this definition does not provide for the transfer of ownership of the alienated object, but only for representation. Yes, according to Art. 665 of the Civil Code, the contract of sale provides that one party (the seller) transfers or undertakes to transfer property (goods) to the ownership of the other party (the buyer), and the buyer accepts or undertakes to accept the property (goods) and pay a certain amount of money for it. This is how ownership of a car is transferred.
In addition, Article 237 of the Civil Code clearly stipulates that representation is a relationship in which one party has the right to perform certain actions on behalf of the other party it represents. Therefore, by issuing a “general power of attorney” for a car in your name, you receive a car only for use and disposal, but not for ownership. When “selling” a car under a general power of attorney, no purchase or sale takes place, and therefore the owner of the car remains the seller. It is from this moment that certain risks begin for all participants in such an agreement.
It should be remembered that if you sell a car for the first time in a year, the tax is not charged. But if it is already the second or third vehicle in a year, then it is necessary to pay the corresponding taxes. As an option to avoid tax, the car owner uses a power of attorney for the buyer, and after the expiration of the period when the car can be sold tax-free, the proper execution of the purchase agreement at the service center.
Regarding the savings on registration for the deal itself. In the past, the registration of a car was done through a notary, then with registration in the MREO and cost the equivalent of several hundred dollars. Currently, the cost between the registration of a power of attorney at a notary and the cost of registration of the agreement at the service center of the Ministry of Internal Affairs can be up to a thousand hryvnias, which cannot be considered an economy considering all the following risks.
We want to emphasize the risks from the point of view of the vehicle owner. Currently, many traffic violations by vehicles are recorded automatically. At the same time, the system scans the license plates of the car and sends fines directly to the address of the car owner, marking him as a violator. In this case, you can avoid paying fines in two ways:
- By assigning the proper user to the car. This can be done at any convenient service center of the Ministry of Internal Affairs, at Driver’s office or Action application. In order to share a car online, the owner must have a vehicle registration certificate displayed in the Driver’s Office. The candidate for the proper user has a driver’s license of the appropriate category.
To complete the application, it is necessary to enter the e-mail addresses and phone numbers of the participants of the agreement, as well as the identification code of the future proper user. At the same time, both the owner and the driver can issue documents at a distance thanks to digital signatures. In addition, in the Diya application, in addition to the registration certificate and driver’s license, you need to have a passport of a citizen of Ukraine or a foreign passport and be authorized. After the application is approved, the vehicle registration certificate appears in the digital documents of the proper user. The term of car sharing is determined independently. Also, this status can be prematurely canceled by both the driver and the owner.
- Appeal in court, proving that the owner of the car was not behind the cream, referring to the issued order. This option is costly in terms of time, money, and effort.
From a practical point of view, none of these cases apply in the case of transfer of the vehicle for repurchase and all risks remain with the owner.
At the same time, questions also arise from the point of view of insurance coverage by a motor vehicle. According to the new law, which came into force in 2025, in the event of a change of owner of the insured vehicle, the new owner is obliged to notify the insurer in writing and provide the insurer with his personal data within 15 calendar days from the date of acquisition of ownership of the vehicle. Therefore, in the event of a traffic accident, the owner of the vehicle can be identified as the person responsible for covering the damage, because usually no one does the reissuing of the insurance policy either. According to the old version of the law on insurance, it was necessary to have an insurance policy for a car, regardless of who the owner is.
Risks from the point of view of the “buyer” of the vehicle. There are much more of them than the seller and they are as follows:
- The real owner of the car (“the seller”) can pledge the car, such a car can be seized as part of a court case (on the division of marital property, compensation for material damage, alimony debts). If the “seller” has debts (loans, utility bills, fines) that are collected from him through the enforcement service, then the car that you “bought by proxy” can be declared wanted and further detained for sale to pay off the debt with sending to the fine site and further sale at auction. In light of recent fines from TCC and JV for violation of mobilization legislation, this risk is very relevant even for car repurchases.
- The seller of the car can at any time in accordance with clause 2 part 1 of Art. 248 of the Civil Code to cancel the mandate. In this case, the “buyer” will be obliged to return the power of attorney and, accordingly, you will automatically lose the legal right to drive the purchased car. The only thing that remains is the right to legally recognize the contract of sale of the car as valid, but this is not always realistic, because it will be necessary to justify your claims in the lawsuit with sufficient evidence. Therefore, we immediately warn about the need to exchange receipts, that funds have been paid for the car to the owner or a person under a power of attorney to hand them over to the owner, indicating the full valid amount of the transaction.
- The power of attorney also becomes invalid in the event of the death of the person who issued the power of attorney, its declaration as dead, its recognition as incapacitated or missing. And after that, the heirs, guardians have legal grounds to return the vehicle that belonged to the deceased, incapacitated in terms of ownership. In such a case, the same receipt mentioned in the previous paragraph will come in handy and the only way to solve the case is to file an appropriate claim with the court.
- In the event of the buyer’s death, recognition of his incapacity, the power of attorney loses legal force and the heirs of such a buyer will not have any right to the car used by the testator-buyer under the power of attorney.
- Term of power of attorney. If the term for which the power of attorney is issued expires, it is necessary to look for the real owner (which is very difficult in the realities of a war-torn country) so that he once again allows to use and dispose of the car, i.e. again to obtain a power of attorney. In addition, if you want to alienate the car, firstly, you can give a power of attorney to the new buyer only for the validity period of the power of attorney given to you, and secondly, the real owner of the car will have the right to demand from you the return of the amount received by you from the alienation of his car to a third party.
- A power of attorney is a document by which the owner authorizes another person to act on his behalf. At the same time, the law prohibits the representative from performing the deed for his own benefit. That is, it will no longer be possible to sell the car to yourself by proxy. As an option, in order not to seek renewal of the power of attorney of the car owner, it is re-registration under the contract of sale of such a vehicle to family members, but this is always an acceptable option (there may not be a wife, in the case of registration for parents, if there are other brothers and sisters, the car will be inherited by all, children may have spouses who wish to share your car in the event of a divorce).
Finally, we would like to note the following. Once upon a time, it was possible to recognize the right of ownership to the car in a court action based on the claim of the new owner of the car. This was actively used by those who wanted to either sell the car without the consent of the spouses, or to save it from the enforcement service in the event of debt collection. Those times have long passed. The court’s position is unanimous – there are no decisions on the recognition of the car sales contract and no decisions on the recognition of the ownership of the car.
Currently, there are rare cases when all is not well with the documents for the car (an old bank loan from twenty years ago, a ban on alienation in the register of property rights to movable property, crossed out engine numbers, etc.). Sometimes, in such cases, the owner of the car, in order not to bother with the elimination of deficiencies in the documents, is ready to give the vehicle at a very significant discount precisely by power of attorney, motivating it by the fact that the new owner will easily obtain ownership of the car through the court. We want to disappoint, but no! As they say, free cheese can only be found in a mousetrap. In such a case, no court will recognize the ownership of the car by the new owner, even though he will have a power of attorney, and banks generally have a directive to appeal court decisions that are not in their favor, all the way to the Supreme Court of Ukraine.
