A customer calls three weeks after collecting the car. They say the engine is making an unusual noise and that the garage has told them the problem existed before the purchase. They demand a refund. Do you have to cover that repair? Can you refuse? How long are you legally responsible for?
If you are a professional motor trader, hidden defects are one of the most common grounds for claims, and also one of the most confusing. The law clearly distinguishes between private sales and professional sales, and in your case the exposure is greater. Understanding exactly what the regulations say and how to work to reduce your risk before closing each deal makes a huge difference.
Contents
What is considered a hidden defect in a used car
Which law applies when you sell as a professional
What the buyer can claim if there is a hidden defect
The most common hidden defects motor traders come across
How to protect your dealership before a claim arrives
The contract cannot exempt you from everything, but it can protect you
Frequently asked questions
What is considered a hidden defect in a used car
A hidden defect is a serious fault that existed in the vehicle before the sale, was not detectable with a visual inspection at the time of handover, and, had the buyer known about it, they would not have bought the car or would have paid a lower price.
The three requirements that must be met are:
The defect must be serious: not just any fault will do. It has to prevent normal use of the vehicle or significantly reduce it.
It must have been hidden at the time of sale: if the buyer saw it, could have seen it, or was informed about it, no claim is possible.
It must have existed before the sale: the defect must have existed before delivery. If it appears because of incorrect use afterwards, it does not apply.
Typical cases in the sector: an engine with internal damage not visible in a visual inspection, a gearbox in poor condition that fails after a few days, a repaired body structure that does not appear in the CARFAX history, or a transmission system with advanced wear that does not produce obvious symptoms until weeks after handover.
Which law applies when you sell as a professional
This is the key difference compared with a sale between private individuals. When the seller is a professional (a motor trader, a dealer), the Civil Code does not apply, but rather the Recast Text of the General Law for the Defence of Consumers and Users (TRLGDCU), as amended by Royal Decree-Law 7/2021, in force since January 2022.
Under this regulation, the professional seller is responsible for any lack of conformity that exists at the time the vehicle is delivered, and for those that appear during the warranty period.
If you want to go deeper into exactly what each type of warranty covers, we explain it in detail in differences between legal warranty and commercial warranty on used cars.
The general warranty period is three years, although for second-hand goods the seller and consumer may agree a shorter period, never less than one year from delivery. In practice, most professional motor traders set a one-year warranty in the contract, which is the minimum legal period allowed.
Another important point: during the first few months after delivery, it is presumed that the defect already existed at the time of sale. This means that if the customer makes a claim within that period, it is you who has to prove that the problem did not pre-exist, not them. That is a clearly unfavourable position if you have not properly documented the condition of the vehicle before selling it.
What the buyer can claim if there is a hidden defect
In the event of a lack of conformity, the consumer is entitled to repair of the item, replacement, a price reduction or termination of the contract. The order matters: first comes repair or replacement, and only if those options are impossible or disproportionate do a price reduction or refund come into play.
If it is also shown that you knew about the defect and did not disclose it, the customer may also claim compensation for damages. And here is a nuance that many people do not know: claims are valid whether or not the seller knew about the defects. Being unable to prove that you did not know about the problem does not exempt you from liability as a professional.
This has a direct implication: acting in good faith is not enough. As a professional motor trader, the law assumes that you should know the condition of the vehicle you are selling.
The most common hidden defects motor traders come across
There are types of defects that repeatedly generate claims. Knowing them helps you know where to focus before putting a car up for sale.
Mechanical problems not obvious in a visual inspection. Advanced wear in the engine, gearbox or clutch is not always detected in a short test drive. If the car has done a lot of real miles or has had poor maintenance, the fault may appear within a few weeks of sale.
Accident damage not reflected in the history. A car repaired without going through insurance leaves no trace in CARFAX or in DVLA records. If the repair was poor or affected structural elements, it can create safety issues that the buyer will detect too late.
Mileage tampering. Odometer tampering is one of the most serious reasons for claims. Even if you bought the car without knowing the odometer had been altered, if you sell it and the customer proves it, liability falls on you. Vehicle history reports are the best tool for detecting this before the problem reaches your forecourt.
Hidden encumbrances and debts. Seizures, finance liens or outstanding loans that are not obvious at first glance. Checking the DVLA report before each purchase is essential if you do not want to assume problems that came with the vehicle already.
In this article we explain how to know if a car has encumbrances (complete guide).
How to protect your dealership before a claim arrives
The best defence against a hidden-defect claim is to have prevented it before the sale. These are the practices that make the difference.
Check every car thoroughly before putting it up for sale. A proper mechanical inspection by a trusted garage, before you add the car to stock, allows you to detect problems you later will not be able to claim you were unaware of. In addition, if you document that inspection, you have solid grounds in the event of a later claim.
For more information, see our guide on what to check before buying a car to sell.
Always check the DVLA and CARFAX reports. These are the two documents that give you the most objective information about the vehicle’s real condition: accident history, changes of ownership, encumbrances, MOT, and recorded mileage data. Doing this on every deal, both when buying and before selling, is a basic risk-management practice. From Dealcar you can consult both reports directly from the vehicle record, without leaving the platform or dealing with external logins.
Draft the contract properly. A sales contract with clearly specified conditions, disclosed known defects and the agreed warranty period is your main legal tool. If the buyer signs acknowledging that they have been informed of the vehicle’s condition, that carries legal weight in the event of a dispute. What you cannot do is include clauses that exempt you from all liability for hidden defects, as the courts have repeatedly ruled them void when applied to consumers.
Here we leave you a Used Vehicle Sale Contract Template ready to use.
Use a handover acceptance form. This document records the condition of the vehicle at the exact time of delivery and is signed by the buyer. If a defect appears later, the form proves that the problem did not exist, or was not visible, when the car changed hands.
Respond quickly to any claim. If a customer calls about a fault, handling the first few days well is crucial. An agile, documented and solution-focused response usually prevents the conflict from escalating. Silence or evasiveness is the fastest route to a formal claim or a lawsuit.
The contract cannot exempt you from everything, but it can protect you
A common mistake is to believe that by including a generic clause saying "the buyer is aware of the vehicle’s condition and releases the seller from liability" you are covered. Spanish courts have systematically declared this type of clause void when it affects consumer rights, especially if the seller is a professional.
What does work is being transparent and documenting it: declare the known defects in the contract, reduce the warranty period to the legal minimum of one year where applicable, and leave written evidence of the vehicle’s condition at delivery. That does not remove liability, but it narrows it and gives you solid arguments if the claim reaches court.
Managing hidden defects well is not just a legal matter: it is a way of protecting your dealership’s reputation. A customer who receives a swift and fair response to a problem speaks well of the business. One who has to go to court to get the car fixed does not.
See our Legal Guide: essential contracts for professional car dealerships
Frequently asked questions
How long do I have to respond as a professional motor trader to a hidden defect?
If you have agreed a one-year warranty in the contract, that is your period of exposure. During that year, if the customer detects a serious defect, you may be required to repair, replace or refund the amount. The law’s general period is three years, but for used cars you can reduce it contractually to a minimum of one year.
Can I refuse to respond if I bought the car without knowing it had that defect?
Not necessarily. As a professional seller, the law presumes that you should know the condition of the vehicle you are selling. Not knowing about the defect does not automatically exempt you from liability. Where your position does improve is if you can prove that you carried out a documented prior inspection and that the defect was not detectable.
Does a contract clause saying the buyer waives the right to claim hidden defects have legal value?
Not in consumer sales. The courts have repeatedly declared this type of clause void when the seller is a professional. Consumers’ rights in relation to hidden defects are non-waivable. What you can do is reduce the warranty period to the legal minimum of one year and properly document the vehicle’s condition at handover.
What is the difference between a hidden defect and a normal fault after sale?
A hidden defect is a serious fault that existed before the sale and was not visible at the time of handover. A fault caused by later use or by the buyer’s lack of maintenance is not a hidden defect. The key is to prove when the problem started, and for that the expert report is decisive.
What should I do if the customer makes a claim and I think the defect did not exist when I sold the car?
Respond in writing, do not ignore the claim, and propose a joint inspection or expert assessment. If the defect arose after delivery or was caused by misuse, you have arguments not to cover the repair. If you have a signed handover acceptance form and a documented prior inspection, that documentation is your best defence.
More than 500 motor traders already use Dealcar to manage their day-to-day operations.
From each vehicle record you can check the DVLA and CARFAX reports, generate sales contracts, register the handover acceptance form and keep full control of every sales file. All in one place, without paper or scattered tools. If you want to see how it works, you can book a free demo at dealcar.io.
A customer calls three weeks after collecting the car. They say the engine is making an unusual noise and that the garage has told them the problem existed before the purchase. They demand a refund. Do you have to cover that repair? Can you refuse? How long are you legally responsible for?
If you are a professional motor trader, hidden defects are one of the most common grounds for claims, and also one of the most confusing. The law clearly distinguishes between private sales and professional sales, and in your case the exposure is greater. Understanding exactly what the regulations say and how to work to reduce your risk before closing each deal makes a huge difference.
Contents
What is considered a hidden defect in a used car
Which law applies when you sell as a professional
What the buyer can claim if there is a hidden defect
The most common hidden defects motor traders come across
How to protect your dealership before a claim arrives
The contract cannot exempt you from everything, but it can protect you
Frequently asked questions
What is considered a hidden defect in a used car
A hidden defect is a serious fault that existed in the vehicle before the sale, was not detectable with a visual inspection at the time of handover, and, had the buyer known about it, they would not have bought the car or would have paid a lower price.
The three requirements that must be met are:
The defect must be serious: not just any fault will do. It has to prevent normal use of the vehicle or significantly reduce it.
It must have been hidden at the time of sale: if the buyer saw it, could have seen it, or was informed about it, no claim is possible.
It must have existed before the sale: the defect must have existed before delivery. If it appears because of incorrect use afterwards, it does not apply.
Typical cases in the sector: an engine with internal damage not visible in a visual inspection, a gearbox in poor condition that fails after a few days, a repaired body structure that does not appear in the CARFAX history, or a transmission system with advanced wear that does not produce obvious symptoms until weeks after handover.
Which law applies when you sell as a professional
This is the key difference compared with a sale between private individuals. When the seller is a professional (a motor trader, a dealer), the Civil Code does not apply, but rather the Recast Text of the General Law for the Defence of Consumers and Users (TRLGDCU), as amended by Royal Decree-Law 7/2021, in force since January 2022.
Under this regulation, the professional seller is responsible for any lack of conformity that exists at the time the vehicle is delivered, and for those that appear during the warranty period.
If you want to go deeper into exactly what each type of warranty covers, we explain it in detail in differences between legal warranty and commercial warranty on used cars.
The general warranty period is three years, although for second-hand goods the seller and consumer may agree a shorter period, never less than one year from delivery. In practice, most professional motor traders set a one-year warranty in the contract, which is the minimum legal period allowed.
Another important point: during the first few months after delivery, it is presumed that the defect already existed at the time of sale. This means that if the customer makes a claim within that period, it is you who has to prove that the problem did not pre-exist, not them. That is a clearly unfavourable position if you have not properly documented the condition of the vehicle before selling it.
What the buyer can claim if there is a hidden defect
In the event of a lack of conformity, the consumer is entitled to repair of the item, replacement, a price reduction or termination of the contract. The order matters: first comes repair or replacement, and only if those options are impossible or disproportionate do a price reduction or refund come into play.
If it is also shown that you knew about the defect and did not disclose it, the customer may also claim compensation for damages. And here is a nuance that many people do not know: claims are valid whether or not the seller knew about the defects. Being unable to prove that you did not know about the problem does not exempt you from liability as a professional.
This has a direct implication: acting in good faith is not enough. As a professional motor trader, the law assumes that you should know the condition of the vehicle you are selling.
The most common hidden defects motor traders come across
There are types of defects that repeatedly generate claims. Knowing them helps you know where to focus before putting a car up for sale.
Mechanical problems not obvious in a visual inspection. Advanced wear in the engine, gearbox or clutch is not always detected in a short test drive. If the car has done a lot of real miles or has had poor maintenance, the fault may appear within a few weeks of sale.
Accident damage not reflected in the history. A car repaired without going through insurance leaves no trace in CARFAX or in DVLA records. If the repair was poor or affected structural elements, it can create safety issues that the buyer will detect too late.
Mileage tampering. Odometer tampering is one of the most serious reasons for claims. Even if you bought the car without knowing the odometer had been altered, if you sell it and the customer proves it, liability falls on you. Vehicle history reports are the best tool for detecting this before the problem reaches your forecourt.
Hidden encumbrances and debts. Seizures, finance liens or outstanding loans that are not obvious at first glance. Checking the DVLA report before each purchase is essential if you do not want to assume problems that came with the vehicle already.
In this article we explain how to know if a car has encumbrances (complete guide).
How to protect your dealership before a claim arrives
The best defence against a hidden-defect claim is to have prevented it before the sale. These are the practices that make the difference.
Check every car thoroughly before putting it up for sale. A proper mechanical inspection by a trusted garage, before you add the car to stock, allows you to detect problems you later will not be able to claim you were unaware of. In addition, if you document that inspection, you have solid grounds in the event of a later claim.
For more information, see our guide on what to check before buying a car to sell.
Always check the DVLA and CARFAX reports. These are the two documents that give you the most objective information about the vehicle’s real condition: accident history, changes of ownership, encumbrances, MOT, and recorded mileage data. Doing this on every deal, both when buying and before selling, is a basic risk-management practice. From Dealcar you can consult both reports directly from the vehicle record, without leaving the platform or dealing with external logins.
Draft the contract properly. A sales contract with clearly specified conditions, disclosed known defects and the agreed warranty period is your main legal tool. If the buyer signs acknowledging that they have been informed of the vehicle’s condition, that carries legal weight in the event of a dispute. What you cannot do is include clauses that exempt you from all liability for hidden defects, as the courts have repeatedly ruled them void when applied to consumers.
Here we leave you a Used Vehicle Sale Contract Template ready to use.
Use a handover acceptance form. This document records the condition of the vehicle at the exact time of delivery and is signed by the buyer. If a defect appears later, the form proves that the problem did not exist, or was not visible, when the car changed hands.
Respond quickly to any claim. If a customer calls about a fault, handling the first few days well is crucial. An agile, documented and solution-focused response usually prevents the conflict from escalating. Silence or evasiveness is the fastest route to a formal claim or a lawsuit.
The contract cannot exempt you from everything, but it can protect you
A common mistake is to believe that by including a generic clause saying "the buyer is aware of the vehicle’s condition and releases the seller from liability" you are covered. Spanish courts have systematically declared this type of clause void when it affects consumer rights, especially if the seller is a professional.
What does work is being transparent and documenting it: declare the known defects in the contract, reduce the warranty period to the legal minimum of one year where applicable, and leave written evidence of the vehicle’s condition at delivery. That does not remove liability, but it narrows it and gives you solid arguments if the claim reaches court.
Managing hidden defects well is not just a legal matter: it is a way of protecting your dealership’s reputation. A customer who receives a swift and fair response to a problem speaks well of the business. One who has to go to court to get the car fixed does not.
See our Legal Guide: essential contracts for professional car dealerships
Frequently asked questions
How long do I have to respond as a professional motor trader to a hidden defect?
If you have agreed a one-year warranty in the contract, that is your period of exposure. During that year, if the customer detects a serious defect, you may be required to repair, replace or refund the amount. The law’s general period is three years, but for used cars you can reduce it contractually to a minimum of one year.
Can I refuse to respond if I bought the car without knowing it had that defect?
Not necessarily. As a professional seller, the law presumes that you should know the condition of the vehicle you are selling. Not knowing about the defect does not automatically exempt you from liability. Where your position does improve is if you can prove that you carried out a documented prior inspection and that the defect was not detectable.
Does a contract clause saying the buyer waives the right to claim hidden defects have legal value?
Not in consumer sales. The courts have repeatedly declared this type of clause void when the seller is a professional. Consumers’ rights in relation to hidden defects are non-waivable. What you can do is reduce the warranty period to the legal minimum of one year and properly document the vehicle’s condition at handover.
What is the difference between a hidden defect and a normal fault after sale?
A hidden defect is a serious fault that existed before the sale and was not visible at the time of handover. A fault caused by later use or by the buyer’s lack of maintenance is not a hidden defect. The key is to prove when the problem started, and for that the expert report is decisive.
What should I do if the customer makes a claim and I think the defect did not exist when I sold the car?
Respond in writing, do not ignore the claim, and propose a joint inspection or expert assessment. If the defect arose after delivery or was caused by misuse, you have arguments not to cover the repair. If you have a signed handover acceptance form and a documented prior inspection, that documentation is your best defence.
More than 500 motor traders already use Dealcar to manage their day-to-day operations.
From each vehicle record you can check the DVLA and CARFAX reports, generate sales contracts, register the handover acceptance form and keep full control of every sales file. All in one place, without paper or scattered tools. If you want to see how it works, you can book a free demo at dealcar.io.
