Pub. 4 Issue 1

by the dealership. In any event, we strongly recommend that dealers consult with their own counsel to discuss the manner in which safety recalls are disclosed, and be sure that any form used is modified to reflect the individual dealership’s recall policies. Sample Used Vehicle Recall Status Disclosure Form 1: The first sample recall form is found at the end of this article. This form was designed to allow dealership personnel to disclose any potential result from the NHTSA Recall VIN Portal, with spaces to disclose: • Franchise vehicles subject to recall with a remedy available; • Franchise vehicles subject to recall with no available remedy; • Non-franchise vehicles subject to recall with a remedy available; • Non-franchise vehicles subject to recall with no available remedy; • Vehicles not subject to an open safety recall; and • Vehicles where the recall status is unavailable. Sample Used Vehicle Recall Status Disclosure Form 2: The second sample recall form is found at the end of this article. This form is used to reflect a fairly common policy of new car dealers: they will not sell a franchised used vehicle subject to an open safety recall when a remedy is available— instead electing to remedy the problem in advance of any sale. Accordingly, unlike the first form we discussed, this form does not provide a space to disclose such circumstances. This form provides spaces to disclose: • Franchise vehicles subject to recall with no available remedy; • Non-franchise vehicles subject to recall with a remedy available; and • Non-franchise vehicles subject to recall with no available remedy. A dealer using this form would follow the same instructions as with Form 1, but only for customers purchasing a non- franchise vehicle subject to recall or a franchise vehicle subject to recall for which no remedy is available. This form would not be used in circumstances where an open recall does not apply or where the recall status is unavailable. Nor would it be used when a franchise vehicle is identified as being subject to recall where a remedy is available, since the dealership would not sell the vehicle in such circumstances. Note: Providing a disclosure is no guarantee that a dealer is shielded from liability from a third party lawsuit or potential product liability claims (which will look all-the-uglier if the defect leading to the recall caused an injury or accident), underscoring the importance of setting an internal policy identifying which recalled vehicles should not be sold. Conclusion While dealer responsibilities relating to new vehicle inventory are clear, the legal requirements relating to used vehicles are far less certain. Given the high-profile status of recall concerns in today’s press, we recommend that dealers be proactive in developing policies (in consultation with counsel and the safety and service experts within the dealership) on how to treat used vehicles subject to recall. Such policies should necessarily involve whether to retail recalled used vehicles that the dealership is franchised to sell, may extend Since automakers are not obligated to pay compensation to deal- ers for used vehicle inventory subject to recall, and many recent recalls involve backlogged parts orders that may take months to resolve, a lot full of recalled vehicles can quickly become a burden on your flooring line. 22 www.glancda.org