Lets Discuss Liability when Selling Customized Cars?

No I'm not selling anything, all my projects are staying here..  For now.

I build cars with custom brackets and suspension parts, and chassis.  Many of you also do this.  I have a limited number of cars I can keep "forever" and am kinda up against that limit at this point.  The next projects will either be temporary for a purpose or will displace one of the ones I have already built.  This means eventually I will have a "finished" project to move on to a new home.  I want to talk about the legal implications of Re-Homing a project car.

What kind of liability would the original builder of a "homebuilt" type car have when it is sold as a "used" vehicle or as an "incomplete" vehicle?  Is the liability truncated by "used vehicle as-is no warrantee" Bills of Sale?  What have people that have sold things like Challenge Cars, or Locost 7s, or hot rods that have frames that they welded up at home done?  

I've always built with the potential in the back of my mind that when I am done with them they will get parted out and all custom parts will get Scrapped.  I would hate to have to do that but if that's what it takes to protect me legally I will that's part of why I've been hesitant to spend big $$ on homebuilds.  Is there settled precedence that takes car of this?

I intend to do some research and contact a lawyer for assistance but I thought I would start here to see what has been done.  I feel like this would be a really good indepth article for say a "DIY builder focused Magazine" to research and publish.  Perhaps leverage contacts with SEMA as  I expect they would have some information on this as many of their member companies sell items that finish welding and assembly is done by the end user who may sell their vehicle on down the line someday.    For me it seems like this is one of those rocks people just don't want to look under but I could be making a bigger deal out of it then it is.

This loosely came up in a thread about the sale of a past Challenge winner and everyone seemed to be unsure so I thought it warranted it's own thread.

And one final note before it potentially goes that way.  I personally would never consider holding the previous owner / fabricator of a vehicle I purchased liable for any loss/damage incurred as a result of use of the vehicle after my purchase.  To me fitness for use is my responsibility alone.  This is not about what I would do if something I bought failed, or even what you would do if something you bought failed.   It's about what does the legal system say the original builder is responsible for.  

This is an interesting topic, and I wonder if there will be any legal distinctions drawn between track cars and street cars. If a part you fabbed lets go on a street car and results in a serious injury, I find it very easy to imagine an insurance company going after you. They certainly are aggressive about steering blame to substandard body shops- there was that case where John Eagle collision glued a new roof on a hail damaged Civic instead of spot welding it. Car was in a nasty wreck, the structure failed and the driver/passenger got messed up pretty badly. John Eagle Collision case

This thread makes it occur to me that this may be one reason why so many cool projects get parted out instead of sold as-is.  I always figured it was because any car is worth more in pieces.

The first rule is that anybody can sue anybody over pretty much anything.  Then fighting it becomes a cost/benefit analysis.

Let's start with the assumption that the seller is the person that did the work and they are not employed nor do they have any ownership stake in any sort of car lot or repair shop.  The buyer buys the car from the seller as a used car in a private party deal and gets injured or killed and the event that causes the death or injury can be definitively proven to have been caused by a faulty repair or modification that the seller performed.

The first difference between that scenario and the one mentioned above where a body shop uses an improper repair technique is that there would be no implied warranty of merchantability from a private party seller in most (all?) states.  Since our seller isn't engaged in the trade, he isn't held to the same standard as the body shop.  The body shop, on the other hand, would be liable for a failure caused by an improper repair since (in some if not most states) they can't disclaim that implied warranty.  They're held to a higher standard since they're in the trade, basically, and the consumer should be able to expect that they would do the work properly.

I'd feel comfortable selling a car that I had done basic repair work on and wouldn't give it a second thought.  If I screwed up replacing a wheel bearing, for example, and it failed causing injury after I sold the car, I suspect it would be a long putt to try to hold me liable.  The car was sold in as-in condition because it was a private party sale and that means you bought it will all faults, known and unknown.  Granted, someone could try to say that they were defrauded because I made a substantial misrepresentation of the condition of the car, but that would probably be pretty tough to get past.

If I ever went to sell the Neon, though, I would look in to the possibility of crafting some sort of waiver to go along with the sale.  It's had substantial portions of its safety equipment removed - bumper reinforcements, air bags, the core support is all boogered up and clearanced, etc - and then an irresponsible amount of power added to it.  In that case, I still think it would be difficult to come back on me legally, but it would probably be a lot cheaper to walk into a courtroom with a document signed by the now late purchaser that disclosed the unsafe nature of the car and that the purchaser and their heirs waive their rights to any relief resulting from that.

wae said:

The first rule is that any insurance company can sue anybody over pretty much anything.  Then fighting it becomes a cost/benefit analysis.

There is a somewhat famous case in body repair world where a Honda Fit was repaired in a manner not to Honda's specification (something about welds, bonding, can't pull details off the top of my head) and the vehicle was involved in another collision, resulting in severe burns to the driver after the fuel tank ruptured due to the middle of the car collapsing in just the right way.  It went to court. The jury awarded the guy something like $5 for every minute for the rest of his projected life span.

My Golf was one of the ones that had only a shoulder belt, no lap belt.  I installed a NAPA non-retracting belt, attaching both points to the lap belt mounting hole on the left sill,. wrapping the belt around the seat.  I didn't feel like removing it when I sold it, but I did tell the guy who bought it that he shouldn't use it because it wasn't mounted safely, it was only there for when I rallycrossed it.

Unless you are wealthy or well insured, a lawyer probably isn't going to waste his time. 

I suspect there will be a difference between an individual selling a single car, and someone operating as a business selling a number of cars.

They would have to prove YOU made the part if you were worth suing. "That was on the car when I bought it" would be my answer to everything.

WAE has covered the key points as to a private seller not being a professional and therefore not subject to the same standard.

Next is intent; one would have to prove that you knowingly did substandard work in an attempt to defraud someone. The hitch with that is if you've been running the car for sometime one would in effect be arguing you attempted to defraud yourself before you defrauded them. The only other possible avenue on intent is proving that you new your modifications were dangerous and been told so by a professional and attempted to hide that fact.

I would think that for a private party sale, a simple waiver saying something along the lines of:

This car has been modified from its original form using custom fabricated parts. No warranty concerning its safety or suitability for any use is expressed or implied. It is sold in as-is, where-is condition. Any and all faults become the sole responsibility of the purchaser at time of sale.

...included in the bill of sale, over both seller and buyer signatures, with date, would pretty much cover you.

I cannot imagine this being a problem. I agree with Duke.

Pete. (l33t FS) said:

wae said:

The first rule is that any insurance company can sue anybody over pretty much anything.  Then fighting it becomes a cost/benefit analysis.

There is a somewhat famous case in body repair world where a Honda Fit was repaired in a manner not to Honda's specification (something about welds, bonding, can't pull details off the top of my head) and the vehicle was involved in another collision, resulting in severe burns to the driver after the fuel tank ruptured due to the middle of the car collapsing in just the right way.  It went to court. The jury awarded the guy something like $5 for every minute for the rest of his projected life span.

The John Eagle Collision Center case. The roof panel was incorrectly attached with glue instead of welded. Went to a few collision industry meetings over the years, nobody wants to be the next John Eagle Collision case.

That being said, I think it highlights the precision that modern vehicles are constructed. Altering the chassis in some areas may cause unforeseen force transfer into other area in the event of a collision. Maybe a chassis brace that is great for stiffening up the car, has the unforeseen consequence of negating a crumple zone. But as a small time fabricator, I doubt anyone will go after you.

This is a great topic and glad to see the interesting discussion.  I guess this can be extended to homes also, in that as a private consumer-owner you have a lot more legal latitude than if a repair/upgrade is done by a professional business if something happens to the next owner after selling the property.

I thought about this a lot when I sold Datsaniti as a street-legal race/drift car. We didn't sign anything other than title and bill of sale. I felt better after selling to the right person, who has also built custom vehicles, so they 'get' it. But what if it trades hands a few times, someone gets hurt in it, and their lawyer finds my build thread? I meticulously documented every which way I modified the car. 

I wonder the same about my hot rod, with its custom chassis and body work. Surely the hot rod world has answered this question?

AFAIK, selling something "as-is" releases all liability. But that won't necessarily stop some lawyers from trying. 

At that point I'd sell the car as a "parts car" in "as is" condition only and have that on the bill of sale.  That way if they use it on the road, you're totally insulated...

Pete. (l33t FS) said:

This thread makes it occur to me that this may be one reason why so many cool projects get parted out instead of sold as-is.  I always figured it was because any car is worth more in pieces.

 

I never considered any liability aspect, but nearly all modified cars are worth more in parts then they are as a whole. 

docwyte said:

At that point I'd sell the car as a "parts car" in "as is" condition only and have that on the bill of sale.  That way if they use it on the road, you're totally insulated...

Not sure I agree with that. People have successfully sued X business for Y happening after signing a waiver saying Y may happen and X business won't be responsible. 

z31maniac said:

docwyte said:

At that point I'd sell the car as a "parts car" in "as is" condition only and have that on the bill of sale.  That way if they use it on the road, you're totally insulated...

Not sure I agree with that. People have successfully sued X business for Y happening after signing a waiver saying Y may happen and X business won't be responsible. 

Yes, but we're talking about individual private-party sales here; Person A is selling a specific vehicle to Person B, not offering themselves as a modification, fabrication, repair, or restoration service.

If the buyer and seller both have receipts that say  "As-Is", signed by both parties, doesn't that pretty much cover it?

(I'm not a lawyer and never played one on TV).

In reply to z31maniac :

You can sue for any reason.  Doesn't mean you have a basis to do so or will win.  Selling it as a parts car means that it wasn't suitable to be driven and licensed for street use.  Which means the person you sold it to made it able to do that.  Which means they're liable.

In reply to 914Driver :

If the seller is a merchant with respect to goods or services of that kind then the implied warranty of merchantability is in play and in some  states can't disclaim that by using "as-is" language.  Same for fitness for a particular purpose.  Private parties, however, are not bound by implied warranties in a transaction so writing out "as-is" is redundant.  I guess the only thing they could try to come back on you, as a private-party-who-is-not-a-merchant-with-respect-to-goods-of-that-kind, would be to try to claim gross negligence or fraud.  They might have a claim if I told them the car had a cage in it that was built by Adam Brock, but I actually just put some PVC pipe together and used toothpaste to simulate welds.  But in a private transaction with disclosure that the car was modified by the owner, especially if the owner had been driving the car before selling it, it would be tough.

The big difference is that we're talking about a regular person selling the car or doing the modifications, not a business.

In reply to nocones :

Does Buyer bewareApply here?  When used cars are sold if the transmission fails can a buyer successfully bring a lawsuit against the seller?  
    While anyone can sue anyone over anything at anytime in civil court  you do have to prove your case.  It's not sufficient to bring a broken transmission to court and say,"he sold this". 

I think you just have to look at home built planes.  FAR more likely to kill someone. I don't remember hearing of an original builder being sued, but as noted, you can sue for anything, winning anything is the question.

Heck, John Denver was killed in a plane someone built and I am pretty sure no one sued the builder for putting the fuel level indicator where you could not see it while flying (if I remember correctly that was a contributing factor). They did sue a fuel valve maker though: https://www.deseret.com/2000/9/29/19531293/relatives-of-john-denver-settle-with-aircraft-makers

Here is some info that should help:

https://www.eaa.org/eaa/aircraft-building/builderresources/next-steps-after-your-airplane-is-built/selling-and-buying-articles/part-1-protect-yourself

https://www.kitplanes.com/builder-liability-and-you/

https://scholar.smu.edu/cgi/viewcontent.cgi?article=1372&context=jalc

Looks like the kit manufacturer is the more likely target: https://komonews.com/news/local/homebuilt-plane-maker-sued-after-seattle-girl-4-killed-in-crash

Aircooled those are some amazingly good articles.  I think that second one from Kitplanes in particular is great.  I would LOVE to see a similar article or result of research with attorney's and industry experts aimed at custom cars.

Wae has brought the Tech hard to this thread and I really appreciate it.  Poking around the internet seems to be backing up what he is saying.  Indemnity is something I saw language of on some Bill of Sale examples for race car sales.  wae do you have any thoughts on a recommended BOS language to use?  

It appears that As-is language is mostly effective but I intend to discuss it with an Attorney prior to doing anything.  It sounds like a decent "As-Is" Bill of Sale *Should* provide reasonable protection.  I saw some advice that said to have the BOS at a minimum witnessed but Notarized would be best.  Although annoying to do I think I would likely take that step with whatever document I do if one of the projects is sold.  

I really appreciate everyones input.  

In reply to nocones :

I just listen to a lot of law podcasts, but I haven't stayed in a Holiday Inn Express.  That said, I could see how an indemnification clause might be of use with the idea being that there is a failure while the buyer is driving and a third party gets injured.  You'd be trying to rope the buyer into bearing the costs.  I don't know how easy or hard it would be to try to punch through something like that or what the practical effect would be.  If you've got 2 mil in assets and the buyer has three really shiny nickles to their name, all the indemnification in the world wouldn't really help since the third party would being coming after your deeper pockets and you'd be left trying to collect from shiny nickles guy.

I think that you'd be covered with the buyer if you simply called out in the sales contract that there were modifications done to the vehicle that make it fundamentally unsafe.  But now I'm wondering what a third party that got injured would be able to do.  Let's say the buyer had a passenger in the car, got into a crash, and the passenger was injured because you didn't properly reinforce the seat bolts through the floor pan.  You could dismiss the claims from the buyer pretty easily, and with indemnify, defend, and hold harmless verbiage you could recover any loss that you had from them.  But would it be considered gross negligence on your part?  That's an interesting thought.  My first thought is that it should fall back on the buyer for operating a vehicle that they were told was fundamentally unsafe.  But again, just because you don't have legal liability doesn't mean that someone can't make it prohibitively expensive for you to prove that.