Selling your vehicle to another consumer can be a risk since you are not afforded the same protections and warranties that the manufacturer or an authorized dealer would typically provide. On the other hand, if you are the buyer, you have no recourse against the private seller of a vehicle if something goes wrong after the sale.
If the seller has taken all legally required steps to complete the sale and has not lied or made any misrepresentations, the seller will probably be relieved of any liability in connection with the vehicle. This includes any basis of fault for an auto accident involving the vehicle. However, there are some instances in which a private seller can still be on the legal hook when it comes to the vehicle.
Incomplete Transfer of Title
After the private sale of a vehicle, the seller needs to ensure that title is properly transferred into the buyer’s name. The seller should complete all necessary paperwork and procedures required by the motor vehicles department or secretary of state and maintain a copy of the completed transfer of title and related documents for at least 18 months.
Some states require that transfer of title be filed within a certain number of days of the sale. Be sure to confirm that you are following Michigan state law in title transfers. Failing to comply with the requirements may leave the seller open to liability for future parking tickets, toll evasions, traffic violations, or perhaps even auto accidents.
Failure to Document and Record the Sale
Another way a seller may still be held liable after a private sale of a vehicle is if the seller fails to properly record the sale. Michigan has rules around documenting the sale of a vehicle. Any sale of a vehicle should be put in writing as part of a bill of sale and include the purchase price, any promises made about the vehicle by the seller, and any other material terms, like whether there is a lien on the vehicle.
In addition to a bill of sale, a private seller should also file a release of liability with the Michigan Secretary of State. A release of liability does exactly what the name of the form suggests — it releases the seller from any liability for traffic violations or accidents that may occur after the sale, but before the vehicle has been registered in the buyer’s name. If the private seller has completed and filed a bill of sale and release of liability, he or she is relieved of nearly all future responsibility related to the vehicle.
Fraud
Even if a private seller has complied with all requirements related to documenting the sale and transferring title, the seller can still be held liable for problems related to the vehicle if fraud was committed in connection with the sale of the vehicle. In some situations, if the seller commits fraud in connection with a known safety defect, and that defect causes or contributes to an accident, the seller might be liable for any resulting injuries.
A person commits fraud in this context when he or she intentionally makes a false representation of a material fact in connection with the vehicle. The seller must know that the representation was false, and the buyer must have relied upon that representation to his or her detriment. A common case of fraudulent misrepresentation occurs when a seller tells the buyer that the vehicle has not been in an accident, which was a material factor in the buyer’s decision to purchase the vehicle. In such a case, the private seller can be held liable for future damages resulting from the fraudulent misrepresentation.
Negligent Misrepresentation
A private seller can similarly be held liable if he or she has made a negligent misrepresentation about the vehicle. Negligent misrepresentation is like a fraudulent misrepresentation, except that in the case of negligent misrepresentation, you do not need to prove that the seller knew that the representation is false. The standard instead is whether the seller acted with a reckless disregard for the truth or should have known that the representations were false.
A common case of negligent misrepresentation occurs when a seller represents that the vehicle’s brakes, tires, wipers, etc. were in good working order, but failed to have them inspected to verify the truth of his/her representations. In such a case, the private seller could be held liable based on his negligent misrepresentations, if the buyer relied upon them.
Hiring an auto attorney who knows Michigan is the first step
Regardless of the situation you or someone you know may be in, you will want to connect with an experienced auto accident attorney who can provide the representation you need to improve your chances at the financial reimbursement you deserve. Contact the team at Bashore Green to learn more.