When I started doing consumer protection law, the only dealerships which would sell used cars “as-is” were the smaller dealerships, never the major franchise dealerships. Now we’re seeing more and more major franchise dealerships selling used cars “as-is”, so it’s worth writing to you so that you have an accurate idea of what your rights are in an “as-is” transaction. Here is a list of the pertinent “rules of the road” for “as-is” transactions, under California law:
- If the dealer or manufacturer gives or sells you ANY kind of a warranty or a service contract in connection with the sale of the vehicle, the sale is not “as-is” even if you sign an “as-is” statement (called a “Buyer’s Guide” in the industry). At the very least, you would have an implied warranty that the vehicle is “merchantable”, i.e. would pass as acceptable in the industry under the circumstances of the sale, if the vehicle is sold with a service contract or any kind of warranty.
- Any “as-is” disclosure must be very conspicuous. On a Buyer’s Guide, you’ll commonly see the “as-is” box in minimum 20-point bold type, easy for the eye to see. If you have signed a contract with a “small-print” or concealed “as-is” clause, that “as-is” clause is probably not valid.
- An “as-is” transaction, if done properly, gets rid of any express or implied warranty on the vehicle, but it does not excuse the dealer or manufacturer for fraud or nondisclosure. We’re seeing more and more cars with undisclosed collision damage or tampered odometers being sold to consumers at major dealerships. These dealerships believe they are insulating themselves from liability by having the consumer sign an “as-is” disclosure, but this simply is not true. “As-is” eliminates the warranty and the specific legal rights arising from the warranty, but it does not eliminate a consumer’s claim for fraud or causes of action in California which resemble fraud, such as the Consumer Legal Remedies Act.
The long and short of it: I always recommend that consumers get at least some kind of warranty because it will give them rights down the road if the car is a complete lemon. However, if you buy a car “as-is”, it is not the end of the road for you in terms of making a claim against the dealer or manufacturer for fraud or nondisclosure. There are particular situations, such as undisclosed collision damage, tampered odometers and “lemon law buyback” vehicles, where my firm has an excellent record of success even though we sometimes have to bring such actions over an “as-is” clause. The “as-is” clause also does not affect claims of finance fraud or lease fraud, as elsewhere covered in this blog.
Thanks for taking the time to read this. I hope it is of use to you and your family and friends.