Tens of thousands of cars and trucks were severely damaged during the recent storms which
devastated
parts of the mid-west and the south. Many of these vehicles were either partially or fully submerged in water. The National Automobile Dealers Association has stated that, historically, about half of flood damaged vehicles are resold with many of these vehicles being
sold to unsuspecting buyers. Therefore, dealers must be
vigilant
in inspecting and
researching
vehicles purchased at auction or taken in trade.
The National Motor Vehicle Title Information System
attempts to cut down on fraud by recording title brands, odometer readings and total loss/salvage history recorded from most States. Checking a vehicle's history report is vital in today's regulatory environment in order to avoid situations where you inadvertently purchase and resell vehicles with a checkered past. However, as the contents of the databases from these sources may be limited, a full inspection of vehicles you contemplate purchasing becomes even more important.
New York courts will hold a dealer responsible for what the dealer knows or should have known about a vehicle offered for sale. Therefore, in addition to performing a search of the vehicle's past history, a dealer should conduct a full inspection of every vehicle purchased for resale or accepted in trade.
The following tips will to help you avoid getting into a situation with a problem vehicle. Share these tips with employees who purchase vehicles at auction, who work in your used car department or who perform vehicle
preparation
or inspections.
- Check the vehicle history with a reputable vendor;
- Inspect the car for evidence of caked-on mud, mold or musty odors;
- Check to see if the carpets are damp or water stained;
- Be suspicious of older vehicles with new interior or carpeting;
- Look for rust and dirt in the interior under the pedals, around seat bolts and screws and under floor mats and rugs;
- Inspect for corrosion or a water line inside and outside the vehicle, especially in the trunk area and on the lens or reflector of the headlights;
- Check the undercarriage for excessive rust or damage.
Most major auction houses will stand behind the vehicles they sell, however, dealers must be diligent to inspect these vehicles prior to purchase to ensure that they are buying an undamaged vehicle.
A dealer's biggest liability exposure will likely come from trade-ins. Make sure customers sign Customer Declaration Forms (available from the Greater New York Automobile Dealers Association) which require the customer to make detailed representations about the vehicle's prior history; including whether or not the vehicle has sustained any flood or accident damage. Failure to have the customer disclose problems with the condition of the trade-in vehicle could limit your ability to recover damages from the customer if the vehicle turns out to be damaged.
Selling a Flood Vehicle
If you wind up with a flood damaged vehicle be aware that d
ealers in New York must disclose, in writing, any previous mechanical or electrical repairs that are the result of a natural disaster (such as fire, flood, hurricane, landslide, earthquake, windstorm or other storm) which rendered the vehicle inoperable for any period of time. The notice must provide specifics about the extent of the damage and the date and location where the disaster occurred. The following is an example of the required disclosure:
"This vehicle was damaged on _____ (Date) as the result of ___
(Type of Natural Disaster) occurring in _________(Location). The vehicle subsequently required repairs to the following mechanical and/or electrical systems: _____ (List All Repairs)."
For more information on your legal requirements for the disclosure of a vehicle's history or if you need assistance on pursuing a customer who failed to disclose the prior damage to you please contact the LaBonte Law Group at 516-280-8580.
