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Dealer Scam Selling Flood Damaged Cars

Flood Damaged Cars - New Jersey Lemon Law


Is it a dealer scam to sell a flood damaged car?
Yes so long as there is no disclosure.

Dealers are required to make disclosures of material facts, such as if the car was flood or water damaged. Flood damaged cars cost people money and can be dangerous.

Now with the Jonas storm on our heels there will be even more flood cars on the market, again, like after Sandy, so you need to be very careful when buying a used car and you need to have it checked by an expert who might be able to find any flood damage on the used car that you might be buying.

Buying a car can be one of the most costly investments a family can make. There are already many risks in buying a car: Financing, dealer conduct, lemon laws, breakdowns and accidents. When you buy a car, you never know what is going to happen after you purchase that car.

However, these things that happen are usually within your control. Unfortunately, there are many things occurring as part of a transaction beyond the purchaser’s control. Usually, the only vehicle information that the consumer received is form the selling dealer. Obviously, the dealer would have acquired the vehicle from auction or for trade and/or required under the law to inspect the vehicle to make sure it is safe. Quite frankly, the dealership is holding all the cards when they sell a car. Moreover, you are at their mercy when you buy a car because you have no option but to rely upon their representations and assume they are telling the truth since they are experts in the field.

Even if you use the CARFAX, it only reports whatever is reported to them. Under the theory of garbage in and garbage out, I cannot really say that you should completely rely upon a CARFAX, but use it as guidance.

You need to do your own homework. However, you are also entitled to rely upon the representations of the selling dealer as they are experts in the field of buying and selling cars.

Unfortunately, many of these dealers take advantage of those who rely upon them to make an improper and dishonest dollar.

The New Jersey Attorney General has recently issued a warning to remind used car buyers to be wary of flood-damaged vehicles. They issue guidelines and reiterate that there are many flood-damaged vehicles on the market due to Hurricane Sandy. Insurance companies will be buying these vehicles in droves and selling them at insurance owned auctions.

There is no requirement to have the insurance company brand the title and salvage unless the cost to repair the vehicle is more than the cash value of the vehicle. Many times insurance companies will repurchase vehicles as a courtesy of their customers. This can be done without stamping the title or labeling the title as salvage because of this administrative irregularity in the law. This can be so even if the car is dangerous.

In addition, since these vehicles are frequently sold at insurance only auctions, there is no requirement for them to disclose since buyers are on notice that the insurance companies are selling the cars and, as such, there must be a problem. The purchasers of the vehicles from these auctions are less honest with the consumers and frequently they will fix a car and flip it to a wholesaler, then the vehicle ends up on the market as a risk to public and the driver of the vehicle.

You must ask if the vehicle has been flood-damaged and you are entitled to rely upon the affirmative representations of the dealer that the vehicle has not been flood-damaged. It is their job to appropriately investigate and respond to your questions. Under the New Jersey Consumer Fraud Act, if there are representations that the vehicle has not been in a flood or had any flood damage, this must be truthful. The law has abandoned the concept of caveat emptor or buyer beware and adopted a more ethical standard of conduct.

Newspaper Article - Flood damages cars

The Law Office of Jonathan Rudnick LLC Web Site

Newspaper article Atlantic Highlands Herald

Flood damaged cars and an auction