OMVIC OMVIC Trade-Ins, Liens and Vehicle Registration 4 — Questions and Answers
Question 1: When a registered dealer accepts a vehicle on trade and the trade-in has a lien larger than the agreed trade-in allowance (negative equity), how should this be handled?
- The dealer must refuse the trade-in since negative equity is not permitted under the MVDA
- The dealer must clearly disclose the negative equity to the customer and document how it will be handled in the contract (Correct answer)
- The negative equity can be rolled into the new vehicle financing without disclosure
- The customer must independently pay the lien difference before trading in
Correct answer: The dealer must clearly disclose the negative equity to the customer and document how it will be handled in the contract
Negative equity must be fully disclosed and clearly documented in the purchase contract; concealing rolled-over negative equity is a deceptive practice prohibited under the MVDA.
Question 2: What is the role of a PPSA lien search in a vehicle purchase transaction?
- To confirm the vehicle passed its last safety inspection
- To identify any registered financial claims against the vehicle that could affect clear title (Correct answer)
- To verify the vehicle's mileage history at ServiceOntario
- To confirm the vehicle has current licence plate stickers
Correct answer: To identify any registered financial claims against the vehicle that could affect clear title
A PPSA search reveals registered liens and security interests against a vehicle, enabling the buyer to know whether the seller has clear title to transfer.
Question 3: Under the MVDA 2002, which of the following must be included in a written vehicle purchase contract?
- The dealer's profit margin on the transaction
- The vehicle's trade-in allowance, purchase price, all fees, taxes, and disclosure of any known damage (Correct answer)
- The names of all previous owners of the vehicle
- The dealer's manufacturer incentive amounts
Correct answer: The vehicle's trade-in allowance, purchase price, all fees, taxes, and disclosure of any known damage
The MVDA requires purchase contracts to itemize the purchase price, all additional charges, trade-in allowance, taxes, and material disclosures about the vehicle.
Question 4: In Ontario, which ServiceOntario transaction records the formal transfer of vehicle ownership from seller to buyer?
- Issuance of a new Safety Standards Certificate
- Completion of the Application for Transfer (Permit) and submission to ServiceOntario (Correct answer)
- Filing of the UVIP with the provincial registry
- Issuance of a new vehicle identification decal by the MTO
Correct answer: Completion of the Application for Transfer (Permit) and submission to ServiceOntario
The legal transfer of vehicle ownership is completed when the new owner submits the Application for Transfer (ownership permit) to ServiceOntario.
Question 5: A consumer buys a used vehicle from a dealer and later discovers the lien was not paid off as promised in the contract. The consumer's first action under OMVIC guidelines should be:
- Contact the lender directly to negotiate a lien discharge
- File a complaint with OMVIC and retain all contract documentation (Correct answer)
- Contact the Ministry of Transportation to cancel the vehicle's registration
- Demand a refund from the Ministry of Government and Consumer Services
Correct answer: File a complaint with OMVIC and retain all contract documentation
Filing a complaint with OMVIC is the appropriate first step; OMVIC can investigate the registered dealer and enforce MVDA compliance.
Question 6: Which statement about the UVIP cost and responsibility is correct?
- The buyer pays for the UVIP and requests it from ServiceOntario
- The UVIP is provided free of charge by the Ministry of Transportation
- The seller pays for and provides the UVIP to the buyer as required by Ontario law (Correct answer)
- The UVIP is prepared by the dealer and has no fee associated with it
Correct answer: The seller pays for and provides the UVIP to the buyer as required by Ontario law
Ontario law places the cost and responsibility for obtaining and providing the UVIP on the seller (private seller); the fee is charged by ServiceOntario to the seller.
Question 7: When a dealer acquires a vehicle as a trade-in, the dealer must apply for a change of ownership. This protects against:
- The dealer being held liable for future accidents involving the vehicle
- Parking tickets and offences committed while the vehicle is still registered to the prior owner
- The MTO charging the dealer's buyer for previous outstanding fines on the vehicle
- All of the above (Correct answer)
Correct answer: All of the above
Prompt registration transfer protects dealers from liability for offences, tickets, and potential charges that could be attributed to the still-registered prior owner.
OMVIC OMVIC Trade-Ins, Liens and Vehicle Registration 4
When a registered dealer accepts a vehicle on trade and the trade-in has a lien larger than the agreed trade-in allowance (negative equity), how should this be handled?