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The topics in the Dial-A-Law series provide general information on a wide variety of legal issues in the Province of Alberta. This service is provided by Calgary Legal Guidance funded in part by the Alberta Law Foundation.
This topic discusses some things to consider when purchasing a vehicle. Once the vehicle is purchased, it becomes your property and your responsibility despite its flaws. There are several things you can do that may prevent costly mistakes in making your purchase.
Make your offer to purchase a used vehicle conditional to a satisfactory mechanical check of the vehicle. The vehicle should undergo a complete inspection that should be done by a garage mechanic and take it for a test drive. If you made the offer conditional and the mechanical check is not satisfactory, you are under no obligation to purchase the vehicle.
Do a search on the vehicle at any Motor Vehicle Registry Office to find out if the vehicle has been written off by an insurance company, whether it could be stolen or has liens or encumbrances (any due charges to be payable) on it. You should obtain the owner’s name, the license plate number and serial number of the vehicle you want to purchase to perform the search.
Insurance companies provide the serial numbers of written-off vehicles to the Motor Vehicle Registry Office for easy detection. A used vehicle that has been “written off” by an insurance company means it was not worth repairing. These vehicles cannot be driven on the highways unless they pass a safety inspection by Alberta Transportation. Once the vehicle passes inspection, a Safety Check Certificate will be issued by Alberta Transportation for that vehicle. You will need to present that Safety Check Certificate along with your Bill of Sale for registration.
If you are not sure about the owner of the vehicle, then you can find out under whose name the vehicle is registered. This can be done by providing a license plate number or serial number to your local Registry office. If you have any concerns that the car might be stolen, call the police department or your local RCMP department.
The search will also show any liens or encumbrances that are registered against the vehicle. Ensure that all the liens and encumbrances are cleared on the title before making the purchase. Otherwise, these due charges will pass on to you with the purchase and your vehicle could be seized for non-payment. You could lose all money you paid for the vehicle.
Once the mechanical check of the vehicle and search of title is done, carefully read the terms of the Purchase Contract so that it reflects your understanding of the purchase. For example, does the Contract state the warranty, the delivery date and the method of the payment you agreed to? All changes to the Contract must be agreed to by both seller and the buyer. The agreement to the changes must be indicated by both the parties putting their initials by the changed terms.
Discuss the warranty term with the seller before you sign the Purchase Contract so that you understand what the warranty is on the vehicle you are purchasing. Where the Contract states that the vehicle is purchased “as is,” it means that the dealer does notguarantee the quality of the vehicle. In most sale and purchase agreements, there is an implied or unstated representation that the goods are quality goods. The exception is where the Contract expressly states that there are no representations of quality or it is written, “as is.” The express statements of the Contract will apply.
Also check the terms of the Contract for the delivery date. Consider adding a term to the Contract for a penalty against the seller if the vehicle is not delivered on time. If you are trading in your old vehicle, add a Contract term that states who will own the trade-in until the new vehicle is delivered. Often the Purchase Contract will include a term that states you must pay the higher price if the price of the vehicle increases before it is delivered to you. If you see such a term, discuss this with the seller before you sign the Contract. Always obtain a receipt for a cash deposit on a vehicle purchase.
There are several methods of payment that you may use in your purchase. Carefully read to understand the types and terms of the finance agreement. Where you fail to make the necessary payments as promised, the Contract will provide certain remedies for the seller to take. Find out whether the seller can seize your vehicle or sue you for the balance of the loan or do both.
Where you finance your vehicle through the car dealership and sign a Conditional Sales Contract, the dealer can either seize the vehicle or sue on the debt. They cannot do both. You may take possession of the vehicle after you promise to make payments over a certain period of time. The dealer will not give you the ownership of the vehicle until you make the last payment.
Where the lender can both seize the vehicle and sue you for the outstanding balance of the loan is financing your purchase through a bank and signing a Chattel Mortgage Contract. In this case, you are given the ownership of the vehicle but the bank takes the vehicle as security against the loan. This gives the lender the remedy to both seize and sue.
Once the purchase of your vehicle is complete, you must obtain the necessary insurance before you can register it at the Motor Vehicles Registry Office. The Registry office will not register your vehicle without proof of insurance.