Prior Used Car Damage

Some dealers believe that they will be safe from a lawsuit in selling a used car with unknown prior damage if they simply run a vehicle history report and disclose the results to the buyer. That can be a costly misperception. Legal actions resulting from the retail sale of previously damaged used vehicles are a staple of plaintiffs’ attorneys. They serve as the basis for challenging the dealer’s sale of a vehicle where the customer has developed buyer’s remorse, or they can serve as the excuse for failing to pay for a vehicle when a customer can no longer afford to do so. 

Recognize the risks involved in sale of previously damaged used vehicles without disclosure of prior damage and take steps to avoid potential problems.

1. Just because a vehicle is purchased at an auction under a green light does not automatically mean that the dealer is safe from disclosure worries. Not all damage must be declared at the auction.  
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2. Customers who buy vehicles and later come to believe they were wrecked will check state title records and vehicle history reports. These should be reviewed for every retail vehicle to determine if they show facts to be disclosed to the customer. 
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3. The FTC window sticker discloses “PREPURCHASE INSPECTIONS: ASK THE DEALER IF YOU MAY HAVE THIS VEHICLE INSPECTED BY YOUR MECHANIC EITHER ON OR OFF THE LOT.” Do not prohibit or even discourage inspections. The customer’s opportunity to examine the vehicle can be helpful in the event of any claim. 
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4. Do not misrepresent known prior damage. Just as importantly, watch for concealment by silence. If the dealership knows that a vehicle has been wrecked and the customer inquires about the status of the vehicle, but the dealership representative says nothing, courts have considered silence as concealment of a material fact in the face of a direct question. 
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5. State title records and vehicle history reports are just tools. The information is not always accurate. There are many vehicles with prior damage or repairs that will not show up in state records or vehicle history reports. A customer who buys a vehicle and later comes to believe it was wrecked will have it inspected for damage. The lesson? Always carefully inspect used vehicles to be sold at retail for prior damage. 
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6. Be especially careful to inspect certified used vehicles for prior damage. Plaintiffs’ attorneys will always argue that the certification is a representation of quality and that the failure to find and disclose damage is gross negligence or fraud.