NAAA

 Arbitration  Policy   !"#$  

 
I. General Policies
1. Fair and Ethical Sale

The sales made at an Auction are intended to promote fair and ethical treatment to both the Buyer and
Seller. If Auction determines that the transaction is not fair and ethical to either party, the Seller and the
Buyer agree that Auction may cancel the sale, at its sole discretion. Federal, State, and Local laws
supersede these policies where applicable.

2. Auction Role in Sale:

a. Auction makes no representations or guarantees on any vehicle sold or offered for sale.

b. Auction is not a party to the contract of the sale. The sales contract is between the Seller and
Buyer only.

c. All vehicles bought or sold on the premises must be processed through the Auction office.
Failure to do so will result in suspension of trading privileges at Auction.

d. Auction reserves the right to review any audio/video documentation to verify the accuracy of a
sale.

e. Any vehicle consigned with the Auction is subject to government inspection, with or without
prior notice, by the FBI, State Police, National Auto Theft Bureau, Local Police Authorities, any
other governmental agency, or quasigovernmental agency.

3. Auction VIN Policies

All vehicles consigned must have a visible public Vehicle Identification Number (VIN) plate attached to
the vehicle by the manufacturer or state inspector (state reassigned VIN only). Those vehicles having a
reassigned VIN plate by the State in place of the original VIN plate must be announced or will be
subject to sale cancellation or Buyer return. Auction reserves the right to refuse the sale of any vehicle
in which the VIN plate appears to be altered in any way.

II. Sale Light System

Auction has a standard light/video display system to describe the condition and/or disclosures related to
the vehicle being sold. The system is defined as:

1. Green Light –Ride and Drive: The green light signals that this vehicle is guaranteed under the
conditions outlined in this policy by the seller. Any defects or issues requiring disclosure per this policy
should be announced using the green and yellow lights.

2. Yellow Light – Limited Guarantee: This light is an indication to the Buyer that the Auctioneer or
Selling Representative has made announcements that qualify/clarify the condition or equipment and
limit arbitration of this vehicle in conjunction with the green light or when “limited guarantee” is
announced.
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3. Red Light – As-Is: Vehicles selling under the red light will only qualify for arbitration under the rules
outlined in this policy. (As-Is dollar amount, model years, and mileage are subject to local auction
policy).

4. Red and Yellow Light – As-Is, No Arbitration: Vehicles selling under the red and yellow light will only
qualify for arbitration under the rules outlined in this policy. (As-Is dollar amount, model years, and
mileage is subject to local auction policy).

5. Blue Light – Title Attached/Title Unavailable/Title Absent: This light is used to announce that the
title is not present at the time of the sale. For Auction rules regarding titles please refer to the Title
Arbitration Policy section. If “title attached/unavailable/absent” is not announced, a vehicle could be
arbitrated for no title in the absence of local auction policy.

III. Seller Responsibilities

1. Seller will be held responsible for the accuracy and completeness of all representations or descriptions.
This includes handouts, catalogues, vehicle markings, condition information or vehicle listings and
verbal or written statements made by Seller, Auction, Auctioneer or Selling Representative at the time
of sale. The Seller understands that the sale light/video display is a binding arbitration representation of
vehicle condition, and is therefore responsible for ensuring that their vehicles sell under the correct light
in the lane.

2. Mileage announcements are not required for vehicles that are 10 years or older and/or deemed exempt
from Federal/State Odometer and Title disclosure laws unless a mileage discrepancy is known or
apparent to the seller. The Seller may represent miles on exempt vehicles; any disclosures made by the
Seller and all known odometer discrepancies are grounds for arbitration.

3. Title discrepancies must be announced including, but not limited to, not actual miles, salvage, theft
recovery, stolen vehicle, flood damage, Lemon Law buybacks and trade assist.

4. If a vehicle is being offered for sale by a third party, the legal owner of the vehicle must be disclosed by
the seller prior to the sale. Disclosure requirements and time limits are subject to local auction policy. If
a vehicle is being offered for sale by a third party, an announcement of “3rd Party Seller” is required.
Disclosure requirements and time limits are subject to local auction policy.
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5. Announcements are required for any matters that relate to the safety or integrity of the vehicle including
but not limited to as per the stated dollar threshold and disclosure requirements stated in this policy, all
requirements under local, state or federal statutes or regulations. Announcements must be made both
verbally and disclosed on the auction invoice/sale contract/bill of sale or equivalent document in a
physical or online auction environment.

6. The announcement of the presence of warning lights does not exempt a Seller from arbitration
responsibilities as defined by the policy. The issue/defect found to be the cause of the light may be
arbitrated within the stated time period and dollar amount threshold according to Appendix 1.

7. The availability of a manufacturer’s warranty shall not affect a Buyer’s right to arbitrate a vehicle.
Regardless of the warranty coverage in terms of the root cause of the complaint, an announcement
may be required.

8. In the event of a successful arbitration by the Buyer, the Seller is responsible for reimbursement of all
reasonable documented expenses incurred by the Buyer (excluding profit, commissions and detail
charges) on vehicles arbitrated for undisclosed conditions. Reimbursements that qualify under these
guidelines will be at the sole discretion of the Auction and will be limited to the reasonable and
documented expenses at auction (wholesale) repair cost.

9. Seller will not be paid for vehicles in arbitration until arbitration is settled and vehicles are sold. For
arbitrations occurring after the seller has been paid, seller is required to promptly return the payment to
the auction if the transaction is voided as a result of arbitration.

IV. Buyer Responsibilities

1. Prior to placing bids, the Buyer is responsible for inspecting the vehicle, listening to and reviewing any
verbal or written announcements and disclosures made by the Seller, Auction, Auctioneer or Selling
representative. Online buyers are also responsible for reviewing all pertinent information available
online, including, but not limited to, announcements, disclosures, condition reports, pictures and online
listings. Buyers are also responsible for observing and understanding the sale lights (Green,
Green/Yellow, Yellow, Red, Red/Yellow and/or Blue), which identify various sale conditions for the
vehicle. Once the vehicle is sold, the Buyer should check the Auction sales receipt or appropriate
document to confirm the vehicle price, disclosures and announcements are correct before legibly
printing and signing their name or digitally/electronically signing the Auction sales receipt or appropriate
document.

2. It is strongly encouraged that an Online Buyer should have a Post Sale Inspection (PSI), warranty or
assurance product from the auction on vehicles purchased.

3. The auction will not arbitrate vehicles based on any unintentional errors or omissions of any
promotional information related to the vehicle, walk-around, handouts, catalogues, vehicle markings, or
vehicle listings as they are for the convenience of the buyer and are not to be relied upon as accurate
or complete.
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4. Buyer agrees to be liable for any and all work done to a vehicle (including a vehicle purchased as title
attached, unavailable or absent) prior to returning the vehicle to Auction except on vehicles arbitrated
for undisclosed conditions not detectable through vehicle inspection, including but not limited to, not
actual miles, salvage, theft recovery, stolen vehicle, flood damage, Lemon Law buybacks and trade
assist.

5. The Buyer is financially responsible for any pending sale and assumes all risk of loss until arbitration is
final.

6. The Buyer or Buyer’s agent (transporter or driver) should note any obvious damage on the gate release
prior to removing the vehicle from the Auction or facilitation service provider’s location. Auction or
facilitation service provider and Seller will not be responsible for any obvious damage not identified on
the gate release or the condition report once the vehicle is removed from the location.

7. The Buyer shall not surrender possession of the vehicle to any claimant, except as required by legal
process, nor shall Buyer voluntarily pay or acknowledge the validity of any claim, without the prior
approval of Auction. Time is of the essence. Any failure on the part of the Buyer, after becoming aware
of said claim, to notify Auction of any claim in a timely manner or failure of the Buyer to cooperate in
defending any such claim shall relieve Auction and seller of any liability under this policy.

8. A vehicle is not considered returned until received, inspected and approved for return by Auction
management. Any vehicle returned must be in the same or better condition as when sold. Any vehicles
delivered to and left on Auction premises without Auction approval remain the sole responsibility of the
Buyer. Buyer assumes all risk of loss. Vehicle must be returned in a timely manner consistent with
Auction direction.

9. There may be a charge of $(auction choice) per mile for excessive mileage on a returned vehicle at the
discretion of the Auction.

10. The Seller/Auction shall not be liable for any vehicle sale or repairs made by the Buyer before the title is
received by the Buyer. If the title has been mailed from Auction to Buyer, Buyer may not return vehicle.
If the Seller presents a valid negotiable title to the Auction within close of business on the next day
(excluding weekends and auction observed holidays) from the time that the Buyer notifies the auction of
their intent to return the vehicle, then the transaction will stand.

V. Title Arbitration Policy

1. All titles submitted by Seller must be in Seller’s company name on title or on a properly executed
reassignment form. The Seller guarantees the titles of vehicles that are sold through Auction. This
guarantee of the title warrants that the title shall be marketable and free and clear of all liens and
encumbrances. This includes any brand (such as “salvage”) noted upon the current or any prior
certificate of title unless such encumbrances were announced at the time the vehicle is sold through
Auction and for a period of four (4) years from the date of sale. Seller’s liability under this title guarantee
shall never exceed the Auction sale price (the “maximum amount”) of the vehicle, and this maximum
amount shall be reduced by two percent (2%) per month following Auction sale date. All liability under
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this title guarantee shall expire and terminate 48 months after Auction sale date. Auction will not be
responsible for any expenses incurred on vehicles returned for late title.

2. Seller warrants, represents and guarantees possession and conveyance of a certificate of title, properly
executed, valid in the state where the transaction is occurring and clear of all liens and encumbrances
(except current year DMV fees in California), and seller warrants and will defend the title against the
claims and demands of all persons whatsoever.

3. Seller will ensure that the title must be reassigned directly to Buyer. Any title assigned directly to
facilitating auction will not be accepted.

4. Seller will not be paid for vehicles until a transferable title is received.

5. Auction accepts no responsibility for non-titled vehicles sold without title. Seller must announce the
vehicle being sold with a bill of sale only and that there is no title to transfer. All non-titled vehicles and
equipment will be sold “As-Is.”

6. If the title problem is due to a clerical or coding error, or incomplete documentation, Auction shall be
given reasonable time after receiving notice to have the error corrected.

7. Applications or other documents related to a duplicate title will not be accepted, unless announced as
such or if allowed by the appropriate jurisdiction.

8. Foreign titles, such as Canadian titles, are unacceptable. Where legal by municipal and/or state law,
any vehicle being offered for sale with a foreign (non-US) title, must be disclosed prior to the sale by the
seller. Disclosure requirements and time limits are subject to local auction title policy.

9. Seller has up to a maximum of [see individual Auction Company’s Title Policy (Auction Choice)]
calendar days for title to be received by Auction. (Sale day is Day 1). After (Auction Choice) calendar
day period, it is the Buyer’s option to return the vehicle or wait a reasonable period of time for the title.
If, after 90 calendar days, Seller has not produced negotiable title and Buyer has not returned the
vehicle, this title guarantee shall not apply and Auction shall have no duty to produce the certificate of
title to the Buyer and shall have no duty to pay Seller.

10. Vehicles lacking a properly assigned title or reassignment to transfer a title at time of sale must sell
“Title Attached/Title Unavailable/Title Absent,” unless announcement is not required within the region.

11. Vehicles lacking lien release or a valid repo affidavit for a repossessed vehicle (where allowed by law)
must be sold “Title Attached/Title Unavailable/Title Absent,” unless announcement is not required within
the region.

12. In regard to defect in title, and in any matter relating to odometer mileage, odometer statements, or
damage disclosure statements: Seller and Buyer agree to indemnify and hold harmless Auction from
any liability, loss costs, damage or expense, including attorney fees which may arise either directly or
indirectly from the sale and purchase of the consigned vehicle including but not limited to title services
provided.
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13. Whenever any claim is made by any person against the title of a vehicle, whether by suit or otherwise,
the Buyer, after becoming aware of said claim, shall immediately notify Auction. This involves giving full
particulars of claim, cooperating fully in defending any legal action, and in taking other steps to
minimize possible loss.

VI. Grey Market Vehicles

1. Eligible Vehicles
Any vehicle not originally built to U.S. specifications can, under certain circumstances, be imported
through a registered importer who modifies the vehicle to comply with U.S. equipment and safety
regulations and then certifies it as compliant, and an independent commercial importer who modifies
the vehicle to comply with U.S. emissions regulations and then certifies it as compliant. Only vehicles
properly converted to U.S. specifications can be sold and must be announced as such.

2. Seller Responsibilities
Seller must inform Auction that a vehicle has grey market history at time of registration and must
disclose that to the buyer in writing as an announced condition on all documentation supporting the
transaction.

3. Proper Conversion
a. If a vehicle was manufactured in Canada for the Canadian Market, the Manufacturer is
required to obtain and affix a U.S. Safety Standard Certification Label to the vehicle.

b. All other vehicles imported must be imported through a Registered Importer. Registered
Importers are required to post a bond with the U.S. Department of Transportation. All vehicles
imported through a Registered Importer must have:

i. U.S. Safety Standard Certification Label that identifies the Registered Importer

ii. Valid U.S. Title or Legal Foreign Title

iii. Meet ALL Federal NHTSA, D.O.T. and/or E.P.A. Mandated Guidelines

iv. Documentation must be provided

c. All vehicles, whether imported by a Manufacturer or a Registered Importer, must show miles
per hour on the speedometer and miles traveled on the odometer. Title 49, United States
Code, Chapter 327, Section 32704, allows replacement odometers without a door frame
sticker if the conversion from kilometers to miles can be done without changing the distance
traveled by the vehicle; therefore, replacement of an odometer under these circumstances
does not have to be announced by the Seller.
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VII. Arbitration Guidelines
Vehicles that have any of the defects outlined in Appendix I that were not disclosed or announced at the
time of sale must be reported to Auction within the time frame noted below in order to be eligible for
arbitration. The only exception is in the case of the purchase of a Post Sale Inspection (PSI). The
purchase of this service may increase arbitration timeframes of items covered in the auction’s PSI
policy. Vehicles must be returned to Auction in the same or better condition than when purchased.

1. Time Period
Refer to Appendix I for arbitration time periods. Sale day is Day 1. Arbitration shall end at the close
of business as determined by each Auction on the last calendar day in the time period.

2. Process
Any single mechanical defect that has a repair cost of $500 or more is subject to arbitration on
Green Light vehicles on vehicles sold under qualifying lights and lack of announcement per
Appendix I. Each vehicle transaction is allowed one chance at arbitration. The arbitrator will inspect
only the defect that is on the arbitration form/documents. Repair costs will be determined by the
auction and will reflect the auction cost to repair. If price adjustment is made and accepted, vehicle
becomes “As-Is, No Arbitration” property of the Buyer, and is not subject to any further arbitration.
The auction management makes the binding decision upon both the Buyer and Seller on all
arbitration matters.

3. Fees
Auction reserves the right to assess an arbitration fee to the Buyer. If the arbitration is valid,
Auction reserves the right to assess an arbitration fee to the Seller in addition to any charges
associated with the arbitration.

4. Not subject to arbitration

a. Vehicles exceeding 20 model years, with the exception of trailers, RVs, and watercraft, which
cannot be arbitrated if they exceed 10 model years.

b. Kit vehicles, homemade vehicles, or modified vehicles are sold “As-Is” and cannot be arbitrated
for odometer, frame, warranty books, or model year.

c. Noise and Inherent Conditions: No arbitration can be based on noises or conditions that are
inherent or typical to a particular model or manufacturer, unless deemed “excessive” by the
arbitrator on non-warranty items. OEM dealer warranty guidelines will be used where applicable
to determine whether the condition is excessive. Additional resources can be found on NAAA’s
Standards page at www.NAAA.com.

d. Manual Transmissions: Vehicles with standard transmissions cannot be arbitrated for manual
clutches unless the defect will not allow a safe test drive.
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e. Wearable Items: Auction will not arbitrate vehicles for wearable items. For purposes of this
policy wearable items are defined as parts of the vehicle that the manufacturer recognizes the
need for replacement/adjustment during the expected life of the vehicle. These items are
normally identified in the Owner’s Manual for routine check and replacement and would include,
but are not limited to, air ride suspensions, tires, wipers, brake pads, shoes, rotors, belts,
hoses, lubricants/fluids, timing belts, bulbs, filters, shocks and struts.

f. Unsafe vehicles: Auction reserves the right to reject any vehicle that management judges to be
unsafe.

g. Vehicles may not be arbitrated based solely upon information provided in Electronic Data
Vehicle Histories (EDVH) or printed EDVH reports. Auction and Seller are not bound by
information listed in EDVH. Examples of EDVH include Carfax, AutoCheck, NMVTIS, etc. The
facilitating Auction may investigate vehicle history based on information found in EDVH for
information that may impact arbitration.

h. Auction is not bound by vehicle grades or other types of scoring systems placed upon the
vehicle. Buyers may only arbitrate a vehicle based upon damage or defects that were present
at the time of the sale of the vehicle.
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VIII. Structural Damage, Alteration or Certified Structural Repair or
Replacement Policy

The purpose of the NAAA Structural Damage Policy is to define and clarify terminology associated with
structural damage and to specify the disclosure requirements of the seller for vehicles offered at NAAA
affiliated auctions. The policy is intended to provide adequate disclosure to the buyer for informed
purchase decisions and to limit arbitrations for the seller. This policy, along with the main Arbitration
Policy will serve as the primary criteria for all arbitration proceedings.

1. Definitions

a. Vehicle Structure-The main load-bearing platform of a vehicle that gives strength, stability and
design exclusivity and to which all other components of the vehicle are fastened. For purposes
of this policy, there are three macro types:

i. Unibody -A type of structure whereby the floor, roof, panels, etc. are bonded together into
one unit, thereby eliminating the need for a separate conventional frame. Unibody structures
are typically shorter, sturdy and have thinner wall thickness.

ii. Unibody on Frame-A type of structure whereby a unitized structure is bolted to a

conventional frame.

iii. Conventional Frame-A type of structure consisting of two symmetrical rails (beams)
connected by cross-members.

b. UVMS-Used Vehicle Measurement Standard. The commercially acceptable measurement

deviation from the vehicle’s original structural specification in order for any deviation not to be
considered structural damage.

2. Recommended Disclosures

a. Structural Damage-Damage to the structure or a specific structural component of the vehicle.

Often referred to as frame damage, although it also applies to Unibody and Unibody on Frame
structures in addition to Conventional Frame.

b. Certified Structural Repairs/Replacement-Repairs to a specifically identified structural

component of a vehicle that has been certified to be within the Used Vehicle Measurement
Standard (UVMS).

c. Structural Alteration -An alteration to the vehicle’s structure including a lengthened or

shortened frame, a modified suspension, or the installation or removal of after-market
accessories.
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3. Seller Disclosure Requirements

Sellers must disclose structural damage, alterations, repairs or replacements (certified or non-
certified) as outlined in this policy prior to selling a vehicle at auction regardless of sales channel or
light condition (except RED-Yellow light, see main Arbitration policy for light definitions).
Disclosures are required for the following:

a. Any/all existing permanent (non-repairable aka kinked or broken) structural damage as defined
in this policy

b. Improper and/or substandard prior repairs (not meeting OEM repair guidelines)

c. Repairs not certified to be within the UVMS Improper alterations to the structure Lengthened or
Shortened structure

d. Altered suspension that requires the structure to be modified from its OEM form.

e. After-market accessories installed or removed to the structure.

f. Towing packages installed (or removed) where new holes are drilled, OEM holes are enlarged,
or if the towing package is welded or brazed to the structure.

g. Multiple access holes (regardless of size) or singular access holes greater than 5/8". Access
holes between 1/4" and 5/8" are subject to disclosure based upon location and condition of
structural component.

h. Corrosion of structural components determined by one or more of the following; when the
substrate loses its shape, the original bonds near the affected area are loose or no longer in
existence, the original thickness of the substrate has been reduced by more than 25%, the
affected area can longer possess its absorption or deflection properties.

i. Structural tear damage (i.e. transport tie down) if more than 1" in length (measured from tear
start/stop points)

j. Damage due to improper jacking or lifting that permanently deforms structural components
outlined in this policy.

k. Damage due to contact with parking abutments and/or road debris that permanently deforms
structural components outlined in this policy.

l. Roof bows/braces that have been modified, have existing damage or removed. A replaced roof
skin is not a required disclosure in terms of the Structural Damage Policy.

m. The C pillar/quarter or Cab panel may or may not be a structural component(s) as per the
vehicle manufacturer.
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4. Arbitration Rules for Structural Damage

1. A vehicle may be arbitrated if it has undisclosed existing damage or repairs, which should have
been disclosed under this policy, even though the vehicle is within the UVMS. If structural damage
is properly disclosed, the vehicle may only be arbitrated for improper repair of the designated area,
existing damage or repairs to other areas of the vehicle not disclosed, or for failure to be within the
UVMS.

2. In the event that structural alteration is disclosed on a vehicle, the vehicle may only be arbitrated
for damage or repairs to structural components other than those disclosed or in the event of
improper alteration.

3. Damaged or replaced core supports or rear body panels do does not require a structural disclosure
under this policy.

4. Damage to the aprons, rail floor pan assembly, inner wheelhouse (upper or lower), D pillar (if
equipped) or other ancillary structural components on a unitized structure in the area where the
radiator core support or rear body panel attaches may will require a disclosure if permanent
damage exists.

5. Brazed exhaust hangers are not a required disclosure under this policy.

6. Facilitating auction will, at its discretion, have a vehicle measured according to the UVMS at a
facility of its choice. Prior to sending the vehicle for measurement, the auction reserves the right to
complete a visual verification of the physical condition of the vehicle to determine that it should be
measured. If the measuring facility determines that the vehicle is within the UVMS, the buyer of the
vehicle will be responsible for the charges paid to the facility. Likewise, if the measuring facility
determines that the vehicle is not within the UVMS, the seller will be responsible for the charges
paid to the facility.

7. Visual evidence supersedes any/all mechanical or electronic measurements.

8. For measurements according to the UVMS, the following guidelines will apply:

a. The vehicle structure must measure to a total tolerance of no more than +/- 8 millimeters (mm)
of published specification of length, width and height at control points that capture the front (2),
center (4) and rear (2) sections of the vehicle.

b. Symmetrically (comparative measure from side to side and point to point based on point
measurement), the length, width and height must measure to a difference of no more than
6 mm. Upper body measurements (tram gauge) by themselves will not be adequate.

9. Buyer must arbitrate any/all structural misrepresentations as outlined in this policy within published
timelines (outlined in the main Arbitration Policy Guidelines) from date of purchase (purchase day
counts as Day One).
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10. The buyer must contact and follow the arbitration process of the auction where the vehicle was
purchased including the auction’s direction for return of the vehicle and the timeframe allowed for
the vehicle to be returned.

11. In the event of improperly disclosed structural damage by the seller, the buyer will be entitled to
reimbursement in accordance with the main Arbitration Policy.
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IX. Flood, Puddle or Stream Policy

Vehicles are frequently exposed to moisture during their ordinary operation, maintenance, and
reconditioning. Occasionally, such exposure may leave residual marks or indicators similar to those left
by exposure or immersion of the vehicle in floodwater. In determining what conditions require disclosure
or in arbitrating vehicles for flood exposure/damage it is critical that the total condition of the vehicle be
considered including VIN data history.
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1. Disclosure Not Required

No disclosure is required nor is arbitration allowed for the following types of water exposure, provided
that none of the components outlined below are damaged:

a. Rain, snow or sleet due to open windows, doors or tops or leaking seals.

b. Car wash or rinse water.

c. Carpet or upholstery shampooing or cleaning.

d. Stream, pond, puddle or floodwater that does not rise above the rocker panel or otherwise enter
the passenger compartment.

e. Stream, pond, puddle or floodwater that enters the luggage compartment, but does not damage
any electrical components (such as lighting or wiring harness) or does not enter the passenger
compartment.

2. Disclosure Required

Disclosure is required and arbitration shall be allowed under the following conditions:

a. The title has been correctly branded indicating flood history of the vehicle.

b. Any of the following components have been damaged due to stream, pond, puddle or floodwater
immersion/ingress:

i. Front or rear internal lighting or wiring harnesses

ii. Engine and its major components

iii. Transmission and differential

iv. Dash instrument panel and wiring

v. Passenger seat cushions

vi. Power seat functions or window motor

vii. Major sound system components

3. Recommended Disclosure

The recommended disclosure is “Flood Damage.” This declaration should be made whenever existing
or prior flood damage is found and therefore requires disclosure. While the vehicle is recommended to
be sold under the red light, the disclosure “Flood Damage” is required for all sale lights except the
“red/yellow As-Is, No Arbitration” light combination.