Tony Gilbert Cars, of Napton, Warwks, took the car in part exchange in March 1999 after an HPI check showed it was 'clean'. In fact the car had been funded on hire purchase with BMW Financial Services.
An error by BMW FS led to it being deleted from the HPI-Equifax finance interest register. Now BMW FS has corrected the error, Mr Gilbert is unable to sell the car.
He is preparing to challenge a landmark legal judgement made 23 years ago in the House of Lords. If he wins his case, motor retailers who rely on financial interest checks such as HPI-Equifax and Experian could get better legal protection.
Finance companies which use the registers could be forced to stand by the information they provide and accept liability if they make a mistake.
"I feel I've done nothing wrong, yet BMW is claiming the car back," said Mr Gilbert. "BMW made a mistake but I am having to pay for it.
"If these companies are using the registers, then they should be putting every car on them. If they make a mistake, they can't claim they are not responsible for that mistake. I wonder how many other cars have been missed off."
Investigations by Mr Gilbert have revealed BMW FS originally declared a financial interest in the car but that interest was deleted from the HPI-Equifax computers five months before he took it in part-exchange. The finance company admits the deletion was made in error but is refusing to accept liability in the case. There is no suggestion an error was made by HPI-Equifax.
In 1977, the House of Lords decided by a majority of three to two that ownership of a car remains with the finance house. That applies even if it has been bought by a trader who has made an HPI check and subsequently finds the finance company had been careless in failing to register its interest.
Mr Gilbert maintains the law is outdated because it was established before the widespread use of data checks. BMW FS registers around 300 cars several times a week with HPI-Equifax and Experian by electronic data transfer. Together with most other motor finance lenders, it relies on the registers to protect its own interests and those of its customers.
A BMW FS spokesman said: "Regular audits are undertaken by us of the recorded HPI interests in our vehicles. It was such an audit that identified the absence of our recorded interest. Our interest was then added. While we have sympathy for Tony Gilbert, we do not believe we can be held liable in this case."
The Finance and Leasing Association, of which BMW FS is a member, has said its Code of Conduct does not cover registration of finance interests in vehicles.
It also said any code or memorandum of understanding would not affect a member's legal rights.
Mr Gilbert is not a member of the RMI and so any agreement between them and the FLA does not apply.
Martin Brassell, Equifax HPI commercial director, said: "In practice, an HPI check is the accepted method for dealers to establish the existence of a finance interest. "This unfortunate case illustrates how important it is for finance houses to register and delete their legitimate interest promptly and accurately for the benefit of the whole trade."