Buying a car from a private seller can be risky, since you are not afforded the same protections and warranties that the manufacturer or an authorized dealer would typically provide. And in most situations, you have no recourse against the private seller of a vehicle if something goes wrong after the sale. As long as 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 -- that includes any basis of fault for a car 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, and we'll summarize those in the sections that follow.
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 check your state’s rules on title transfer. Failing to comply with the requirements may leave the seller open to liability for future parking tickets, toll evasions, traffic violations, or perhaps even car accidents. (Learn more about liability law and loaning your car.)
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. Just as states have rules about filing title transfers, they also have rules about documenting the sale of a vehicle. Any sale of a vehicle should be put in writing (usually in what is called 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 local DMV. 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.
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 of 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.
A private seller can similarly be held liable if he or she has made a negligent misrepresentation about the vehicle. A negligent misrepresentation is similar to a fraudulent misrepresentation, except that in the case of a 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. (Learn more about negligence.)
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.
Should I Contact an Attorney?
If you are involved in an accident in a privately sold vehicle, you should examine all of the sale and title documents thoroughly and think back to your communications with the seller to determine whether there might be any basis for holding the seller liable. Of course, with the scenarios we've described in this article, "liability" can take many forms, from contract-related damages to personal injury. But it's rare (not to mention difficult) to pin fault for a car accident on the private seller of a vehicle. You'll most likely need the help of an experienced attorney, particularly in possible cases of fraud or negligent misrepresentation. Learn more about finding and working with a personal injury attorney.