A Reminder of Dealer Responsibilities Related to Flood-Damaged Vehicles

Posted 07.16.2013

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Recent storms in Alberta and Ontario have left many vehicles destroyed by flood waters. While Ontario and Alberta Branding Programs may keep most of these flood-damaged vehicles off the road permanently (branded as ‘irreparable’), some of these flood vehicles will likely slip through. As well, there may be some flood-damaged vehicles that were uninsured; these vehicles could be dried out, cleaned up, sold off or traded in. Dealers trading in these vehicles, even unknowingly, are taking great risks.

ONTARIO’S BRANDING and DISCLOSURE LAWS REGARDING FLOOD VEHICLES

BRANDING – The Ontario Ministry of Transportation’s mandatory branding program specifically addresses the issue of flood-damaged vehicles. According to the ministry the brand of ‘irreparable’ will be applied to any vehicle that has been immersed in liquid to the bottom of its dashboard or higher, or, to any vehicle if any major part of its electrical system has been, or appears to have been, immersed in liquid. Further, all imported branded vehicles previously identified with ‘fire or flood’ damage will be branded as irreparable. Vehicles branded as ‘irreparable’:

  • cannot be made roadworthy and can never be driven on the road in Ontario
  • can only be used for parts or scrap
  • have been written-off as a total loss

DISCLOSURE – The Motor Vehicle Dealers Act (MVDA) requires all dealers provide full disclosure of a vehicle’s past use, history and condition including:

  • if a vehicle has been branded or declared a total loss
  • if a vehicle “sustained any damage caused by immersion in liquid that has penetrated to the level of at least the interior floorboards
  • if a vehicle has been registered in another jurisdiction, and if so, where
  • any material fact that might influence a reasonable purchaser

Failure to properly make these disclosures could lead to charges, a discipline hearing and/or revocation of registration. As always, even if a dealer’s due diligence fails to discover prior material facts, the dealer is expected to assume responsibility for the non-disclosure and make suitable restitution to a purchaser up to and including rescission.

DANGERS – The damage caused by flood waters can be difficult to spot and can take months or years to show up. If flood waters cause corrosion inside sensitive electronic or safety components, the results can be catastrophic: air bags might not deploy in a collision, engines could shut off at highway speeds, steering could fail – these vehicles are not safe for the road. For tips on how to spot a flood-damaged vehicle, refer to this bulletin.

Read more on How to Avoid Purchasing a Flood-Damaged Vehicle.

Reprinted with permission from OMVIC.

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