Clients of the LaBonte Law Group frequently ask about the dealership's legal obligation to disclose prior damage to new and used vehicles.  This article summarizes the disclosure requirements for new and used vehicles in New York.   

   

NEW VEHICLES

 

     Under New York State law, prior to sale and delivery, a dealer must provide written notification to the consumer of any repairs to repair physical damage with a retail value in excess of five percent (5%) of the MSRP.  This rule applies to any repairs performed after shipment from the manufacturer; including damage to the vehicle while in transit.   

 

     The disclosure is based upon the retail cost to repair the vehicle; not the dealer's wholesale or actual cost.  The total cost must include the retail cost for both parts and labor, at the dealer's stated labor rate.   

 

     If a dealer fails to make the required disclosure the consumer is entitled to a full refund of the purchase price of the vehicle, any trade-in allowance, and any fees and charges if the refund request is made within four (4) months after the date of purchase.   

 

     The law also requires manufacturers to notify the dealer if they are aware of any prior damage.  If the manufacturer fails to provide such notice then the dealer is entitled to reimbursement from the manufacturer.   

 

     If you are aware of damage that must be disclosed then the LaBonte Law Group recommends that you use the following written disclosure which you can print on dealership letterhead:   

 

ACKNOWLEDGEMENT OF DISCLOSURE BY DEALER

OF DAMAGE TO MOTOR VEHICLE  

 

In connection with the purchase from ________("Dealer") of the motor vehicle described as follows: _________(YEAR MAKE MODEL VIN NO.) I, the undersigned, hereby acknowledge that the Dealer has disclosed to me prior to sale, that the above referenced vehicle had been damaged on ______ (Date) at ________(Location) before I agreed to purchase said vehicle, that it had been damaged on _____ (Date) at _________ (Location) as follows: __________ (Description of Damage).  I further acknowledge that said damage has been repaired to my satisfaction.

 

Date: _______

Signature of Purchaser: ____________________  

Witnesses: _____________________________  

 

USED VEHICLES

 

     New York does not have a specific law requiring used vehicle damage disclosure. However, this does not relieve a dealer's obligation to disclose prior damage!  In used vehicle damage cases the courts will apply common law concepts of deceit, misrepresentation and fraud.  A dealer is required to disclose all known material facts about the vehicle.  For example, if a customer asks if the vehicle was ever involved in an accident, and the dealer is aware or should be aware of prior damage, the dealer must disclose that information to the purchaser.  Failure to do so would constitute misrepresentation and/or a deceptive trade practice.   

     Generally, a dealer will discover that a vehicle was previously involved in an accident through a disclosure from the original owner, a vehicle history report or through a safety inspection or vehicle prep.  If the dealer becomes aware of such damage through any of these means then such damage should be voluntarily disclosed to the customer by referencing the damage on the bill of sale or on a separate document like the one used for new vehicle damage disclosure.  

     Customers who discover undisclosed damage subsequent to sale are quick to file complaints with consumer agencies or lawsuits.  In either scenario if the customer can prove that the dealer failed to disclose the damage at time of sale then it is necessary for the dealer to now prove that the dealer had no way to know of such damage or that the damage was so minimal that is had no impact on the value of the vehicle.  In many cases it is determined that the damage existed at time of sale but that the dealer's prep department failed to properly inspect the used vehicle or failed to report the damage discovered during the prep of the vehicle to the appropriate managers.   

     Damages awarded to consumers who are successful in these damage disclosure cases can range from the rescission of the sales contract (with a full refund issued to the customer) to partial refunds for the difference of the purchase price versus the true value of the vehicle with the damage disclosed, to any of the foregoing plus an award of punitive damage and attorney fees and court costs.        

     In order to protect your dealership from unwanted complaints and lawsuits make sure your dealership has enacted a thorough used vehicle inspection and preparation procedure which requires that all used vehicles undergo a full inspection from top to bottom to determine if there is any excessive damage.  Inspections should be conducted regardless of any representations made by the prior owner or auction and the results of such inspections submitted to the dealer's management team or proper consideration and analysis.  

     For more information about vehicle damage disclosure or to discuss any situations you may experience regarding damage disclosure call the LaBonte Law Group at 516-280-8580.