[OAC_Sparky]

Unfortunately, this puts you into an even more awkward position. Although I'm no lawyer, I would think that since you are not technically the legal owner of the car that you can't even part it out. Whoever the lienholder is has legal claim on whatever the value is on the car, and until the lien is lifted you don't have a legal right to do squat to it.

What your co-worker should have the decency to do is either find out the amount of the loan (from his sister) and use the money you gave him for the car to pay the loan out. Or pay you back for the car and whatever money you put into it (although you would be out the labour you put in).

If he isn't willing to do this I would say that you would have a solid small claims court case. Whether you want to pursue that against a co-worker is a decision you'd have to make.