Motor Car Trader Obligations
When selling used cars, licensed motor car traders (LMCTs) in Victoria must adhere to strict regulations to ensure transparency and protection for buyers. These regulations cover a wide range of responsibilities, including providing clear title guarantees and warranties and maintaining proper documentation. In this article, we will explore each of these obligations in detail.
Guarantee of Clear Title
One of the most critical obligations for LMCTs is to guarantee clear title to buyers. This means that the car being sold must not have any financial encumbrances (such as loans) and must not be stolen. Providing clear title ensures that the buyer legally owns the vehicle without any undisclosed debts or legal issues.
Traders must provide buyers with a written notice confirming that the vehicle has a clear title. One way to prove this is through a ‘certificate of clear title,’ which can be obtained from the Personal Properties Securities Register (PPSR). Failing to provide this guarantee can lead to significant penalties for traders. More information on selling safe vehicles can be found on the VicRoads website.
Statutory Warranty
LMCTs are also required to provide a statutory warranty for certain used vehicles. A statutory warranty applies to cars that are:
- Less than 10 years old, and
- Have travelled fewer than 160,000 kilometres.
The vehicle’s age is determined by the build date stamped on its build plate, typically located on the firewall between the engine and the passenger compartments. The statutory warranty covers three months or 5,000 kilometres, whichever comes first.
Warranty Repairs and Exclusions
If a fault is discovered within the warranty period, the trader must repair the defect to a reasonable condition, considering the vehicle’s age. However, there are specific exclusions from the statutory warranty. These include:
- Accidental damage after the buyer takes possession of the vehicle.
- Misuse or negligence by the buyer.
- Items listed on a defect notice with a repair cost estimate.
- Certain accessories, such as radios, non-standard alarms, or cigarette lighters.
Vehicles Exempt from Statutory Warranty
The statutory warranty does not cover:
- Motorcycles
- Commercial vehicles
- Vehicles sold at public auction
- Vehicles older than 10 years or with over 160,000 kilometers
If a car becomes undrivable due to a warranty-related defect, the trader must cover towing costs. However, they are not required to provide a replacement vehicle while repairs are being made.
Dealings Book
Traders must maintain a detailed dealings book, an essential record of every vehicle bought, sold, or exchanged at their premises. This book establishes an audit trail for each vehicle’s ownership and origin, protecting consumers and traders.
The dealings book must be kept in paper or electronic form for at least six years after the last entry. If kept electronically, the book must be accessible at each business location. Failing to maintain or update the dealings book can lead to penalties.
Entering Details in the Dealings Book
Traders must obtain the signature of the person with whom they are trading the vehicle. If a signature cannot be collected, they must retain a signed document that includes the vehicle’s identification, the person’s name, and address. All signed documents must be retained for electronic dealings books unless the entry is printed and the person signs the printout.
Forms of Notice to be Displayed on Used Vehicles
All used cars for sale must have a “price and data sheet” attached detailing key information about the vehicle. This information is outlined in Form 4 of the Motor Car Traders Regulations 2018. Traders can download the Licensed Motor Car Trader form 4 as an example.
In addition, traders may affix a “defect notice” if the vehicle has known issues excluded from the statutory warranty. This notice informs buyers of any pre-existing problems and the estimated cost to repair them. All vehicles displayed in a trader’s yard are considered for sale and must have these notices attached.
Selling Demonstration Vehicles
When selling demonstration or ex-demonstration vehicles, traders must follow the same regulations for used cars. This includes updating the dealings book and displaying the relevant notices.
Written-Off Vehicles Register
VicRoads manages a register of written-off vehicles to prevent theft and ensure that vehicles deemed write-offs are appropriately repaired. There are two categories of written-off vehicles:
- Statutory write-offs: These vehicles cannot be re-registered or returned to the road.
- Repairable write-offs: These vehicles may be repaired and re-registered, but only after passing a roadworthy test and undergoing a Vehicle Identification Validation (VIV) inspection.
Traders must inform potential buyers if a vehicle they are selling has been listed on the written-off vehicle register.
Roadworthy Certificates and Other Documents
Before a buyer takes possession of a vehicle, the trader must provide a current roadworthy certificate. Additionally, within 14 days of selling a car, the trader must:
- Lodge a completed transfer of registration application with VicRoads.
- Pay the transfer fee.
- Provide evidence that a current roadworthy certificate has been issued.
Buyers are also entitled to a prescribed form outlining their cooling-off rights before signing the contract. After the sale, the trader must promptly provide the buyer with a copy of the sales contract, extended warranty documents, and defect notices.
Odometer Tampering
Odometer tampering is illegal under the Motor Car Traders Act 1986. It is an offence to manipulate a car’s odometer to falsify the distance it has travelled. If tampering occurs on a trader’s premises, the law assumes that the trader or someone acting on their behalf committed the offence.
Odometer tampering has severe penalties, with individuals facing fines of up to 240 penalty units or imprisonment for up to two years. For companies, the penalties can be even higher—up to 1,000 penalty units.
Consignment Selling
Consignment selling, where a trader sells a vehicle on behalf of a private individual, is illegal. Traders cannot offer to sell, or have in their possession, a vehicle intended for consignment sale. If a trader is found engaging in consignment selling, they may face a fine of 100 penalty units, court action, or both.
The only exception to this rule is vehicles sold at public auctions, which are exempt from consignment selling laws.
By adhering to these regulations, LMCTs ensure that the used car sales process is transparent and legal and protects both the buyer and seller. Non-compliance with these obligations can result in hefty fines, legal action, and sometimes imprisonment. Ensuring that all documentation, warranties, and notices are properly handled is essential for motor car trading businesses’ continued success and integrity.
