Can a Buyer Ask for a Refund After a Private Auto Sale?

A buyer can ask for a refund after a private party auto sale, but the seller generally does not have to agree to cancel the sale. As long as the seller did not engage in fraud and the sale meets certain legal criteria, most private car sales are "as is," with the buyer responsible for future repairs.

This article describes a seller's options if a buyer requests a refund after a private auto sale. We'll discuss:

• What consumer rights apply to private auto sales
• Providing the proper disclosures and vehicle information to buyers
• How state laws affect what sellers must disclose during a private auto sale

Buyers Have Limited Rights Following Private Sale

Selling a vehicle yourself may get you more money than doing a trade-in or selling it to a dealer. But, while a car dealer likely won't call you and ask to return the vehicle for a full refund later, a private buyer might.

What can you do if you sold a car and the buyer wants their money back? Of course, you can refund the buyer's money and take the car back. But you are not legally obligated to do so in most cases.

The buyer's legal options depend on the facts surrounding the sale. Generally, the buyer's rights are minimal when buying a vehicle from a private party. The buyer must thoroughly inspect the vehicle or have a mechanic perform an inspection before finalizing the sale.

Car buyers are also not entitled to a cooling-off period for used or new vehicle sales. The federal cooling-off rule does not apply to automotive consumers with buyer's remorse.

Private Party vs. Dealership Auto Sales

Whether the buyer realizes it, there are important legal differences between buying a vehicle from a licensed dealership and buying from a private party.

When someone buys a used motor vehicle from a dealer, state and federal consumer protection laws protect the transaction because the dealership is a business. But, when someone buys a vehicle from a private seller, the vehicle is sold "as is." This means the sale comes without warranty unless otherwise noted in a sales contract signed by the seller and the buyer.

Buying something "as is" is a legal term meaning "with all issues known and unknown." This means the seller is generally off the hook for any problems that may happen after the title changes hands. At that point, any issues become the buyer's responsibility.

Of course, there are exceptions where the buyer could have a fraud argument. For example, if you as the seller:

• Were not honest about the vehicle's condition, or
• Didn't have legal standing to sell the vehicle, like not being the true owner or not having a clear title

Vehicles That Don't Pass Emissions Testing

Certain areas have laws banning the sale of vehicles that do not pass emissions testing. Vehicles sold "as is" are not exempt from these laws. If you sell a vehicle in an area with such a law and it did not pass emissions testing at the time of the sale, the buyer could ask for their money back or file a civil claim.

For example, California law requires private auto sellers to get a smog certification for vehicles more than four years old. The buyer must pay a smog transfer fee for vehicles under four model years old.

Consult your state's smog law for specifics.

Providing Disclosures for the Vehicle

The best way to protect yourself if a buyer requests a full refund after a private sale is to provide all the required disclosures at the time of the sale. State laws determine what you must disclose, but plan to issue the following:

• Odometer reading
• Damage disclosure and accident history
• All known mechanical issues
• Maintenance history and records
• Any valid warranty information
• Lien release, if necessary

If a buyer later sues you or claims you did not disclose certain information about the vehicle, thorough records can be your best defense.

Keep copies of the bill of sale and any communications between you and the buyer that discuss the vehicle's condition. Further, encourage potential buyers to take the vehicle for a test drive and to get a mechanic's inspection.

Also, you must meet any promises in a written contract.

Check your state's law and department of motor vehicles (DMV) for specifics on what to provide during a private automotive transaction.

Do Lemon Laws Apply to Private Used Car Sales?

A "lemon" is a vehicle with a substantial defect that remains unfixed even after a reasonable number of repair attempts. Each state's lemon law defines what makes a "substantial" defect and how many repair attempts it considers reasonable.

Lemon laws apply to new cars under their original manufacturer's warranty. Some states' lemon laws also cover used vehicles with time left on their original warranty. Used cars from car dealerships are protected under lemon law, not private car sales.

Consumers often misuse the term "lemon" when discussing a vehicle needing repair. If a buyer claims you sold them a lemon, reviewing your state's statute can help determine if they have a lemon law claim. You can also talk to a lemon law attorney for help.

What If the Buyer Sues Over the Car Purchase?

If the car buyer filed a lawsuit in small claims court to get a refund, both parties would have the opportunity to tell their sides of the story. Then, a judge would issue a decision.

If a buyer sues you, you will want help from an attorney who practices consumer law.

Need Help With a Private Auto Sale? Contact an Attorney

In most cases, sellers do not have to take back a vehicle sold in a private sale. If you need help with an uncooperative buyer or are facing a civil lawsuit due to a private auto sale, you want professional legal help.

Contact a consumer protection attorney in your area to learn how they can help you with a stressful auto sale situation.