Interpretation ID: aiam2003
Carlton
Fields
Ward
Emmanuel
Smith & Cutler
P.A.
The Exchange National Bank Building
P.O. Box 3239
Tampa
FL 33601;
Dear Mr. Keettel: This is in response to your letter of July 15, 1975, commenting o several aspects of the odometer disclosure regulation (49 CFR Part 580, *Odometer Disclosure Requirements*).; You suggested that the term 'transferor,' defined in S 580.3 of th odometer regulation, poses a potential problem for a person who transfers ownership of a motor vehicle by gift to a member of his family and fails to execute an odometer disclosure statement. In your opinion, the attractive civil penalty available for noncompliance with the disclosure requirements might expose such a transferor to suit by his transferee despite the need to demonstrate intent to defraud as a prerequisite to recovery.; The National Highway Traffic Safety Administration (NHTSA) does no agree with your comment. Section 402(3) of the Motor Vehicle Information and Cost Savings Act (Pub. L. 92-513) defines the term 'transfer' as a change of ownership by purchase, *gift*, or any other means (emphasis added). Section 408 of the Act orders the Department of Transportation to prescribe rules requiring any transferor to give an odometer disclosure statement to the transferee in connection with the transfer of ownership of a motor vehicle. Thus, the law mandates the execution of an odometer disclosure statement even when the transfer of ownership is by gift.; Since intent to defraud must be shown in order to obtain recovery unde the Act, it is doubtful that someone who innocently fails to provide a disclosure form would suffer the consequences imposed by the Act. It is important that disclosure statements be executed at each point a vehicle changes hands as a means of protecting individuals in the chain of ownership. Once it is discovered that an odometer has been altered, the owner of the vehicle may name all prior owners as defendants in his suit and the disclosure form may be the only absolute evidence of one's innocence. Thus, the Act's requirement that a disclosure statement be provided, even in the case of an intra-family gift, has a definite basis. The 'intent to defraud' aspect of the penalty section serves as a safeguard against abuse.; You commented in your letter that a loophole exists in section 580.5(b making it possible for new car dealers to transfer vehicles without executing a disclosure statement. Your understanding of the section is incorrect. A new car dealer is required to complete an odometer disclosure statement whenever he transfers ownership of a vehicle to a person for purposes other than resale. This means that the only time a disclosure form is unnecessary (under S 580.5(b)) is when the vehicle is transferred between parties for the purpose of resale. An example of this type of transfer is between a distributor and a dealer.; In your letter you cite possible problems involving the point at whic the disclosure statement must be executed, the conspicuousness of the statement, and the effect of the statement that the mileage indicated on the odometer differs from the true number of miles the vehicle has traveled. S 580.4 requires that the disclosure statement be furnished to the transferee of a vehicle before any transfer of ownership document is executed. In the preamble to the regulation, the agency explained this to mean that the disclosure must be made as part of the transfer, and not at some later time. This assures that the transferee will be made aware of the odometer mileage and its accuracy before he obtains ownership of the vehicle.; Although there is no requirement that the odometer statement b provided as a separate document, it is necessary that all of the required information be contained on some form which is provided to the transferee. There is, of course, no way of assuring that a transferee will examine all of the papers handed to him when he takes ownership of a vehicle. However, since the disclosure document must include a considerable amount of current information on the vehicle, it is likely that transferee (sic) will be aware of the filling out of the form.; The statement included on the form relating to the accuracy of th odometer mileage is phrased in positive terms and states that the mileage indicated on the odometer *is* incorrect, not that it *may* be incorrect. The odometer disclosure requirements are intended to assure that a transferee is aware of the accuracy of his vehicle's odometer mileage. If the transferor indicates that the mileage is incorrect, he has put the purchaser on notice and the purchaser from that point assumes the risk of owning a vehicle whose mileage is uncertain. It seems unlikely that a certification that the mileage is incorrect would be overlooked as might happen with 'fine print' since the transferor must make a mark by the statement showing its applicability. This, it would seem, would draw one's attention to the warning.; Thank you for your comments. Sincerely, Frank Berndt, Acting Chief Counsel