Recent storms across the mid-west resulted in an estimated 10,000 vehicles soaked by floodwaters.  As recently noted by the National Automobile Dealers Association, historically, about half of flood damaged vehicles are resold. Unfortunately, some of these vehicles are sold to unsuspecting buyers.   Therefore, dealers must be vigilant in inspecting and researching vehicles purchased for resale 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 44 of the 50 U.S. 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.  

     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 must make 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 your vehicle prep personnel.  

1.      Check the vehicle history with a reputable vendor;

2.      Inspect the car for evidence of mold or mold odors;

3.      Check to see if the carpets are damp or water stained;

4.      Be suspicious of older vehicles with new interior or carpeting;

5.      Look for rust and dirt in the interior under the pedals, around seat bolts and              screws and under floor mats and rugs;

6.      Inspect for corrosion or a water line inside and outside the vehicle, especially             in the trunk area; 

7.      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.  

     The dealer's biggest exposure to liability comes from trade-ins.  Make sure customers sign Customer Declaration Forms (available from the Greater New York Automobile Dealers Association) which require the customer to detail 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 if the vehicle turns out to be damaged.    

Selling a Flood Vehicle