Motor car trader obligations - used car sales

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Guarantee of clear title

Licensed motor car traders (LMCTs) must, by law, provide buyers of used cars with a guarantee of clear title. This is a written notice that ensures the buyer has not purchased a stolen car or one with money owing on it.

To show the car has no money owing on it and is not stolen, you may use a 'certificate of clear title' from the Personal Properties Securities Register.

Penalties apply if you do not provide a guarantee of clear title for a used car.

You can find out more about how to ensure a used car is safe to sell by visiting the VicRoads website.

Statutory warranty

You must provide a buyer with a statutory warranty if the car is less than 10 years old and has travelled less than 160,000 kilometres.

A motor car’s age is determined by the build date stamped on its build plate. Usually, this is found on the firewall between the engine and passenger compartments.

A statutory warranty lasts for three months or 5000 kilometres, whichever occurs first.

You must repair any faults or defects found during the warranty period to a reasonable condition, taking into account the vehicle’s age.

You must list any faults not covered by the statutory warranty on a defect notice and display this on the vehicle. The details you must provide on a defect notice are given on Licensed motor car trader form 5 (defect notice) (Word, 16KB).

A statutory warranty does not apply to:

  • motorcycles, commercial vehicles and cars sold at public auction
  • any accidental damage that occurs after the car has been delivered to the buyer
  • any damage caused by the driver due to misuse or negligence after they take possession of the car
  • any item listed on a defect notice with a reasonable estimate of how much it will cost to repair
  • tyres, battery or any accessories - these accessories are:
    • radios, cassette players, CD players, MP3 and MP4 players and docks
    • DVD players and video display panels
    • telephone and in-car telephone kits
    • clocks and non-standard alarms
    • cigarette lighters
    • tools other than jacks and wheel braces
    • light globes, sealed beam lights and non-standard fog lights
    • global positioning systems (GPS) and satellite navigation systems
    • non-standard body hardware
    • power outlets, including cigarette lighter sockets
    • non-standard rear window demister
    • non-standard keyless entry systems and remote key pads
    • car aerials.

Vehicles not covered by a statutory warranty are:

  • cars that are more than 10 years old or those that have travelled 160,000 kilometres or more
  • motorcycles
  • commercial vehicles
  • cars sold at a public auction.

If a car cannot be driven due to a warranty defect, the LMCT must pay any towing costs. However, the LMCT or mechanic is not obliged to provide a replacement vehicle while a car is being repaired.

Dealings book

A dealings book is a record of every vehicle:

  • bought, sold or exchanged at your trading premises, or
  • in your possession with the intention of selling or exchanging.

A dealings book is an important protection for consumers as it establishes an audit trail of vehicle ownership and place of origin. You:

You must keep a dealings book for at least six years after its last entry - it can be in either paper or electronic form.

Whatever format you choose for your dealings book, your legal obligations are the same.

If you keep an electronic dealings book, it should be accessible at each location where you conduct business. You could face penalties if you do not keep your dealings books up to date.

Entering details in the dealings book

You are required to obtain the signature of the person with whom you trade a vehicle in your dealings book. If you cannot obtain a signature in the dealings book, you must retain a signed document that identifies the vehicle, and the person’s name and address.

For example, if you record an invoice number in the dealings book, you must keep the actual invoice (along with all other documents relevant to that transaction) at your premises.

If you use an electronic dealings book, you must keep all relevant signed electronic documents (which identify the vehicle, and the person’s name and address), unless you print out the entry and obtain the signature of the person with whom you traded the vehicle.

Forms of notice to be displayed on used vehicles

Motor car traders must attach a used motor car price and data sheet to all used vehicles offered for sale. Form 4 of the Motor Car Traders Regulations 2018 explains the details that must be included in the data sheet.

Download our example Licensed motor car trader form 4 (used car sales price and datasheet) (Word, 30 KB).

A motor car trader may also affix a notice to a motor car offered for sale that lists any defects that exist in the motor car. These defects will then be excluded from the statutory warranty.

Licensed motor car trader form 5 (defect notice) (Word, 16 KB) explains the details that must be displayed on a defect notice.

All vehicles displayed in your yard are considered to be for sale, and so must have the relevant forms attached.

Selling demonstration vehicles

Your obligations when selling demonstration and ex-demonstration vehicles are the same as for selling used cars.

You must:

  • record the details of these vehicles in your dealings book, and
  • attach the relevant form.

Written-off vehicles register

VicRoads keeps a register of written-off vehicles to:

  • deter vehicle theft
  • ensure written-off vehicles are repaired to manufacturers’ specifications before returning to the road.

The types of vehicles that can appear on the written-off vehicles register are:

  • statutory write-offs
  • repairable write-offs.

A statutory write-off cannot be removed from the register and any vehicle with this classification cannot be returned to the road (it can never be re-registered).

To re-register a repairable write-off:

  • the buyer must have the vehicle repaired to manufacturer specifications, and
  • the car must pass a roadworthy test and Vehicle Identification Validation (VIV) inspection process.

You must advise potential buyers that a car they are buying has been on the written-off vehicles register.

For more information, visit the Written-off vehicles register & written-off vehicle types page on the VicRoads website.

For more information about your obligations regarding the written-off vehicles register, contact VicRoads.

Roadworthy certificates and other documents you must provide

As a licensed motor car trader, you must:

  • give the buyer a current roadworthy certificate before they take possession of the car
  • lodge with VicRoads within 14 days after selling the car:
    • the completed transfer of registration application
    • the transfer fee payable
    • evidence that a current roadworthy certificate has been obtained.
  • give the buyer a prescribed form setting out their cooling-off rights before they sign the contract
  • as soon as possible after the sale, give the buyer a copy of:
    • the sale contract
    • any extended car warranty documents
    • any defect notice.

Odometer tampering

Under the Motor Car Traders Act 1986, it is illegal to tamper with a car’s odometer and falsify the distance it has travelled. It is also illegal to replace one odometer with another.

If odometer tampering has been found to occur on a motor car trader’s premises, then the tampering is considered to have been done by the trader or someone acting on their behalf.

We take odometer tampering seriously. Traders guilty of odometer tampering face fines (240 penalty units for an individual and 1000 penalty units for a company), imprisonment of up to two years, or both.

Consignment selling

When a car is sold by consignment, it is sold by an agent acting on behalf of a person who is not a licensed motor car trader (LMCT).

It is against the law for a motor car trader to:

  • sell a motor car by consignment, or offer to sell a motor car by consignment, or
  • have a car in their possession with the intention of selling it by consignment.

You may face a fine of 100 penalty units, court action or both if you are an LMCT and sell a car by consignment.

The laws relating to consignment selling do not apply to cars sold at public auction.

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