Can a car dealer be liable for selling a flood damaged car?

UPDATED: Sep 30, 2022

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Can a car dealer be liable for selling a flood damaged car?

My husband and I bought a car about a month ago from a dealer with good reviews. We got the car for a good deal but like three days after the check engine light turned on. I started to get suspicious of the car thinking that it was salvage since it had a weird smell and yesterday I noticed that under the driver’s seat the metal it’s starting to rust. I couldn’t contact the seller today because it’s labor day but I want to be prepared when I go in to talk to him.

Asked on September 5, 2016 under General Practice, Colorado


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

The dealer is liable, on the basis of fraud, if the dealer knew, or reasonably must have known (that is, any dealer in its circumstances logically must have known) of the flood damage; in the dealer knew of the flooding but didn't disclose it, that misrepresenation or lie constitutes fraud, which could give you  grounds to potentially rescind the contract (return car, get money back) or at least get monetary compensation (e.g. the difference between what you paid and the lesser value of a flood-damaged car). The key is, though, the dealer must have known: if the dealer legitimately did not know, then they are not liable, because in that case, they did nothing wrong.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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