New Rule for Car Resales and
Existing New Mexico law requires that each motor vehicle dealer provide an affidavit to a purchaser where to the best of the seller’s knowledge prior wreck damage or other alteration equals or exceeds 6% of the sale price. In January, 2014, Attorney General King adopted a regulation requiring motor vehicle dealers to inspect motor vehicles for prior wreck damage to assure that proper legal disclosures were made to retail purchasers prior to sale.
While many dealers admit that a significant percentage of cars on the road have been damaged, many consumers do not receive the required affidavit that is intended to outline the extent and nature of the prior damage and repairs. This information is important to allow a purchaser to decide if they are paying a reasonable price for the car – given the car’s condition – and to protect the buying public where the safety of the car may be at issue. Neither the law nor the regulation requires that all damage be disclosed; only if the prior damage or alteration exceeds or equals 6% of the sale price.
Many dealers advertise to the public that they conduct a “multi-point inspection” of the car prior to sale. This marketing tactic obviously is intended to assure the purchaser as to the condition and value of the car the consumer wants to purchase. In stark contrast to the representation of this “multi-point inspection” is the fact that many dealers admit that their inspection, prior to adoption of the 2014 regulation, does not include inspecting for prior wreck damage or alteration to the car.
Many dealers have already incorporated a version of inspection for their motor vehicle inventory to identify prior wreck damage or alteration. This regulation will ensure all dealers conduct minimum standard vehicle inspections and disclose material facts concerning the vehicle’s condition in compliance with the law so they can provide consumers with better information on the vehicles they are selling.
The following are answers to commonly asked questions about the Rule, 12.2.14 NMAC:
1) Are vehicles sold with a salvage title exempt from the inspection requirement of 12.2.14 NMAC?
No. Vehicles sold with salvage titles are not exempt from the inspection requirement of 12.2.14 NMAC when vehicles are sold by a licensed dealer or person selling four or more motor vehicles a year to the public. 126.96.36.199(M) NMAC.
2) Are unrepaired vehicles sold with a salvage title exempt from the inspection requirement of 12.2.14 NMAC?
No. Unrepaired vehicles sold with salvage titles are not exempt from the inspection requirement of 12.2.14 NMAC when vehicles are sold by a licensed dealer or person selling four or more motor vehicles a year to the public. 188.8.131.52(M) NMAC. However, the calculation of the cost of repair should not apply to unrepaired damage. NMSA 1978, Section 57-12-6(A).
3) Are vehicles sold in an unrepaired condition exempt from the inspection requirement of 12.2.14 NMAC?
No. Vehicles sold in an unrepaired condition are not exempt from the inspection requirement of 12.2.14 NMAC when vehicles are sold by a licensed dealer or person selling four or more motor vehicles a year to the public. 184.108.40.206(M) NMAC. However, the calculation of the cost of repair should not apply to unrepaired damage. NMSA 1978, Section 57-12-6(A).
4) Are certified non-repairable vehicles exempt from the inspection requirement of 12.2.14 NMAC?
Yes. Certified non-repairable vehicles are not vehicles that may be used for personal household or commercial use. 220.127.116.11(I) NMAC. Certified non-repairable vehicles can only be sold to a licensed wrecker of vehicles or a person licensed by a jurisdiction outside of this state to process vehicles for dismantling, wrecking, shredding, crushing or selling motor vehicle parts or scrap material or otherwise disposing of motor vehicles. NMSA 1978, Section 66-3-10.1(B).
B. “non-repairable vehicle" means a vehicle of a type otherwise subject to registration that:
(1) has no resale value except as a source of parts or scrap metal or that the owner irreversibly designates as a source of parts or scrap metal or for destruction;
(2) has been substantially stripped as a result of theft or is missing all of the bolts on sheet metal body panels, all of the doors and hatches, substantially all of the interior components and substantially all of the grill and light assemblies and has little or no resale value other than its worth as a source of a vehicle identification number that could be used illegally; or
(3) is a substantially burned vehicle that has burned to the extent that there are no more usable or repairable body or interior components, tires and wheels or drive train components or that the owner irreversibly designates for destruction or as having little or no resale value other than its worth as a source of scrap metal or as a source of a vehicle identification number that could be used illegally. NMSA 1978, Section 66-1-4.12.
A non-repairable vehicle shall not be repaired, reconstructed or restored for operation on the roads or highways of this state. NMSA 1978, Section 66-3-10.1(C).
5) Must motor vehicles be inspected by certified motor vehicle mechanics?
No. Motor vehicles must be inspected by an industry certified person with adequate experience performing vehicle repairs in the areas of:
a. Painting and refinishing
b. Structural and non-structural analysis and repair;
c. Mechanical and electrical components analysis and repair of motor vehicle cab, chassis and body; and
d. Inspection of vehicle for previous alteration or repair;
Any person who possess equivalent or similar knowledge, skills and experience. 12.2.14(J) NMAC.
6) Must government auctions comply with 12.2.14 NMAC.
No. The New Mexico Unfair Practices Act only applies to natural persons, corporations, trusts, partnerships, associations, cooperative associations, clubs, companies, firms, joint ventures or syndicates. NMSA 1978, Section 57-12-2(A).
7) Does the vehicle inspection requirement in 12.2.14 NMAC apply to wholesale transactions?
No. The motor vehicle inspection requirement in 12.2.14 NMAC only applies to retail transactions. 18.104.22.168 NMAC and 22.214.171.124(M) NMAC. Wholesaler is defined as:
A. . . . any person, except a person making a casual sale of the person's own vehicle, who sells or offers for sale vehicles of a type subject to registration in this state, to a vehicle dealer who is licensed under the Motor Vehicle Code or who is franchised by a manufacturer, distributor or vehicle dealer; provided, however, that if any person except a person making a casual sale of the person's own vehicle also sells a vehicle at retail, that person shall be deemed to be a dealer and is subject to the dealer-licensing provisions of the Motor Vehicle Code. NMSA 1978, Section 66-1.420.
However, any licensed or unlicensed dealer or person selling four or more motor vehicles a year to the public are subject to 126.96.36.199(H) NMAC regardless of whether the transaction is characterized as “wholesale to the public”. 188.8.131.52(M) NMAC. Any attempt to represent a retail sale as “wholesale to the public” to avoid the requirements of NMSA 1978, Section 57-12-6 and 12.2.14 NMAC would constitute a violation of the Unfair Practices Act, NMSA 1978, Section 57-12-2(D)(15) by falsely misleading consumers that the seller selling vehicles “wholesale to the public” does not have any obligation to comply with NMSA 1978, Section 57-12-6 and 12.2.14 NMAC.
8) Must the content of the inspection used by sellers exactly follow the “Reasonable Inspection” provided in section 184.108.40.206 NMAC.
No. The “Reasonable Inspection” is a safe harbor inspection. This inspection is “deemed” to be reasonable as required by 220.127.116.11(A).
9) What is the minimal inspection a seller must perform under 12.2.14 NMAC?
The minimum inspection requirement is described in 18.104.22.168 NMAC which states that:
The seller obtain a reasonable inspection of the motor vehicle, performed by a qualified person, prior to offering the motor vehicle for retail sale. 22.214.171.124(A). The inspection used must be sufficient to be considered reasonable.
10) What information must the seller disclose to the purchaser?
The minimal information required to be disclosed to the purchaser is described in 126.96.36.199(H) and specifically includes:
(1) The name of the seller and contact information;
(2) A description of the vehicle, including year, make, model, stock number and vehicle
(3) The vehicle condition repair required by 188.8.131.52 NMAC of this rule;
(4) The odometer reading of the motor vehicle
(5) A statement of the calculation and total cost of alteration or repair;
(6) A statement as to whether or not the alteration or repair causes safety issues;
(7) A statement as to whether or not the motor vehicle has frame damage;
(8) The identification and contact information of the qualified person who performed the
(9) The inspection date and the calculation and total cost for the motor vehicle inspection.
And as described in 184.108.40.206:
A. A written disclosure identifying the specific alteration or repair to the motor vehicle if alteration or repair cost equals to or exceeds 6% of the sales price. 220.127.116.11(F) NMAC;
B. A written disclosure whether to the best of the seller’s knowledge, the motor vehicle title should have been branded, or has been branded salvage. 18.104.22.168(G) NMAC.
11) Must the seller provide information about the vehicle’s condition to every purchaser?
No. The seller is required to provide information about vehicle alteration or previous wreck damage to purchasers buying vehicles with repairs costing 6% or more the motor vehicle’s sale price.
12) Does 12.2.14 NMAC apply to auction sales?
Yes. When vehicles are sold by a licensed dealer or person selling four or more motor vehicles a year to the public, the seller must comply with 12.2.14 NMAC regardless of what venue is used to conduct the sale. 22.214.171.124(M). NMAC.
13) Does 12.2.14 NMAC apply to auction houses?
(1) If the auction company purchases motor vehicles and then sells four or more of those vehicles in a year to the public, the auction company must comply with 12.2.14 NMAC. 126.96.36.199(M) NMAC.
(2) If the auction house sells motor vehicles owned by other persons to the public as an agent for the owners of the motor vehicles, the auction does not have to comply with 12.2.14 NMAC. In this case, the obligation for compliance with 12.2.14 is placed upon the seller of the vehicles, when selling four or more vehicles a year to the public. 188.8.131.52(M) NMAC, but as the agent for the seller, the auction house is required to provide the seller’s affidavit to the purchaser wherever applicable.
Please send written questions concerning 12.2.14 NMAC to:
Assistant Attorney General
Consumer Protection Division
111 Lomas Blvd NW, Suite 120
Albuquerque, New Mexico 87106
The New Mexico Attorney General’s Office will continue updating information on this website as necessary.
A downloadable .pdf of the 2014 rule and the information on this page is available below.
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