The Personal Property Security Act defines a security interest as an interest in personal property that secures payment or performance of an obligation, and section 62(1) lets the secured party take possession of the collateral on default. A repairer's lien under section 3(1) of the Repair and Storage Liens Act works the same way against an article it has repaired. A transfer tax, an ownership history and a wholesale appraisal are all real parts of a used-vehicle deal, and none of them secures a debt. Chapter 15 covers researching a vehicle.
Question 2 of 12 ·Liens on trade-ins and repairs
A dealer keeps leaving trade-in liens unpaid and the registrar acts in the public interest. What may follow?
Under section 10 of the Motor Vehicle Dealers Act, 2002, where the registrar proposes to suspend or revoke a registration under section 9 and considers it in the public interest to do so, the registrar may order a temporary suspension, and that order takes effect immediately. Revocation is not immediate. It runs as a section 9 proposal, and the registrant may request a hearing before the Licence Appeal Tribunal within 15 days after the notice is served. The registrar has no power under the Act to issue a bare warning, to levy a fixed fine, or to ban deposits without a proposal and a right to a hearing.
Question 3 of 12 ·Liens on trade-ins and repairs
What has to be true before a dealer can say a used vehicle has clear title?
A vehicle has clear title when no lien is registered against it, so no creditor holds a security interest to enforce over the car. A dealer must pay out or discharge any lien before selling, which is why a lien search belongs in vehicle research. Chapter 15 covers researching a vehicle.
Question 4 of 12 ·Liens on trade-ins and repairs
Where a dealer has promised to clear a lien on a trade-in, when must it pay?
OMVIC requires the payout immediately rather than on any later trigger, because the customer stays liable to the creditor until the debt is discharged. A dealer who delays, or who delivers a car with the lien still registered against it, risks suspension or revocation of the registration. Chapter 15 covers researching a vehicle.
Question 5 of 12 ·Liens on trade-ins and repairs
A lender finances a car. What step makes the lien show up in a search?
Personal Property Security Act · reproduced on this site
Press to read the wording here
Registration perfects a security interest in any type of collateral. R.S.O. 1990, c. P.10, s. 23.
Section 23 of the Personal Property Security Act states that registration perfects a security interest in any type of collateral. For a financed vehicle, the lender registers a financing statement, which is what a dealer's lien search later picks up by VIN. Chapter 15 covers researching a vehicle.
Question 6 of 12 ·Liens on trade-ins and repairs
Once a bank's lien turns up on a trade-in, no other lien can be registered against that vehicle.
One vehicle can carry liens from more than one creditor at the same time, because a car loan and an unpaid repair bill are separate debts secured against the same vehicle, so finding one lien does not end the search. 15.05 covers the lien check.
Question 7 of 12 ·Liens on trade-ins and repairs
Dealers that pay out the lien on a customer's trade-in give the customer the creditor's release letter.
A dealership that undertakes to clear the debt on a trade hands the customer the creditor's own release letter, where the creditor provides one, because only the creditor that registered the claim can confirm it has been settled. 15.05 covers the lien payout.
Question 8 of 12 ·Liens on trade-ins and repairs
Which vehicles should a dealership run a lien check on?
A lien follows the vehicle rather than the person who owed the money, so a dealership runs the check on any vehicle it plans to buy or take on trade, before the vehicle comes in and before it has paid for it. 15.05 covers the lien check.
Question 9 of 12 ·Liens on trade-ins and repairs
Which number is a lien search on a trade-in run against?
Section 43(1) of the Personal Property Security Act makes the registrar's search indexes the debtor names and the motor vehicle identification number, so a lien search on a vehicle is run against that number, which stays with the vehicle while a plate or a permit changes hands. 3.09 carries the definition.
Question 10 of 12 ·Liens on trade-ins and repairs
What does it mean for a customer to have negative equity on their vehicle?
Negative equity means the customer owes more on the vehicle loan than the vehicle is worth, so the shortfall has to be dealt with somewhere in the new deal instead of disappearing when the vehicle is traded. 4.09 covers negative equity.
Question 11 of 12 ·Liens on trade-ins and repairs
A customer buying from a dealership is expected to run their own lien check before closing.
The search belongs to the dealership. It runs a lien check on anything it buys or takes on trade, and a vehicle with a lien still on it is not one to sell, so the buyer is not the one expected to look. Chapter 15 sets out the practice.
Question 12 of 12 ·Liens on trade-ins and repairs
What does a dealership give the customer after clearing the loan on her trade-in?
Proof that the debt is gone has to come from the creditor holding the claim, so OMVIC requires the dealership to pass on the release letter that creditor issues. 15.05 covers the trade-in payout.
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