Buying a car from a private seller - know your rights…

by Alan Knowsley - Rainey Collins

Recently we have had a few people reporting to us that they purchased a car privately after a bad experience with a car dealer. Unfortunately however, in the cases reported to us their luck did not change when buying privately.
   
The stories tend to be very similar. Soon after purchasing the car, faults begin to emerge. At first the faults are usually small but soon they began to escalate and within a few weeks the cars require service at a mechanic.
  
Much to the dismay of the car owners, the mechanics reported that each car had systemic faults, requiring extensive and costly repairs. In one case, the car required so much work that the cost exceeded what the buyer paid for the car in the first instance!
   
Understandably, so soon after buying their cars, the new owners were all loath to incur further costs.

In each case they tried speaking to the person who sold them their cars. Without exception it was pointed out by the seller that they had little recourse against them.
  

What are your options?

You may be surprised to learn that when a car is purchased between private individuals, key consumer protection legislation such as the Consumer Guarantees Act 1993, the Fair Trading Act 1986 and the Sale of Goods Act 1908 do not apply (unless the seller was not the legal owner of the car). The Motor Vehicle Disputes Tribunal, is also unavailable as it only hears claims involving these Acts.

Instead any remedy lies through the Contractual Remedies Act. The Contractual Remedies Act deals with misrepresentation in contracts. If the seller represented the car as being in a reliable and good condition, but the car was actually faulty and the seller deliberately hid this, then the buyer could make a claim under the Contractual Remedies Act or seek to cancel the contract. The difficulty with this however, is first proving there was a fault with the car at the time of the purchase, and second, proving that the seller was aware (or reasonably ought to have been aware) of the fault.
    
Even if there is a strong basis to suspect that the seller deliberately hid a fault, it may not be economic to seek to recover the costs. The forum in which you bring a claim against the seller will depend on the cost of the repairs and the value of the car. In most instances the Disputes Tribunal will be available to hear claims. The Disputes Tribunal however, can only hear claims for up to $15,000.00 (or up to $20,000.00 with the consent of both parties). If the car is particularly valuable (or the cost of the repairs are) especially high, it may mean that you have to bring your claim in the District Court.
       

What should you do?


Like most things in life prevention is better than a cure. As such it is vital that before purchasing the car you make best efforts to ensure it is roadworthy. Before buying ensure that a qualified mechanic does a thorough examination of the car. You should also make sure that the car has a current warrant of fitness, and the registration is up to date.

Another trap people often fall into is failing to check to see whether the car has any security interest attached to it. It may be the case that the seller has previously used the car as collateral to finance a loan. If the car has been used as security, and the security has not been removed, a creditor may be able to claim the car off you at a later date.
For a similar reason, it is also important to ensure that as soon as your purchase the car you transfer the ownership to your name. This can be done at any NZTA agency eg AA, Post Shop, VTNZ, VINZ or online.

Buying a car from a private seller does carry risks. While you may be able to purchase a car for less than you would from a car dealer, if issues emerge, you may be left with a hefty repair bill, with little chance of recovering the costs.

For more information on this topic, please contact the Rainey Collins office (04 4736850)
or the article author - Alan Knowsley.


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