Buying a used car: your rights, and how not to get caught out

Service page: Consumer claims and class actions lawyer.

Why is buying a second-hand car a legal minefield?

An apartment has a land registry (Tabu) record, and a new product has a manufacturer’s warranty. A second-hand car is different: it is sold “as is”. But that does not mean the seller is exempt from a duty of disclosure. Quite the opposite. Did you buy a new car that turned out to have a defect? See the article A defective new car and the “lemon law”: the buyer’s rights.

The seller’s duty of disclosure: what must be disclosed

A vehicle dealer must disclose to the buyer any known defect that significantly reduces the car’s value (section 4(a)(1) of the Consumer Protection Law). Before signing, separately from the contract, they must give the buyer a signed disclosure form. It lists damage caused to the car and the mileage, as far as known to them (section 4 of the Used Vehicle Sale (Right to Information and Fair Disclosure) Law, 5768-2008). An “as is” clause does not protect a private seller either, when the non-conformity results from facts they knew or should have known and did not disclose (section 16 of the Sale Law). Failing to disclose facts they should have disclosed is deception, and it allows the contract to be canceled. This is under section 15 of the Contracts (General Part) Law, 5733-1973 (חוק החוזים (חלק כללי), התשל״ג-1973). What does this include in practice?

• Accident damage that was repaired but not reported.
• A history of recurring mechanical failures.
• A rolled-back odometer.
• Water damage.
• Technical modifications that do not match the permit.
• Licensing problems.

An inspection beforehand protects you, not the seller

Before buying a second-hand car, always check:

• Service and insurance claim records: ask the seller for them. After the purchase, the buyer is entitled to information about the car (section 2 of the Used Vehicle Sale Law). Every garage that serviced the car and every insurer that insured it must give the information they hold.
• An inspection by an independent mechanic (not the seller’s mechanic), and keep the opinion in writing.
• License plates and chassis number.
• Vehicle license and the validity of the roadworthiness test (the “test”).
• Whether the car is pledged to a bank.

Buying from a dealer? What to check in the contract and the disclosure form before signing:

1. There is a written contract. Separately from it, there is a disclosure form that the dealer signed and gave you by the time of signing. You confirm with your signature that you received it (section 4(a) of the Used Vehicle Sale Law).
2. The form sets out the dealer’s details and the details of the car’s owner (section 4(b)). It gives the number of previous owners. If the dealer knows that one of them was a leasing company, it also gives its name. It sets out the damage caused to the car and the mileage it has covered, as far as the dealer knows. And it states the amount to be paid.
3. The dealer disclosed to you that they sell vehicles in the course of business (section 4(c)).
4. The mileage on the form matches the figure stated in the vehicle license according to the last annual test (section 6).

Can you cancel the purchase of a second-hand car within 14 days, without giving a reason?

Usually not. The Consumer Protection Regulations (Cancellation of Transaction), 5771-2010 (תקנות הגנת הצרכן (ביטול עסקה), התשע״א-2010) allow you to cancel the purchase of a new car from an importer within 14 days. The condition is that it has not been registered in the buyer’s name (regulation 2(6) and item (21) of the Schedule). They do not cover the purchase of a used car. Canceling the purchase of a second-hand car is based, as a rule, on a cause of action. One is material misleading in a transaction with a dealer, within a reasonable time from when you learned of it (section 32 of the Consumer Protection Law). Another is deception, including failure to disclose facts the seller should have disclosed (section 15 of the Contracts (General Part) Law). A third is non-conformity of the car with what was agreed, which is a breach of the seller’s obligations (section 11 of the Sale Law). It allows cancellation under the conditions in section 7 of the Contracts (Remedies for Breach of Contract) Law, 5731-1970 (חוק החוזים (תרופות בשל הפרת חוזה), התשל״א-1970). For a car bought from a dealer in a distance sale, the right of cancellation in section 14C(c) may also apply.

A car from a dealer compared with a car from a private person

When you buy from a dealer, the Consumer Protection Law and the Used Vehicle Sale Law apply. They set a duty to disclose known defects, and a disclosure form. When you buy from a private person, these disclosure duties do not apply. Instead, the Sale Law and the duty of good faith in negotiations apply (section 12 of the Contracts (General Part) Law). One caveat: someone who sells a car without being registered as its owner in the vehicle license is considered a vehicle dealer for the purposes of the disclosure form (section 4(d) of the Used Vehicle Sale Law). This does not apply if they prove otherwise, or if the car belongs to a first-degree relative.

A rolled-back odometer is a criminal offense

Presenting a false mileage figure by a dealer is misleading, and misleading is a criminal offense (sections 2 and 23(a)(1) of the Consumer Protection Law). It also gives the buyer a cause of action to cancel the transaction (section 15 of the Contracts (General Part) Law) and to compensation. Check the mileage stated in the vehicle license according to the annual test (section 6 of the Used Vehicle Sale Law). Keep evidence.