Thought experiment: Guy with Foundation Series offer adds Person#2 to title as Joint Owner; finalize "sale" to P#2 in a year

[A2be]

Thought experiment:
TL;DR: Guy with Foundation Series Cybertruck offer adds Person#2 to title as Joint Owner; finalize "sale" to Person#2 in 12 months.

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I'm a former Econ prof, and we often engage in "thought experiments". So let's do one together:

Limited-edition Foundation Series offers to order a Cybertruck are out to many persons.
Some will, of course, just execute the deal; pay the above-website price, and own a Foundation Cybertruck. Cool.

Say someone ("Alan")—who has been offered a Foundation Series order—does NOT have the $$$, nor desire, to execute & buy the Foundation Cybertruck.
And, assume Alan wants to stay on the right side of Tesla, and the contract requirement to not resell the vehicle in <12 mos. (not get sued by Tesla)

So, we assume that the reservation holder's name, "Alan Smith", WILL BE on the title, and stay there for a year.
... but possibly with a joint owner, as is standard in Tesla deliveries.

Now, hypothetically, Tesla would have no problem jointly titling the car in Alan's name plus one other. This may typically be a spouse; but in today's America, it need not be.

Say Alan asks if anyone else would like to MOSTLY own a Foundation Series Cybertruck, for Jan/Feb 2024 delivery, and pay for MOST of it, and use it MOST of the time.
("MOST" is TBD between the two of them; but could be, say, 90 or 95% or more).

Say "Bob" comes along, did not reserve a Cybertruck, wants one badly. Wants an early Cybertruck very much (for whatever reason.)
Now if Bob wouldn't mind holding title jointly with Alan for the first year,
... knowing Bob would hold possession, pay for MOST of it, obtain insurance, pay registration & license, garage it, modify it (or not), etc., and
accept a firm property transaction from Alan to xfer title to Bob completely in 12 months.
(say a quit claim contract dated 12 mos. out plus an agreement to sell any residual joint ownership interest & remove self from title)
Bob might agree to let Alan drive it a few days; or even have it one time for a week or two during year one, along the lines of a Turo "car-sharing" rental agreement.

For purposes of the thought experiment, assume both Alan and Bob have excellent reputations; credit scores above 800; $50k or 100k in the bank; own their homes; both currently own other Teslas, and those are in excellent condition and well taken care of.
Title would be a standard joint-owner title that Tesla does in a large percentage of their deliveries: "Bob Cooper and Alan Smith, joint owners"

Now, say Bob and Alan reach an amicable agreement, along these lines, to co-own a Cybertruck: limited use by Alan; it's mostly Bob's truck, from the beginning.
(Note: from a logical point of view, this is not unlike most marriages where one spouse is the primary user of a jointly-owned vehicle, and the other uses it very little.)

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Questions:

1) would Tesla have any valid legal issue with this sort of arrangement?
NOTE: Alan would be still an owner, on the title, for at least 12 months.
Attorneys are welcome.

2) would Tesla be likely to ever even know???

3) what is the biggest risk to Alan?

4) what is the biggest risk to Bob?

5) a) how likely is it that one or more such "Alan's" exist in the US?
b) how likely is it that one or more such "Bob's" exist in the US?

Have fun THINKing.

 

[jjrandorin]

1. probably not

2. probably not

3. The same risk anyone holding joint property has. Too much liability.

4. see point 3. too much personal liability with a shared resource, especially if "bob" and "Alan" are not at a minimum close friends, or family (too much liability for me even with those stipulations)

5. No idea, but there are people who cosign for virtual strangers, buy gift cars and scratch off pin numbers and provide both to some random person on the internet they think is their boss, who get catfished, etc. There are plenty of people who might think of something like this and think its a good idea until one of them gets in an accident in the vehicle or something and they start thinking about suing each other.

 

[Big Dog]

I'll bite.

Tesla would not care.

Both Alan and Bob have teh same risks. They are on legal title for a car for which they will both need insurance. They are on legal title for a car which they may never see. Bob could make it difficult for Alan to drive it. Alan could make it difficult for Bob to get 100% ownership in a year. What does 90% owner Bob do if 10% owner Alan gets into an accident and the car is in the shop for 4 months?

5 a & b: there's one born every minute.

 

[ChiefRollo]

Are you Alan or Bob?

 

[jjrandorin]

Are you Alan or Bob?

I doubt OP is either archtype. They self identified in this thread and in others as a former Econ professor (teacher). Thus, they like just discussing things for the sake of discussing things or to "make people think".

My father was a college professor, and "discussion for discussion sake" or what they would consider to be "thought provoking" is sort of in the job description. Either you enjoy that, or you dont.

 

[SMLBound]

Are you Alan or Bob?

MG... Alan looking to make a few bucks. amiright?

 

[someguywithcar]

I think of the risks of a partnership. Death, divorce, disability, disagreement.

If any of those happen in that year then the deal gets really murky.

 

[A2be]

Thank you to @jjrandorin , @Big Dog , and @someguywithcar for the substantive responses.

To this point, consensus seems to be that a co-ownership title relationship would be okay as far as Tesla is concerned.

Risks you have put forward are liability via ownership of a shared resource, and death, divorce, disability, disagreement. I'll add one: differences in how Bob & Alan perceive they would/should use the truck during the first 12 months; might be mitigated w something equivalent to limitations on a rental during a Turo car-sharing arrangement.

To an economist, risks are costs with an expected value; they count in the cost category of the decision to make any economic choice. They are not, in a binary sense, reasons to not proceed with a joint enterprise transaction.

(e.g., if probability is 0.04 that Bob dies in the first 12 mos. of ownership, then Bob would conceivably consider a cost there, against his benefit of having the early Cybertruck he also desires. He may choose to mitigate it w a contract w Alan, or perhaps with his knowledge of Alan (character, reputation, asset ownership,...); or he may just not care. People do things frequently without explicitly handling details for the risk of their death.)

Net: risks are real. They are costs in the cost / benefit consideration of whether or not to undertake any transaction.

Interestingly, I have been contacted since I posted this thread. Received a surprising call the other evening.
And, "Yes, Virginia, there is a Santa Clause" there is a Bob!
... and Bob is apparently discussing this with an Alan.

 

[walla2]

1. Get a written contract to address flaking out, responsibilities, terms, and a clause for mandatory damages for a breach, who covers legal fees, etc.
2. Bob and Alan both listed to Tesla at order (not pre-order).
3. Bob and Alan both request to be on the title.
4. Insure the vehicle and only Alan should minimally drive and then store the vehicle until the title arrives. The reasons for this areto minimize risk of any loss to Alan of his vehicle in an accident and to limit liability to both parties, in particular Bob who has no long term intention to retain any liability to Alan or his actions/activities.
5. Alan could then release interest on the title leaving Bob on the title. If Alan or his heirs fails to timely release interest, a damage should be assigned for this to at minimum the total cost of the vehicle, + tax and legal fees.
6. Send the title with release to the State for re-issue with the single owner Bob.
7. Contact Tesla and let them know the car should be in Bob's account as Alan has released interest of the vehicle. This really isn't a sale technically and Bob/Alan could be partners, etc, which isn't really Tesla's business.

If funds are being exchanged for any of the above, you risk violating the terms of resale for foundation vehicles which is subject to Tesla's intrepretation although technically this isn't a resell, just a release of interest. The written contract should determine what happens in the event a $50,000+ charge from Tesla arrives for violating the terms. In reality, this should work but there is very little reason to do all this for Alan unless this is a friend or family member that one trusts or a business partner with a well established history of trust. A lot of potential risk and headaches to people you don't know or can't truly vet.

 

[A2be]

Following up the note of a couple weeks ago:

I have been contacted since I posted this thread. Received a surprising call the other evening.​

And, "Yes, Virginia, there is a Santa Clause" there is a Bob!​

... and Bob is apparently discussing this with an Alan.​

"Bob" called again. Says he ordered a Cybertruck tri-motor, for delivery mid to late 2024. He used "Alan's" reservation, and they plan to co-own the truck together for the year after delivery, after which Alan will release his entire interest, making the truck Bob's. (and satisfying the Tesla no-sale in < 12 mos. clause).

So far, Alan has just the $100 reservation in on it; and Bob put 100% of the $1000 non-refundable deposit down with the order. So they are currently 91%/9% split on the (small) money that is at Tesla. Bob says he is going to be paying 100% of the costs at delivery, sales tax, insuring it, etc.

So, at least one actual experiment of my thought experiment has begun.

If I hear more later, will try to update this thread.

 

[Nurkbonis]

Register it to a new LLC in your name. Sell the LLC...

Tesla may still ban you from buying new cars from them, but technically, you sold the business and the assets it held, not the Cybertruck itself...

I have read some people with supercars with no-sale provisions have done this, but those cars don't have ownership tracked like Tesla does.

 

[yerEVan]

correct me if i'm wrong, but tesla essentially would not know unless you ask for ownership of the car into your own tesla account, correct? i.e. keep the tesla account the way it is, for a year, and then allow the buyer to ask tesla to move it over to their account by providing the proof of title.

 

[A2be]

Sure, there are no doubt lots of ways ppl could work around things to reduce legal risk.

The idea of my thought experiment was to think about two folks agreeing to technical joint ownership for a year in order to satisfy the Tesla rulz, while still letting a new person, w no reservation, get happy and pay to get an early Cybertruck.

But in at least one case, I know two people are doing this. I called 'em "Bob" & "Alan", just like in the thought experiment. And, now, I also know a couple more ppl are considering the joint-ownership option.

 

[yerEVan]

I’m considering this too for my 2nd reservation with a close friend.

 

[bruce3]

Very interesting thought experiment. But does someone have EVIDENCE IN WRITING from Tesla that a non-resale clause exists in the purchase paperwork? I've seen 3 different reports from Oct, Nov, Dec 2023 claiming Tesla had such a clause, had $50k lawsuit deterrence (Oct), then had rescinded that clause (Nov), then had brought it back (Dec).

Kinda silly to undergo a complicated legal agreement if there's a chance this non-resale clause is gone. FWIW, I engaged in a chat session with Tesla this morning and the agent there said they had no information one way or the other about whether Tesla was enforcing any resale limits on CT.

I can re-read my Foundation Series offer and $1k deposit paperwork (right now I'm not planning on doing it), but I didn't see anything about that there at first glance and that deposit should be returned if the final purchase contract introduces something not clearly pointed out at the time the deposit was made.

 

[sperkin]

I've put my thought experiment into practice. Has not been flagged by Tesla yet, but still no VIN either.

 

[ThomasD]

 

[GardensCT]

Very interesting thought experiment. But does someone have EVIDENCE IN WRITING from Tesla that a non-resale clause exists in the purchase paperwork? I've seen 3 different reports from Oct, Nov, Dec 2023 claiming Tesla had such a clause, had $50k lawsuit deterrence (Oct), then had rescinded that clause (Nov), then had brought it back (Dec).

Hi Bruce I ordered my CT just a few weeks ago on 1/18 and I read through the agreement and I definitely saw that clause with a $50k lawsuit deterrence before I signed off.

 

[GardensCT]

Also I can see it under my app documents.

 

[MikeChicago]

"Thought experiment" you say
Quick question, does Alan also sell marked up PS5 and Nvidia graphic cards on eBay?

In all seriousness, I'd say two things. One, I doubt Tesla would actually pursue a lawsuit or attempt to fine "Alan." Two reasons. One, you'll have no trouble finding a lawyer that will question the legality of such agreement. Second, the wording is intentionally vague. Tesla "may" repurchase your vehicle in "reasonable" amount of time, etc. Lawyers will pick those statements apart. Second, such lawsuit or "injunction to transfer title" which is what they actually threaten, would be costly for Tesla and for the end user and if the courts find Tesla's provisions illegal or unenforceable in your state. On top of it, you... I mean, "Alan," would have a case to sue Tesla for damages related to such action.

All this assumes you sign and send by certified mail a request to opt out of arbitration. You should always do that. If you're forced to arbitrate, then the above is far more likely to happen to "Alan" and go Tesla's way.

Another reason why I doubt this would happen is publicity. Let's say "Alan" claims financial hardship and thus the need to sell the vehicle. I'm pretty sure a multi-billion dollar company trying to hurt a regular Joe like "Alan" would make for a juicy little bit in the media. In a one-off situation, I don't see how Tesla would find this to be beneficial to them.

Last, I'll say I'm glad Tesla is including this language. It's only fair to everyone else who reserved one. These "resellers" are nothing more than ass***** who should find a better, and a more honest, way to earn a buck. Just my opinion, of course.