Buying or Selling a Car

Contributor: Nick Seddon

Currency of information: January 2011

Introduction

Several areas of law relate to buying a car. These include the laws of contract (see ConsumersAndContracts), credit (CreditAndFinance) and fair trading (see Australian Consumer Law in ConsumersAndContracts).

The major pieces of legislation related to buying and selling cars in the ACT are the:

• Australian Consumer Law;
• Sale of Motor Vehicles Act 1977 (ACT);
• Road Transport (General) Act 1999 (ACT);
• Road Transport (Third-Party Insurance) Act 2008 (ACT);
• Road Transport (Vehicle Registration) Act 1999 (ACT); and
• Road Transport (Vehicle Registration) Regulation 2000 (ACT).

The Sale of Motor Vehicles Act 1977 (ACT) ('the Sale of Motor Vehicles Act') deals with the rights and obligations of purchasers and motor car dealers, including rights related to minimum standards of documentation and used car warranties. It also provides for the licensing of motor car dealers.

The Sale of Motor Vehicles Act Part 4A also provides for the Register of Interests in Goods, which enables a purchaser to check whether anyone other than the seller (for example, a finance company) has an interest in the car. The Act relies on the New South Wales scheme under the Registration of Interests in Goods Act 1986 (NSW). A purchaser should check the Register of Encumbered Vehicles ('REVS') (see Contacts and Links for details) if buying a used car privately.

Unless otherwise specified, this text applies to the purchase of both new and used cars.

Some Useful Terms and Definitions

Seller. The person disposing of the car (the car is usually registered in the seller's name). There are special provisions in the Sale of Motor Vehicles Act 1977 s 3 which deal with cars sold on hire-purchase which is deemed to be a sale for the purposes of the Act. Further, a dealer is deemed to be an agent of the finance company if the sale is financed. Section 3(e) provides that a vehicle is taken to be sold even though some of the price was provided by way of a trade-in.

Purchase of a motor vehicle, means acquiring the vehicle from a person selling or exchanging the vehicle who has, or appears to have, authority to dispose of the vehicle in that way (s 32A).

Motor car dealer is a person who:

Register of Encumbered Vehicles (REVS) is the New South Wales administered register, used for the ACT as well, where a person can check whether a car is the subject of a security interest in favour of a finance company (see Contacts and Links for details).

Registration certificate. This is issued by the road transport authority under reg 40 of the Road Transport (Vehicle Registration) Regulation 2000 (ACT). It shows details including the registered operator's name, the address (if any) for the service of notices on the registered operator of the vehicle, the vehicle's garage address, the vehicle's registration number, the vehicle's make, the vehicle's model or body type (whichever is more descriptive), the vehicle's VIN or, if there is no VIN, any chassis number and engine number of the vehicle.

The ACT register of motor vehicles does not provide evidence of title to the vehicle (Road Transport (Vehicle Registration) Act 1999 (ACT) s 9).

VIN: The car's individual vehicle identification number, which is permanently marked on its frame or chassis (see Dictionary in the Road Transport (Vehicle Registration) Regulation 2000 (ACT)).

Certificate of inspection is issued by an authorised examiner (reg 146 of the Road Transport (Vehicle Registration) Regulation 2000 (ACT).

Security interest: This is an interest in or power over goods (such as a goods mortgage over a car bought on finance) to secure the payment of a debt or other obligation.

The Hidden Costs of Buying a Car

Buying a car invariably costs more than the purchase price. When calculating how much you can afford to spend, you should consider additional costs, such as:

• stamp duty or transfer fees;
• registration costs (including a compulsory insurance premium, which insures you and others for death or injury if your car is involved in an accident);
• an NRMA or other inspection of the car to test its mechanical soundness;
• any optional extras you might want;
• costs associated with borrowing money to buy the car;
• insurance premiums (eg. comprehensive insurance or third party property insurance);
• fuel, spare parts and repairs;
• NRMA membership; and
• depreciation.

If you need finance to help you buy the car, you should shop around. Different lenders offer different kinds of products. Always check the fees and charges payable, plus the interest rate and whether it is fixed or variable. See CreditAndFinance.

Remember -- you do not have to sign with a motor car dealer's on-site (or recommended) lender: the finance offered is often at a high interest rate compared with bank or credit union personal loans. Most forms of insurance offered in relation to finance contracts are optional, and you should only sign up for such insurance if you understand what it will cover you for, and you definitely want it.

Used Cars: Before You Buy - Who Owns the Car?

Registration Certificate

Unless you are buying a used car from a licensed motor car dealer, you must check that the person selling the car is the registered operator, or has the authority of the owner 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 only recently acquired the car or cannot find the certificate, they can apply to have a (replacement) certificate issued (reg 42 of the Road Transport (Vehicle Registration) Regulation 2000 (ACT)). In order 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, such as a driver's licence. The registration certificate by itself is not proof of ownership.

If you buy a stolen car, you may be forced to give it back to the true owner. Although you could try suing the supposed seller for the return of the money paid for the car, you are unlikely to recover it.

When a motor car dealer acquires a car, its registration is transferred into the dealer's name. However, the dealer may sell the car before this has occurred. If the dealer is not recorded as the registered operator of the car, you should ask for proof that the dealer acquired the car from the registered operator. Ensuring that a seller is authorised to sell the car is not as crucial if the seller is a motor car dealer, however, as you may be entitled to compensation from the motor car dealers' compensation fund (see Correctness of the certificate below) if the dealer fails to transfer good title to the car (Part 9 of the Sale of Motor Vehicles Act 1977).

REVS Certificate

As well as checking ownership of a used car, you need to check whether anyone else (for example, a finance company) has a security interest over the car. This only needs to be done if you are buying the car privately. Motor car dealers take the risk of a car being the subject of a security interest (Sale of Motor Vehicles Act 1977 ss 32E(2) and 32F).

If the seller owns the car outright, and no one else has an interest in it, the seller is said to have clear title to the car.

The ACT uses the New South Wales system for checking whether a vehicle is encumbered by a security interest. This is called the Register of Encumbered Vehicles or REVS under the Registration of Interests in Goods Act 1986 (NSW) and administered by the New South Wales Office of Fair Trading (see Contacts and Links for details).

A purchaser will normally obtain clear title to a car unless a security interest (held, for example, by a bank or finance company) is registered on the REVS. If that interest is registered, then the purchaser's title will be subject to the priority of the registered security interest. Consequently, if you are buying a used car privately, you must inspect the REVS. Otherwise you risk losing the car.

If a REVS check does not show any security interest then the purchaser gets clear title (Sale of Motor Vehicles Act s 32E(2)).

The REVS scheme covers the following participating jurisdictions apart from the ACT: Victoria, South Australia, Northern Territory and Queensland (Registration of Interests in Goods Regulations 2004 (NSW) Part 6). This means that reliance can be placed on the REVS scheme if considering purchasing a vehicle from those jurisdictions.

If you know or suspect that the car is registered in Western Australia or Tasmania you can check by telephoning:

• the Western Australian Department of Transport's Register of Encumbered Vehicles; tel: 1300 304 024; or
• the Motor Vehicles Securities Clearance Register at the Tasmanian Department of Transport Client Services; tel: (03) 6233 5201.

The practice of REVS is to regard the VIN or chassis number (depending on the car's age) as the primary identifier of a vehicle. In Roads Corporation v Allen Clarke Motors (1993), the Supreme Court of Victoria held that the registration number of a vehicle does not enter into the definition of the "goods" for the purposes of the Chattel Securities Act 1987 (Vic)(equivalent legislation to the Sale of Motor Vehicles Act), and that any vehicle remains the same item of "registrable goods" whatever registration number it happens to bear for the time being. To obtain information from the REVS, you must give the car's VIN or chassis number, engine number and the registration number and State / Territory (if the car is registered). 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 REVS.

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 before, 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 a mere 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.

A security interest that is unregistered, or that has been incorrectly registered, will be extinguished, if the purchaser in good faith buys the car for value and without notice of the security interest (Sale of Motor Vehicles Act s 32E(2)); Montedeen Pty Ltd v Rossfield Nominees (ACT) Pty Ltd (2000)). Checking the REVS is sufficient to make the purchaser a person acting in good faith and without notice so long as the REVS did not disclose any security interest.

In the event of a dispute, advice given over the telephone will not be conclusive evidence of having inspected the relevant Register, but it will be a preliminary indication of whether there is a security interest on the title. To protect your interests and ensure proof of inspection of the REVS before purchase, you must get a certificate from the REVS (containing information from the register about the car to be purchased) before handing over any money to the seller.

When inspecting the certificate, you should ensure that the correct car has been identified on the certificate and that there is no other security interest holder.

Currency of the certificate

A certificate issued by the REVS will only show security interests registered at the time the certificate is issued. Any delay in purchasing the car will reduce the protection given by the certificate, as a security interest could be registered in this time. You should therefore get a fresh certificate if there is any significant delay. It is not necessary to check again before the end of the day after the day the certificate is issued (Sale of Motor Vehicles Act s 32D(1)(b)).

Correctness of the certificate

If the certificate does not contain information from the Register relating to the car at the time the certificate was issued (that is, a security interest exists but is not disclosed on the certificate), the certificate is taken to be correct (Sale of Motor Vehicles Act s 32D(4)).

A security interest holder can also apply to the Director-General of the New South Wales Department of Fair Trading for compensation if a security interest was extinguished because it was not entered correctly on the REVS by departmental personnel (Registration of Interests in Goods Act 1986 (NSW) s 13). However, the ACT Sale of Motor Vehicles Act s 32D(5) provides that an action does not lie against the Territory, New South Wales, the Director-General or a person engaged in the administration of the ACT Act or the New South Wales Act, for the reliability of any information given by the Director-General or an administrator in relation to a matter that may be recorded under s 5(3) of the New South Wales Act.

Exceptions

There are various exceptions to the protection offered by obtaining a REVS certificate.

A. Purchaser leases or sells to person aware of security interest

A purchaser does not obtain clear title if the purchaser has bought the car to lease, hire purchase or sell to another person and that other person was aware of the security interest (Sale of Motor Vehicles Act s 32E(3)).

B. Members of the same household

A purchaser does not obtain clear title if the purchaser is a member of the same household as the seller (Sale of Motor Vehicles Act s 32E(4)(c)).

C. Corporations

A purchaser does not obtain clear title if the purchaser and the seller are corporations that are related to each other under the Corporations Act 2001 (Cth); or either the purchaser or the seller is a corporation and the other is an individual who is a director or officer of the corporation within the meaning of the Corporations Act 2001 (Sale of Motor Vehicles Act ss 32E(4)(a) and (b)).

D. Repairers' liens and court orders

A repairer's lien ranks in priority to any registered security interest (Registration of Interests in Goods Act 1986 (NSW) s 3B). A repairer's lien is the right of a motor vehicle repairer to keep possession of a car until it receives payment for repairs made to the car.

A court order in respect of a vehicle also has priority over a registered security interest.

E. Stolen cars

The legislation does not specifically provide for the registration of information about stolen vehicles. The REVS, however, is linked to police databases which record details of stolen cars, so checking the REVS may also let you find out if the car has been recorded as stolen. To fully protect your interests, however, you should verify the identity of a private seller to ensure that he or she has the right to sell the car. You should also check that all details relating to the car, including make and model, VIN or chassis number, and engine number correspond exactly to the certificate of registration. If possible, see if the seller has a copy of the contract of sale they entered into (that is with a motor car dealer) and that the details of the vehicle and identity of the seller match. Remember, each year many people unsuspectingly buy a stolen car and have to return the car to the true owner, and lose their purchase price.

F. Sheriff's warrants

A car may be subject to a warrant held by the Sheriff's office.

Once the Sheriff has seized a car under a warrant authorising seizure of goods (issued in a civil proceeding or because of a failure to pay a fine, for example), the Sheriff usually registers this interest with the REVS. However, the Sheriff is not bound by the legislation to do so. In a situation where the Sheriff does not register an interest which arose before purchase of a car, the Sheriff, and not the purchaser, may have legal title (see Ward v Alan Mance Motors Pty Ltd (1994)). However, the definition of security interest in that case is different from the definition used under the New South Wales and ACT legislation so that the Sheriff's interest may not have priority. However, this is uncertain so that it is best to check with the Sheriff's office.

If the Sheriff has received a warrant to seize goods belonging to the seller but has not yet removed the car from the seller's possession, and the purchaser has paid for the car, the purchaser may be forced to give the car to the Sheriff to satisfy the warrant. In this situation the purchaser will probably be unable to recover the money paid to the seller though there is undoubtedly a legal right to such recovery.

Therefore, when buying a car privately, the purchaser should check with the Sheriff's office that no warrant exists for the seizure of goods belonging to the seller. The purchaser should get a letter from the Sheriff's office confirming this.

Written-Off Vehicles

There is a register of written-off vehicles to prevent re-registration of unsafe vehicles and illegal "rebirthing" of cars (see Road Transport (General) Act 1999 (ACT) Part 5 Div 5.3). A purchaser should check with the road transport authority that the car has not been registered as a write-off. If it is registered as a "repairable write-off", it can be re-registered if sufficient work is done to repair it. A "statutory write-off" cannot be re-registered (see Road Transport (General) Regulations 2000 (ACT) Part 6).

Obligations of the Seller and Purchaser

Transfer of Registration

The procedures relating to the sale of motor cars, transfers of registration and inspection certificates required at the time of sale are regulated by the Road Transport (Vehicle Registration) Act 1999 (ACT) and the Road Transport (Vehicle Registration) Regulation 2000 (ACT) ('the Road Transport (Vehicle Registration) Regulation'). The following procedures apply to the transfer of registered vehicles.

Obligations of seller

Under s 73(1) of the Road Transport (Vehicle Registration) Regulation a person, or the agent of a person, who disposes of a registered vehicle must, immediately after disposing of the vehicle--

It is an offence to fail to do these things.

Obligations of buyer

Under s 74(1) of the Road Transport (Vehicle Registration) Regulation a person, or the agent of a person, who acquires a registered vehicle must, not later than 14 days after acquiring the vehicle--

It is an offence to fail to do these things.

Stamp duty

Stamp duty is payable under Part 9 of the Duties Act 1999 (ACT) ('Duties Act') on the dutiable value of the vehicle which is the greater of the cash price paid or the market value. The rate is determined from time to time by the Minister under s 139 of the Taxation Administration Act 1999 (ACT). The duty is payable on registration (Duties Act s 207) by the applicant for registration, that is, the buyer (s 206). There are numerous exemptions from the liability to pay duty (see Duties Act Part 9.2) the most important of which for present purposes include applicants for registration being hospitals and schools (s 210), charitable organisations (s 210A), certain disabled people (s 211), modified vehicles for disabled people (partial exemption)(s 211A), successors of deceased owners (s 212), transfers following breakdown of marriage or de facto relationships (s 213), vehicle dealers (ss 214 and 214A), organisations registered under the Workplace Relations Act 1996 (Cth)(s 215) and owners of veteran, vintage or historic vehicles (s 217).

Certificate of inspection

The road transport authority may refuse to register the new owner if a certificate of roadworthiness is not provided as required by the authority or vehicle inspection requirements are not complied with (Road Transport (Vehicle Registration) Regulation s 78(1)(f)). The obligation to have a vehicle inspected only arises if the road transport authority so requires by providing a written notice to that effect (Road Transport (Vehicle Registration) Regulation (s 143)).

Third-party Insurance

Third-party insurance is compulsory and it is an offence to drive a car that is not insured (Road Transport (Third-Party Insurance) Act 2008 (ACT) s 17). Third-party insurance covers a person for potential liability for causing death or personal injury when driving a car. It does not cover property damage (for example to another car) nor does it cover the car itself for any damage. Other insurance may be obtained (but it is not compulsory) to cover property damage or damage to the car.

Third-party insurance is taken out at the same time as registration of the car (Road Transport (Third-Party Insurance) Act 2008 (ACT) s 31). It must be applied for and the owner can choose which third-party insurer to use from an approved list of insurers (Road Transport (Third-Party Insurance) Act 2008 ss 28-29).

An important feature of third-party insurance is that it "attaches" to the car and not the owner (s 20(a)). This means that any person who drives the car is covered.

There are some important exceptions to the coverage in that the third-party insurer may seek to recover a payout from a driver. The insurer can recover:

• up to $500 if the driver is more than 25 per cent to blame for an accident (s 167);
• up to $2,000 if the owner was fraudulent in applying for insurance (s 168);
• all compensation paid out if the driver was not authorised to drive the car (s 169);
• all compensation paid out if the driver deliberately injured or killed someone (s 170);
• a relevant proportion of compensation paid out if the driver was affected by alcohol or a non-medicinal drug (s 171);
• a relevant proportion of compensation paid out if the accident was due in part to a defect caused by the manufacturer or a repairer (s 172).

Is there a Warranty?

Motor car dealers often offer "extended warranties" as part of a car sale. You should be wary of such warranties, as they can be so limited in their application that they are not worth the price you pay for them. You should only buy such a warranty if you fully understand its terms and are certain that it will be worthwhile.

New Cars

A buyer of a new car (that is, a vehicle that has not been sold and has not travelled more than the minimal kilometres usual with a new car) must rely on the manufacturer's warranty or on other legal remedies (for example, in contract or fair trading laws discussed in chapter 22).

However, under the Sale of Motor Vehicles Act 1977 (ACT) dealers are obliged to provide minimum warranties for "new vehicles" that have been driven for either less than or more than 15,000 kilometres (in other words demonstration models). In addition, a cooling off period may apply (see Sale by a dealer below).

Used Cars - Private Sales

Private sellers do not generally give warranties. As is the case with new car purchases, if a person buys a used car privately and something goes wrong with the car, he or she will have to rely on other legal remedies. It is not possible to rely on the misleading conduct provisions of the Australian Consumer Law (or, before 1 January 2011, the former Trade Practices Act 1974 (Cth)or the Fair Trading Act 2002 (ACT)) because a private sale is not "in trade or commerce" (see Australian Consumer Law in ConsumersAndContracts).

If a private seller has made a statement about the car that turns out to be wrong (a misrepresentation) it is possible to cancel the contract or else seek damages. Damages are available under the Civil Law (Wrongs) Act 2002 (ACT) s 174. In an action for damages, the defendant can escape liability if he or she can prove that there were reasonable grounds for believing the statement was correct at the time it was made (see Misrepresentation under common law in ConsumersAndContracts).

A private seller may have provided a contractual warranty (for example, that the car does not use oil more than is normal) but this would be unusual. If such a warranty is given, then it should be recorded in a simple written contract for the purchase and sale of the vehicle.

It is an offence under s 32 for any vendor of a secondhand vehicle to make a statement that the vendor knows, or ought reasonably to know, is false. It is also an offence to alter the odometer. These offences apply to private sales, to dealers and to persons selling to a dealer (for example, a trade-in).

Used Cars - Sale by a Dealer

If a used car is purchased from a motor car dealer, the Sale of Motor Vehicles Act 1977 (ACT) provides non-excludable warranties that must, in most circumstances, be given by the dealer. The Act imposes a number of obligations on dealers.

Sale to persons under 18

A dealer must not purchase from, or sell a vehicle to, someone apparently under 18 without obtaining the written permission of the person's parent or guardian (s 19).

Dealer's notice

Each vehicle must, unless it is offered to trade buyers, have a legible written notice attached to it including a long list of particulars (s 20). These are:

If the vehicle is a demonstrator vehicle then this information must also be included in the notice (s 20(4)).

It is an offence for any false or misleading information to be included in the notice (s 20(5)).

The dealer must provide information about previous ownership if asked by a prospective purchaser (s 20(6)).

The dealer is not allowed to sell a vehicle the odometer of which has either been replaced or altered without the permission of the Registrar of Motor Vehicle Dealers (s 22).

Required action on sale

If a dealer sells a secondhand motor vehicle to which a notice has been attached in accordance with s 20 to a purchaser who is not a trade owner, the dealer must (s 21):

A dealer may give a copy of a notice to a purchaser by posting it by certified mail to the purchaser at the address given by the purchaser and endorsed on the notice.

Cooling off period

Section 25B of the Sale of Motor Vehicles Act 1977 (ACT) provides for a three-business-day cooling off period for any purchase of a vehicle (but not a commercial vehicle) from a dealer other than at auction. The purchaser must provide a written notice to the dealer if the purchaser wishes to exercise this right. The notice should state that the purchaser is terminating the contract.

The period can be waived by the purchaser if he or she has signed a document to that effect before accepting delivery. The document must be in the proper form (see Sale of Motor Vehicles Act Form 3 - Loss of right to terminate, at www.legislation.act.gov.au/af/2002-27).

If the purchaser exercises the right to terminate the contract, the following provisions apply:

• the dealer must not dispose of a trade-in during the cooling off period (s 25B(3));
• the dealer must return any trade-in and the purchase money less $100 or 1 per cent of the purchase price whichever is the greater (s 25B(4)(a));
• any credit transaction for the purchase is also terminated together with any security created over the vehicle (s 25B(4)(b) and (c)); and
• the purchaser is responsible for any damage to the vehicle and must return the vehicle to the dealer unless it is unroadworthy or cannot be driven due to circumstances beyond the purchaser's control in which case the purchaser must allow the dealer to collect the vehicle (s 25B(4)(d) and s 25B(5)).

Warranties

Under s 23 (cars other than commercial vehicles) and s 25A (motorcycles) of the Sale of Motor Vehicles Act 1977 (ACT), the dealer must repair defects so as to place the vehicle in a reasonable condition having regard to its age, such defects appearing within the warranty kilometres or period (whichever occurs first) according to the following table.

Vehicle	Warranty - the first of
	Kilometres	Period
New motor vehicle (other than a motorcycle) that has been driven for less than 15,000km at the time it is sold by dealer	20,000 (after manufacture)	12 months less 1 month for each 2,000 km that the vehicle has been driven before sold by dealer
New motor vehicle (other than a motorcycle) that has been driven for 15,000 km or more at the time it is sold by dealer	5,000 (after sale)	3 months
Second-hand motor vehicle (other than a motorcycle) that has been driven for not more than 160,000 km and was manufactured not more than 10 years before the time it is sold by dealer	5,000 (after sale)	3 months
New or demonstrator motorcycle	10,000	6 months

The defect must be repaired even if it was not apparent at the time of purchase. Section 23(3) caters for latent defects so that if a defect is apparent after, but was present before, expiry of the warranty kilometres or period it must still be repaired so long as it is reported to the dealer within a reasonable time of discovery. There are no equivalent provisions for motorcycles.

Any time that a vehicle is in for repairs does not count in the warranty period (s 23(4)).

Statutory warranties may not apply to some vehicles excepted from the scheme by the Minister (s 25(6)) but this must be displayed on the vehicle.

What rights?

The Sale of Motor Vehicles Act 1977 (ACT) only provides for the right to have the vehicle repaired. It does not give a right to cancel the contract if the vehicle is unsatisfactory, apart from the three business day cooling off period discussed above.

If the vehicle costs $40,000 or less or, if more than $40,000, is acquired for personal, domestic or household use then the Australian Consumer Law applies and the car must be of acceptable quality (s 54) and reasonably fit for purpose (s 55). The Australian Consumer Law implied terms are not confined to new goods but the fact that goods are secondhand is catered for by s 54 which provides that goods of any kind are of acceptable quality if they are as fit for the purpose or purposes for which goods of that kind are commonly bought as it is reasonable to expect having regard to any description applied to them, the price (if relevant) and all the other relevant circumstances. So, secondhand goods cannot be expected to perform in the same way as new goods. Further, if the dealer has specifically drawn attention to a defect then the purchaser cannot rely on that defect to say that the vehicle is not of acceptable quality.

The significance of the Australia Consumer Law applying is that a number of remedies are available including repair, replacement or return of the vehicle if there is a major defect. These remedies are more fully discussed in What remedies are available? in ConsumersAndContracts.

It would also be possible to cancel the contract if the dealer engaged in misleading or deceptive conduct in the sale of the vehicle. This is also fully discussed in Misleading or Deceptive Conduct in ConsumersAndContracts.

Care should be taken in cancelling a contract if the purchaser has also entered into financing arrangements. This is taken care of if the three business day cooling off period procedure is used: the financing contract is also cancelled. But this is not so under the Australian Consumer Law. It may be possible that the sale of the vehicle is reversed but the purchaser is then stuck with a loan contract. If the finance company is a linked credit provider (that is, finance was arranged by the dealer), then the consumer has rights against both the dealer and the finance company if the vehicle is not of acceptable quality or not fit for purpose (see Australian Consumer Law s 278).

Apart from a legal right to cancel the contract, a persistent purchaser may well persuade a dealer to take the car back. The purchaser can take the dispute to the Registrar of Motor Vehicle Dealers (see Contacts and Links). A dealer may wish to avoid this procedure.

Who benefits?

For new cars, the warranty lasts its full length even if the vehicle is sold on to another purchaser (other than a dealer) (Sale of Motor Vehicles Act s 23(6)). For secondhand cars, the warranty is only enforceable by the immediate purchaser (s 23(7)).

Excluded defects

Defects that are brought to the attention of the purchaser by a written defect notice that complies with s 24 of the Sale of Motor Vehicles Act 1977 (ACT) are excluded from the dealer's warranty. The defect notice must specify the cost of repair. If this turns out to be understated, the purchaser can recover the difference from the dealer (s 24(5)).

Under s 25, the dealer is not responsible in any case for:

• a defective battery or tyre;
• a defect in an accessory fitted to the vehicle;
• accidental damage;
• a defect arising from negligence or misuse or motor sport; or
• superficial damage to paintwork or upholstery that would have been apparent at the time of purchase.

Disputes

Disagreements between motor dealers and purchasers may be referred by either party to the Registrar of Motor Vehicle Dealers with a written request that he or she give an opinion in relation to the dispute. The Registrar's opinion will contain a statement of findings in relation to the dispute and the action that he or she recommends should be taken to determine it (Sale of Motor Vehicles Act s 27).

Compensation

Under Part 9 of the Sale of Motor Vehicles Act 1972 (ACT),a person, other than a trade owner, who suffers financial loss in connection with a motor vehicle because of the failure of a licensed dealer to comply with an obligation imposed on him or her by the Act or because of the failure of a licensed dealer to pass an unencumbered title to the vehicle may apply to the Registrar of Motor Vehicle Dealers for compensation in relation to that loss. The application must be made within six months of the loss being incurred. The Registrar will not determine an application unless the Registrar is satisfied that the applicant has taken all reasonable steps to enforce any remedies that the applicant may have against the dealer. A determination by the Registrar can be appealed to the Magistrate's Court.

Contacts, Links and Resources

Encumbered Vehicles

Register of Encumbered Motor Vehicles (REVS): 13 32 20 (jurisdictions other than Western Australia and Tasmania)

Western Australian Department of Transport's Register of Encumbered Vehicles: 1300 304 024

Tasmanian Department of Transport Client Services, Motor Vehicles Securities Clearance Register: (03) 6233 5201.

Other Contacts

CITEC Confirm www.confirm.citec.com.au

Licence Recognition www.licencerecognition.gov.au

NRMA Checklist: A useful checklist is provided by the NRMA at www.nrmacarwise.com.au/pdf/NRM_7792_CarWise_Checklist_v5.pdf.