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APPRAISED AND STILL SCREWED
 

Appraised and Still Screwed

Originally Appeared in "Sports Car Market", June 2000

by Alexander Leventhal

As an enthusiast and an attorney, I hear an automotive-related horror story at least once a week. Usually, most auto/legal-related dramas are the result of a few missed cues, undocumented promises or misjudgments on the part of a buyer or seller. However, this month's victim did nearly everything right and still got screwed.

The gentleman who called told me that he had recently purchased a 1962 Maserati Sebring Vignale coupe in red over black from a well-known east coast exotic car dealer. The car had been described to him as a strong #2. He had hired a nationally-known appraiser to do a pre-purchase inspection. The appraiser actually sent a subcontractor to do the inspection, but assured the buyer that the sub was fully qualified and a Maserati marque expert. The subcontractor's inspection report said that the car had no major flaws, was unrusty and unhit, and was worth somewhere in the mid-$20,000 range. The buyer paid $25,000.

The vehicle was shipped via Intercity Lines (an outfit I have personally used and been very satisfied with) and arrived at the buyer's home in sunny Los Angeles. The buyer gave his new car the once over, and noticed it wasn't as good cosmetically as had been described. Still optimistic, he decided to take it for a ride. The car went about two blocks and stalled, which was probably a blessing in disguise since it had no brakes and pulled violently to the right.

It seemed that even though the buyer exercised due diligence, the car was still not what had been bargained for. This was later proved when the vehicle was inspected by Steve Cram (of SCM's "Appraiser's Corner"), who found the vehicle to be a "very poor physical specimen loaded with rust and Bondo" which had sustained a "tremendous accident in the past to the left front of the car" which causes the vehicle to "pull viciously." This was made worse by the fact that the vehicle had "no brakes." Mr. Cram's assessment was that the vehicle was worth roughly $7,000 as a parts car and his advice was for the buyer to retain the services of an attorney. The previous inspector was clearly blind, in bed with the seller, or both.

All that is left for the buyer at this point is to try to recoup his investment by bringing legal actions against the appraiser, the appraising subcontractor, and the selling dealer. In many situations involving used cars, this can be done under New York's "lemon law" which provides a very cheap and effective avenue for dispute resolution. Unfortunately for the buyer in this case, this law specifically excludes coverage for "historical vehicles" which is defined in relevant part as vehicles more than twenty-five years old. This means that if the matter cannot be settled quickly (which is likely), then the buyer will need to litigate it in state court in New York or California (if long-arm jurisdiction can be had in California) or in federal court using diversity jurisdiction. Wherever the matter is litigated, causes of action will be brought against all the parties for breach of contract and fraud. This will be expensive, and the amount of the loss (roughly twenty grand) means that the costs and fees related to the lawsuit may make the action less profitable than would be ideal for the buyer. With no other alternatives, however, this is all that can be done.

Most of the time, at this point in the column, I sum up what has been written into a piece of advice which can prevent the horror that befell the plaintiff/victim in the story from happening to any other reader. In this column, the advice may seem impractical, but it will go a long way towards protecting other buyers from this type of fraud.

The first tenet is to hire only a nationally-known appraiser with a reputation to protect, and then insist that person, and not a subcontractor, perform the evaluation. This may be difficult, and may cost substantially more, especially accounting for travel expenses, but it is the only way to make sure that the inspector is not in bed with the seller. Even if it costs a few grand, it would have put the buyer in this case in a much better position than he is now. A national figure would never risk his reputation on a $25,000 car while the same can clearly not be said of the no-name subcontractor in this case. Think of it as expensive insurance.

The second piece of advice is to check a few references from the seller if you are purchasing from a dealer. This may not prevent you from getting a bad car on a fluke, but if no references can be provided it will tip you off that the main profit center of the dealer in question may be fraud, and not classic car sales.

Alex Leventhal is a car collector and attorney in New York. His comments here are general in nature, and are not a substitute for a consultation with an attorney.


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