OMVIC OMVIC Trade-Ins, Liens and Vehicle Registration 1 — Questions and Answers
Question 1: Under the MVDA 2002 and OMVIC's Code of Ethics, what must a dealer disclose to a customer regarding a trade-in vehicle valuation?
- Only the final allowance offered for the trade-in (Correct answer)
- A written itemized breakdown of the trade-in value and any deductions applied
- The dealership's wholesale resale price for the trade-in
- No specific disclosure is required as trade-in values are negotiable
Correct answer: Only the final allowance offered for the trade-in
The dealer must disclose the trade-in allowance offered to the customer clearly and in writing as part of the purchase contract.
Question 2: What is a 'lien' on a motor vehicle in Ontario?
- A notation that the vehicle failed a provincial emissions test
- A financial claim registered against the vehicle by a creditor, typically a lender who financed the vehicle (Correct answer)
- A safety recall notice issued by Transport Canada
- A border crossing restriction placed on vehicles imported from the United States
Correct answer: A financial claim registered against the vehicle by a creditor, typically a lender who financed the vehicle
A lien is a legal financial claim registered against a vehicle, most commonly by a financial institution that lent money to the original buyer to purchase it.
Question 3: Before accepting a used vehicle as a trade-in from a consumer, what is a registered dealer's responsibility regarding liens?
- The dealer should ask the customer to check for liens on their own
- The dealer must conduct or facilitate a lien search to identify any outstanding financial claims against the vehicle (Correct answer)
- The dealer only needs to check for liens if the vehicle is less than three years old
- Lien checks are optional and only required if the customer requests one
Correct answer: The dealer must conduct or facilitate a lien search to identify any outstanding financial claims against the vehicle
Dealers have a duty to identify outstanding liens on trade-in vehicles through a proper lien search before assuming ownership or crediting the trade-in value.
Question 4: If a trade-in vehicle has an outstanding lien, how must a registered Ontario dealer handle the lien payout?
- The dealer can deduct the lien amount from the customer's trade-in allowance and pocket the difference
- The dealer must pay out the lien to the lender directly and apply any remaining equity to the customer's transaction (Correct answer)
- The customer must settle the lien independently before trading in the vehicle
- The dealer can ignore liens under $2,500 without consequence
Correct answer: The dealer must pay out the lien to the lender directly and apply any remaining equity to the customer's transaction
Dealers must pay out outstanding liens to lenders directly to clear the title, and any equity above the lien belongs to the customer.
Question 5: In Ontario, the Used Vehicle Information Package (UVIP) must be provided by the seller in which type of transaction?
- Only when selling a vehicle to a dealer
- In all private sales of used motor vehicles between individuals (Correct answer)
- Only when the vehicle is more than 10 years old
- Only when the vehicle has had more than two owners
Correct answer: In all private sales of used motor vehicles between individuals
Ontario law requires a UVIP (issued by the Ministry of Transportation) to be provided by the private seller in every private used vehicle sale.
Question 6: Which organization in Ontario maintains the lien registration system for motor vehicles?
- OMVIC
- The Ontario Court of Justice
- The Personal Property Security Act (PPSA) registry administered by the Ontario government (Correct answer)
- The Canadian Automobile Association
Correct answer: The Personal Property Security Act (PPSA) registry administered by the Ontario government
Vehicle liens in Ontario are registered under the Personal Property Security Act (PPSA) through the Ontario government's PPR (Personal Property Registry).
Question 7: A customer trades in a vehicle with a $6,000 outstanding lien and is offered $10,000 as the trade-in allowance. What amount should the customer expect to receive as a net credit toward their new purchase?
- $6,000 — the dealer pays off the lien and the customer receives nothing
- $10,000 — the customer receives the full trade-in allowance and pays the lien separately
- $4,000 — the lien is deducted from the trade-in allowance leaving the net equity (Correct answer)
- $16,000 — the lien amount is added to the trade-in allowance
Correct answer: $4,000 — the lien is deducted from the trade-in allowance leaving the net equity
The lien payout ($6,000) is subtracted from the trade-in allowance ($10,000), leaving $4,000 net equity applied to the customer's new purchase.
OMVIC OMVIC Trade-Ins, Liens and Vehicle Registration 1
Under the MVDA 2002 and OMVIC's Code of Ethics, what must a dealer disclose to a customer regarding a trade-in vehicle valuation?