How To Avoid Used Car Lawsuits

When selling your used car, besides getting it detailed and looking spiffy as can be, there are some other things to consider. You want to protect yourself and avoid a possible used car lawsuit.

How can you be sued for selling a used car? Among the potential lawsuit-in-the-making scenarios, here are just a few:

  • Rolled-back odometer
  • Misrepresented condition
  • Doctored repair bills
  • Failure to disclose an accident
  • Stolen vehicle

Tips to selling a used car

Knowing what not to do is one thing, but knowing the best way to proceed to sell your used car isn’t always top of mind. Here are some basics to tend to before putting that ad on Craigslist, hanging a sign in the window or parking it at the local car sale lot this weekend.

Have a bill of sale. A bill of sale is a document that records a transaction between two parties. For the seller, the bill of sale shows the purchase price, date the car was sold and buyer information. For the buyer, the bill of sale provides specific vehicle information that can be checked against a vehicle history report, such as VIN and odometer reading. Both buyer and seller should sign and date the bill of sale. If the buyer does not sign the bill of sale, it may be difficult for the seller to prove the sale took place and could then be liable for any violations or tickets the new owner incurs. Note that a bill of sale does not prove ownership. Only a title transfer does that.

Sign the title over to the buyer. Once the money is in hand from the buyer, sign the title over to the new owner. This may be done at the DMV or in some states you can download a release-of-liability form or fill it out online. This document establishes the time the vehicle left your possession. If you still owe money on the car, go to the bank holding the title to conclude the sale. When money changes hands at the bank, then you sign the title over to the new owner. In the case of title held at an out-of-state bank, go to the DMV and get a temporary operating permit, based on your bill of sale. After you pay off the car’s loan balance with the proceeds from the sale, sign the title over to the new owner.

Do not offer an implied warranty. An implied warranty is an unwritten warranty. It essentially means that when a buyer purchases a product, it will function as expected when used in an ordinary fashion. To avoid having any problems that can come back in the form of a used car lawsuit, make sure to sell the vehicle in “as is” condition.

Do not offer money back. If you price your vehicle fairly or negotiate in good faith to arrive at a reasonable price, there should be no discussion about any cash back, money back or rebates. After all, you’re not a used-car dealer. Suppose you’ve disclosed everything about the vehicle and the car breaks down shortly after the sale? Here’s where having the car inspected by a professional mechanic comes in handy. If you’ve paid for such an inspection and the mechanic says there’s nothing wrong with the car, you are under no obligation to refund any money to the buyer or to pay to have it repaired.

Represent your used car in a legal, legitimate way. Order a vehicle history report from AutoCheck or Carfax and have it ready for the buyer to view. This shows a complete record of the car from the time it was first sold, to you or other previous owners. It also details any accidents, recalls, service and other information. If your car has been repaired, also have copies of repair receipts available. Tell the buyer about any known conditions, scratches, noises, or anything else that may pertain to the vehicle. The more open and honest you are about the condition and history of your vehicle, the more protected you are in having disclosed all information and represented the vehicle in a legal and legitimate way.

Compromise with an extended warranty split. If you know there have been problems with the vehicle and have disclosed them with the potential buyer, one way to sweeten the deal – and get yourself off the hook – is to offer to split the cost of an extended warranty with the buyer. This may shave several hundred dollars off your net proceeds, but it is a worthwhile investment, especially if the buyer balks after learning the engine needed replacement or the suspension failed during your ownership.

Bottom line: Be sure to protect yourself before the car sale to avoid used car lawsuits afterward.


Follow The Car Connection on FacebookTwitter and Google+.


The Car Connection Daily Headlines
I agree to receive emails from The Car Connection. I understand that I can unsubscribe at any time. Privacy Policy.
Thank you! Please check your email for confirmation.