Area of Law: Consumer Law
Answer # 806
Selling a used vehicleRegion: Ontario Answer # 806
To sell a used vehicle in Ontario, you must comply with a number of rules established by the Ontario government.
First, if you are selling a used vehicle privately in Ontario, you are required by law to purchase a Used Vehicle Information Package and make it available to prospective purchasers. This package contains information about the history of the vehicle and whether anyone has a claim to the vehicle. For example, if a loan was taken to finance the purchase of the vehicle, the bank will have registered a lien against the vehicle. You can obtain the Package for a cost of $20 from ServiceOntario Driver and Vehicle Online Services or from any Driver and Vehicle Licence Issuing Office. Visit ServiceOntario for a list of Office locations.
Second, you must give the Package to the buyer when the vehicle is eventually sold. Once you find a buyer, record your name and signature as well as the sale price and date on the bill of sale portion of the Package. The buyer must then take the Package to a Driver and Vehicle Licence Issuing Office to be registered as the new owner and pay the required sales tax of 13% (on either the purchase price of the vehicle or the wholesale value, whichever is greater).
Third, as a seller, you must also complete and sign the Application for Transfer. This is found on the back of the vehicle portion of the registration permit. You give the vehicle portion to the buyer, and keep the plate portion of the registration permit for yourself. You will use this plate portion if you decide to put your licence plates on a new vehicle. You may also have to provide the buyer with a vehicle Safety Standards certificate, if required
Fourth, as a seller, you must remove your licence plates from the vehicle you are selling. You can keep them and use them on your next vehicle. Even if the buyer asks you to, it is best not to leave your licence plates on the vehicle you are selling. If you give your plates to the buyer and the buyer does not have their own vehicle insurance, your insurance will have to pay for the damage if the buyer is in a car accident.
As a seller, you should be careful not to misrepresent the condition or previous use of the car. It is all right to give a positive description of what you are selling, but any important fact that is stated, that the buyer later discovers is not true, may entitle the buyer to return the vehicle.
The safest method to accept payment for your used vehicle is in the form of cash, certified cheque or money order. A regular cheque may bounce, leaving you without your vehicle and without payment.
More information about selling a used vehicle in Ontario can be found from the Ontario Ministry of Transportation.
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