The central question revolves around the legality and practicalities of transferring ownership of a mobile device that is still subject to outstanding payments. This situation commonly arises when a consumer enters into a payment plan with a carrier or retailer to acquire a smartphone. For example, an individual might agree to monthly installments for 24 months to fully pay for a new device.
Understanding the conditions attached to the initial purchase is vital. Financial institutions and cellular service providers often retain a lien or security interest on the device until the full purchase price is satisfied. This arrangement protects their investment. Historically, this practice safeguards the lender from financial loss due to default on the payment agreement. The consumers ability to freely transfer the property title is therefore encumbered.