Used cars: Before you buy – who owns the car?
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Unless you are buying a used car from a licensed car trader, you must check that the person selling the car is the registered operator or has the owner’s authority to sell the car. You should ask the seller to produce the car’s registration certificate (this is issued to registered operators with each renewal of registration).
If the seller cannot find the certificate or it has been destroyed, they can apply to have a (replacement) certificate issued (RSV Regulations reg 42). To check that the person named on the registration certificate is the same as the person from whom you are buying the car, get some photo identification from the seller, (e.g. a driver licence).
If you buy a stolen car, you may be forced to give it back to the true owner. Although you can sue the person who sold you the car to try to recover the money you paid, you are unlikely to get your money back.
When a car trader acquires a car, its registration is transferred into the car trader’s name; however, a car trader may sell a car before this has occurred. If the car trader is not recorded as the registered operator of the car, you should ask for proof that the car trader acquired the car from the registered operator.
However, ensuring that a seller is authorised to sell a car is not as crucial if the seller is a car trader, because you may be entitled to compensation from the Motor Car Traders’ Guarantee Fund if a car trader fails to transfer good title to a car (MCT Act s 76). (The Motor Car Traders’ Guarantee Fund is administered by Consumer Affairs Victoria (CAV); for CAV’s contact details, see ‘Contacts’ at the end of this chapter.)
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As well as checking ownership of a used car, you need to check whether anyone else (e.g. a finance company) has a security interest over the car. This only needs to be done if you are buying a car privately as car traders are prohibited from disposing of cars without first cancelling any security interest in them (MCT Act s 48) (penalty: 100 penalty units (pu) or 12 months’ jail). If the seller owns the car outright, and no one else has an interest in it, the seller has clear title to the car.
The PPSR records details security interests against vehicles and it indicates whether or not there is a security interest over a car. The PPSR lets you see who, apart from the seller, has a claim over the car that must be satisfied before you can obtain clear title to it.
A purchaser normally obtains clear title to a car unless a security interest is registered on the PPSR. If that interest is registered, then the purchaser’s title is subject to the priority of the registered security interest. Consequently, if you are buying a used car privately, you must inspect the PPSR, otherwise you risk losing the car.
To obtain information from the PPSR, you must give the car’s VIN or chassis number. Make sure you get these details directly from the car, not from the seller. Check that these details match the details on the registration certificate, before calling the PPSR.
If, on inspecting the register, you find that the seller does not have clear title to the car, you should not enter into a contract to buy the car (unless prior to, or as a part of, that contract the seller satisfies the claim that the security interest holder has on the car; you should ensure that this aspect of the contract is in writing, and not rely on verbal assurance by the seller that the security interest will be discharged). You should contact the security interest holder directly if unsure about the seller’s arrangements and, if doubts remain, look elsewhere for a car.
To protect your interests and to prove you checked the PPSR prior to purchase, you must get a certificate from the PPSR (containing information from the register about the car to be purchased) before handing over any money to the seller.
When inspecting the certificate, ensure that the correct car has been identified and that there is no other security interest holder.
Currency of the certificate
A certificate issued by the PPSR shows the security interests registered at the time the certificate was issued. Any delay in purchasing the car reduces the protection given by the certificate, as a security interest could be registered in the time between the certificate being issued and the purchase date. Therefore, you should get a fresh certificate if there is any significant delay.
Exceptions
Liens
The PPSR does not apply where the person who holds the security interest is in possession of the car immediately before the time of sale. This most often occurs with repairers’ liens. A repairer’s lien is the right of a motor vehicle repairer to keep a car until they receive payment for repairs made to the car.
Sales by court order
The PPSR does not apply where a car is sold as a result of a court order obtained by a creditor of the car’s owner. Usually, cars are sold by the Sherriff’s Office to enforce court orders for payment of debts owed by the owners of the cars, or by a car trader on behalf on the sheriff.
Notice
The PPSR does not apply if a purchaser knew of, or is regarded by law as having knowledge of, a security interest.
Inventory
The PPSR does not apply where a purchaser holds a car as inventory for themselves or someone else. This usually happens when a car dealer has possession of cars that have not been fully paid for by the dealer. This exception only applies where a dealer buys a car, not to a consumer who buys a car from a dealer.
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A written-off vehicle is one that has been seriously damaged. To check to see if a vehicle you are considering buying has been written-off, search for the vehicle on the Written-Off Vehicles Register (WOVR). It is important to note that if a vehicle is listed on the WOVR, it may not be able to be registered and so cannot be legally driven in Victoria.
If you are buying a second-hand vehicle, you should always check to see if the vehicle has been written-off. A vehicle trader is required to disclose if a vehicle is on the WOVR.
There are three types of ‘write-offs’ on the WOVR:
a ‘statutory write-off’ – this is where a vehicle is so badly damaged that it should not be repaired;
a ‘repairable write-off’ – this is where a vehicle can be repaired but the cost of the repairs exceeds the vehicle’s market value; and
an ‘inspected write-off’ – this is where a repairable write-off vehicle has been repaired and has passed an independent vehicle inspection; these vehicles can be registered in Victoria.
Used cars: Before you buy – who owns the car?
Chapter: 6.7: Buying a car
Contributor: David Niven, Legal Consultant
Current as of: 1 September 2024
Law Handbook Page: 563
Next Section: Obligations of the seller and purchaser
