- Tesla prohibits you from selling
or transferring your Model Three reservation
to someone else without their written consent,
but there may be a way around it.
A lot of you've asked me whether or not you can
sell your Model Three reservation
and the short answer is no, not technically.
If you take a look at their reservation agreement,
which was attached to the email you received in your
confirmation there is a clause here stating,
"Your reservation is not transferable
"or assignable to another party without the prior written
"approval of Tesla."
So, it's a pretty clear cut answer, right?
Well, not exactly.
I wanted to get an expert opinion on this,
so I called up another YouTuber, Franklin Graves,
and asked him what he thinks.
He is a lawyer based out of Nashville, Tennessee
and he also has a channel helping other YouTubers
learn how to deal with legal issues.
Let's hear what he had to say.
The most important thing,
the first thing that you'll wanna do legally
is look at the terms, what did you agree to when you
submitted the information
and clicked the button to reserve your spot in line.
So, looking at the agreement actually it's pretty,
it's pretty straightforward
and a lot of people have already found this
and pointed this out under section six
where it says, "This agreement is not transferable
"or assignable to another party without the prior written
"approval of a Tesla authorized representative."
So, that pretty much answers the question for the most part.
- [Franklin] Yeah, it's pretty clear.
- Now, I think it's understandable that people wanna
get creative and as we already talked about
things change from the time that the reservations
might've actually been made, life circumstances, whatever,
so it's understandable people might be wanting
to get out of it,
so just from a contracts perspective this is essentially
a legal theory of assignable contracts.
Typically assignability is one of those standard
or boilerplate provisions of agreements
or contracts that are easily overlooked
and people just say, "Oh, it's boilerplate
"you can't do anything about it, it's just standard."
And so in this particular situation, though,
it's a pretty important clause as we already discussed.
So, if a contract is assignable typically that means one
or both parties to an agreement are able to transfer
the rights or obligations under that contract
to a third party.
And depending on the language of the agreement
this may or may not also require the prior written
permission of the other party to the contract,
so if that's too confusing, whatever,
we can go to another--
- [Franklin] No, so this pretty clearly answers
the question, you know,
legally can I sell my reservation?
- Not without Tesla's permission.
- [Franklin] Right, yeah, yes you can if you
have written permission, right?
- Yeah, and so that's the other thing
that you just mentioned selling
and I think that's gonna be the big distinguishing
factor here if somebody is going go to Tesla
and say, "Hey, I don't need my reservation anymore."
I would think they would prefer to help out
and help somebody transfer the reservation
to a family member or loved one or somebody like that,
not necessarily for-profit
because then that takes away the opportunity
for somebody else that is actually waiting
and they themselves waited in line.
- So, since Tesla can cancel your reservation at any time
and it appears that if you were buying a Model Three
just for the purpose of reselling it they will do this.
I would really advise against it
or if you're thinking about buying a Model Three reservation
know it's likely a scam
and even if it's real Tesla could find out
and cancel the reservation.
Oh, wait, that one was deleted.
Okay, good, maybe you saw this video.
In any event, there really isn't anything Tesla can do,
though, once you officially take ownership
of the vehicle, that is once the title's in your name
and you own the car, unless maybe they had a lease,
but currently it doesn't appear that there is a lease option
on the Model Three.
So, once it's yours it's yours
and you can pretty much do whatever you want with it.
Here's Franklin again to explain it to us
from a legal perspective.
- That's it essentially there just gonna turn right around
and sell it once they're done customizing it.
- Right, but as far as Tesla knows it's still my car, right?
- So, that kinda gets to that,
so going back to that order agreement once you actually
have placed your order and you're entering into that
purchase agreement with Tesla,
that's where it specifically says that you're not going
through this process just to immediately turn around
and resell the vehicle.
That being said, that's really from a contractor's
perspective, that's really only up until the point of you
actually have title and have been transferred ownership
of the vehicle from the dealer in this case, Tesla.
So, what you do after, so within five minutes of signing
that and title is in your name to the vehicle,
you're free to do whatever you want,
they are nothing, but after looking at this agreement again
this may or may not be the one for the Three,
but it just depends on whether
or not there something else they might try to throw in
there maintaining ownership beyond that,
but I guarantee you I'm very, very skeptical that they would
ever actually try to do that.
Once you have title your name, you own it outright.
So, once you're at that point,
yes, you could turn around and sell it to somebody
or transfer title to it
and I think there's some tax questions
that we're gonna go into later on,
but that's what essentially you could,
nothing prevents you from doing that
- So, I could have a informal
or even formal agreement with another person,
let's say my neighbor,
and they could and we could say, "Hey, look I have this
"reservation, I expect to get it within this window."
Tesla won't technically let me buy it to sell to resell it,
but that doesn't prevent me and you from having an agreement
and then once I officially take ownership of it,
then I can legally transfer it to you.
I could legally sell it to and Tesla has essentially,
unless they have something in the contract,
but we haven't seen,
they actually don't have a legal basis to say no to that
to stop it, right?
- Correct.
- The only, yeah go ahead.
- Yeah, even if they did have something in the agreement,
again, I highly doubt they would get to that point
because I think that,
who is it?
There was something else where
either way it would be huge consumer backlash to
try to claim that they still have some type of ownership
interest in what you do with the vehicle
after you purchase it.
- So, unless Tesla adds something to the purchase agreement
stating that you specifically cannot sell the vehicle
to someone else, which is pretty unlikely considering
the backlash that they would receive from a PR standpoint,
you really are free to do whatever you want after you
take delivery of the vehicle.
That does bring up a question about taxes, though.
Only the original purchaser of the vehicle is eligible
for any tax credits that you can get,
currently in the United States we have a $7,500
federal tax credit
and many states also offer tax incentives.
So, if you're thinking, hey, I'll just take
the tax credit and then sell the car and make that profit,
they actually can tax you on that as income.
So, you should be careful
and really talk to tax professional before you go
too far down this route of selling your Model Three
reservation or the Model Three itself
after you take delivery.
So, I'm curious what you think,
are you considering selling your Model Three reservation
or after you receive the car are you considering
selling it then?
I'd really love to see how you imagine it playing out.
And also on the other end,
are you considering buying a Model Three reservation
and skipping the line?
Really curious kind of what the community thinks about this.
So let me know in the comments down below.
And a quick disclaimer that none of what we shared
here is legal advice or financial advice.
We're just doing this for educational
and entertainment purposes.
So, if you are considering any of these actions here
please consult some professionals before doing so.
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