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We recently sold a car that we weren't aware there was a salvage title on. The money has already been exchanged and the title signed over to them. The buyers, discovering its salvage status, are now having issues getting it titled in their name, and want us to get involved.

To pass inspection with the sheriff's office it needs to have an air bag light (undiagnosed) fixed, and the buyers want us to pay for it. The light was on, prior to purchase, but they didn't ask about it, or ask us to do anything about it then.

We accepted $900 lower than our asking price of $2600, informally agreeing the buyers could expect to have to do some general repairs as the car is 20 years old. The air bag light was never mentioned in negotiations.

All parties in Colorado, USA.

Note: the Bill of Sale states “as-is”.

Update: The buyers have now abandoned the car outside our house, but are not returning our calls.

Update and Close: The buyers took us to small claims court, and we won, based partially on "as is", and partially because the judge believed we had no way of knowing it was salvage. He seemed unclear on whether only one of those elements would have been enough, so I'm not sure how helpful this is as a precedent, though.

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    Was the "as-is" status of the sale advertised, documented or mentioned?
    – Greendrake
    Nov 7, 2019 at 23:05
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    Greendrake - Yes, the bill of sale states “as-is”. I will update the question to reflect that, as well as another update.
    – Rob Stening
    Nov 8, 2019 at 3:34
  • Did the title you signed over not indicate that it was a salvage title? I don't really understand how you would not be aware of the status.
    – Michael Hall
    May 25 at 16:41
  • @MichaelHall The title word "salvage" did not appear written on the any title, nor was it ever used verbally at the DMV when we first bought and transferred it. Salvage status was 'discovered' by the DMV on the VIN number only when the new buyers did their paperwork. The DMV provided us a prewritten document to sign saying we were unaware of its salvage status (so clearly this has happened before), and the court ruled in our favor partially because "I believe you couldn't have known it was salvage" (as well as the sale being "as-is").
    – Rob Stening
    May 26 at 23:44
  • To clarify then, the DMV made a mistake and didn't do the same thing that revealed it was salvaged when you bought it that they did that revealed it was salvaged when they bought it? i.e. You are positive that it did not have an accident or repairs while in your possession that would have put it in the salvaged category? Either way, the judge ruled in your favor and you won your case, so why are you asking here?
    – Michael Hall
    May 27 at 0:03

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Colorado statute 42-6-206 imposes disclosure requirements on the sale of vehicles with salvage titles. That you didn't know it was a salvage does not seem to be of concern to this particular statute. This means that you are potentially entitled to redress against the people who sold you the car as well, provided the sale occurred in Colorado and they failed to disclose it to you (i.e., you didn't just forget about it in the intervening years).

Given the presence of a law specifically covering your circumstances, it may be worth consulting with a local attorney to see what your obligations are. There may be mitigating circumstances, but they are not currently obvious to me if they're there. (conventional wisdom in the industry is that all private sales are "as-is" with no implied warranty of merchantibility and no recourse for a buyer who doesn't do due diligence -- I was shocked to find a statute specifically protecting buyers of salvage vehicles)

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    Good find. In particular, the statute appears to say that OP, as the seller in the most recent transaction, is required to give the buyer a "full and immediate refund of the purchase price", and if OP does not, they may be charged with a misdemeanor and fined. As you say, OP may be able to turn around and demand a refund from the person who sold them the car previously, but I guess things could be more complicated if significant time has passed.
    – Nate Eldredge
    Nov 8, 2019 at 20:38
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    Another note is that, since this is a criminal statute, OP could consider reporting the previous seller to the police.
    – Nate Eldredge
    Nov 8, 2019 at 20:39
  • Thank you for finding this statute. However, there's a complication regarding "That you didn't know it was a salvage does not seem to be of concern to this particular statute." --- 'Salvage' was never included on any Title in the car's history, and has now been 'discovered' by the state on the VIN number. --- After the sale, the buyers returned to us and had us sign a document confirming we never knew about its salvage status, they seemed satisfied with that.
    – Rob Stening
    Nov 8, 2019 at 21:11
  • So, they seemed fine with it having a salvage title and aren't asking for their entitled refund. But they are asking us to fix the warning light issue, which due to salvage status prevents them getting it re-titled. So what's our obligation status to fix the light? As far as I can see none - but if we refuse they can demand the salvage refund, so it's semi-moot. Does that seem correct?
    – Rob Stening
    Nov 8, 2019 at 21:12
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    @RobStening Interesting -- if the title was not branded prior to the state taking a look at it and you've already agreed with the buyer that you didn't know it was a salvage, then I suspect you're safely outside the bounds of this statute, in which case the conventional wisdom prevails: it's the buyer's car now, and you have no responsibilities to them. However, IANAL. Given the existence of protections around buying salvaged vehicles, the buyer might have standing to at least drag you to court if they decide to make a case out of it. Doubt they'd win, but it'd still be a thorn in your side
    – bvoyelr
    Nov 9, 2019 at 2:50

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