Car sales from either a motor trader or private seller must follow set procedures. A roadworthiness certificate less than 30 days old is mandatory for the seller. Be wary of offers of an extended warranty. Motor traders must give a warranty on a used car less than 10 years old with modest mileage. Cars sold by auction carry no warranty. Cancelling a car sales contract, called recission, must be done quickly. Several grounds exist for legally cancelling a contract. A cooling-off period applies to car sales. The Motor Car Traders Act 1986 (Vic) allows for cancellation of contracts if the odometer reading is wrong or if the contract lacks prescribed particulars. There are financial penalties for withdrawing from a contract.

Contributor

David Niven

Legal Consultant

Obligations of the seller and the purchaser of a car

Last updated

1 July 2020

Where to find the procedures

The procedures – relating to the sale of cars, transfers of registration and roadworthiness certificates required at the time of sale – are regulated by the RSV Regulations, MCT Act and the Motor Car Traders Regulations 2018 (Vic) (‘MCT Regulations’). The following procedures apply to registered vehicles.

If the seller is a car trader and the purchaser is not a car trader

The purchaser must:

  1. complete and sign a transfer of registration application form and give it to the seller; and
  2. give the seller the transfer fee payable (reg 75 RSV Regulations; penalty: 10 pu).

If you give the car trader written notice (at or before the time of purchase) that you do not require the car trader to act as your agent for payment of stamp duty on the transfer of registration application, the above purchaser’s obligations do not apply. Instead, the purchaser’s obligations outlined below under ‘If neither party is a car trader’ apply.

The seller must:

  1. give you a current roadworthiness certificate before you take possession of the car (s 42A(1) MCT Act; penalty: 50 pu); and
  2. lodge with VicRoads within 14 days after selling the car:
  1. the completed transfer of registration application,
  2. the transfer fee payable, and
  3. evidence that a current roadworthiness certificate has been obtained (regs 71, 72 RSV Regulations; penalty: 10 pu);

If you give notice under regulation 73(1) then the above seller’s obligations do not apply. Instead, the seller’s obligations outlined below under ‘If neither party is a car trader’ apply. Also, the seller’s obligations above do not apply to a car disposed of in accordance with a court order or other legal process.

3. give the purchaser a prescribed form setting out cooling-off rights before the purchaser enters into the sales contract; and

4. as soon as possible after the sale, give you a copy of:

  1. the sale contract (for information on what must be contained in the contract, see ‘Prescribed particulars’, below),
  2. any extended warranty documents,
  3. the prescribed notice (required by s 52 MCT Act) in the correct form (depending on whether the warranty under s 54 MCT Act applies or not), and
  4. any defect notice (under s 55 MCT Act);

Points (c) and (d) above only apply for used cars.

The sale contract, extended warranty documents, prescribed notice and any defect notice must be retained by the car trader for at least six years (ss 83A, 83C MCT Act; reg 30 MCT Regulations; penalty: 50 pu). They are dealt with more extensively below; see ‘Is there a warranty?’ and ‘How to get out of a car deal’).

5. for used cars, if the car trader has agreed to: 

  1. have defects in the car repaired, or
  2. supply and fit a part or accessory, or
  3. make an arrangement or pay money in relation to the registration, duty or insurance, or
  4. ensure that the terms of such an agreement are written in the sale contract (reg 25 MCT Regulations; penalty: 10 pu).

If you suffer loss as a result of a car trader’s failure to provide a roadworthiness certificate, or failure to pay transfer or registration fees or stamp duty, you may make a claim to the Motor Car Traders’ Guarantee Fund to seek compensation for the loss (s 76 MCT Act). (The Motor Car Traders’ Guarantee Fund is administered by CAV; for CAV’s contact details, see ‘Contacts’ at the end of this chapter.)

If the purchaser is a car trader and the seller is not a car trader

The seller must: immediately after disposing of the car, complete and sign a transfer of registration application form and give it to the purchaser (regs 71, 72 RSV Regulations; penalty: 5 pu).

The purchaser must:

  1. as soon as possible after acquiring the car, complete and sign the transfer of registration application form obtained from the seller;
  2. lodge with VicRoads within 14 days: 
  1. the form, and
  2. the stamp duty and transfer fee payable (reg 75 RSV Regulations; penalty: 5 pu);

The above seller’s and purchaser’s obligations do not apply to a car disposed of or acquired in accordance with a court order or other legal process.

In this event, the purchaser must obtain, complete and sign a form of notification of a court order or other legal process and lodge this form and the stamp duty and transfer fee with VicRoads within 14 days after acquiring the car (reg 76; penalty: 5 pu).

3. as soon as possible after the sale, give the seller a copy of: 

  1. the sale contract, and
  2. any extended warranty documents.

The sale contract and warranty documents must be retained by the car trader for at least six years (ss 83A, 83C MCT Act; reg 30 MCT Regulations; penalty: 50 pu). These documents are dealt with more extensively below; see ‘Is there a warranty?’ and ‘How to get out of a car deal’.

If you suffer loss as a result of a car trader’s failure to pay transfer or registration fees or stamp duty, you may make a claim to the Motor Car Traders’ Guarantee Fund to seek compensation for the loss (s 76 MCT Act). (The Motor Car Traders’ Guarantee Fund is administered by CAV; for CAV’s contact details, see ‘Contacts’ at the end of this chapter.)

If neither party is a car trader

The seller must, immediately after disposing of a car:

  1. complete and sign a transfer of registration application form and give it to the purchaser; and
  2. give the purchaser a current roadworthiness certificate (unless the purchaser is the seller’s spouse or domestic partner) (reg 71 RSV Regulations; penalty: 5 pu).

The seller’s obligations above do not apply to a car disposed of in accordance with a court order or other legal process.

The purchaser must:

  1. as soon as possible after acquiring the car, complete and sign the transfer of registration application form obtained from the seller; and
  2. lodge with VicRoads within 14 days: 
  1. the form,
  2. evidence that a current roadworthiness certificate has been obtained, and
  3. the stamp duty and transfer fee payable (reg 75 RSV Regulations; penalty: 5 pu).

List point (2)(b) above does not apply to the acquisition of a light trailer, specially constructed car or recreation motor cycle, or if the purchaser is the seller’s spouse or domestic partner (reg 75(4)). The above purchaser’s obligations do not apply to a car acquired in accordance with a court order or other legal process. In this event, the purchaser must obtain, complete and sign a form of notification of a court order or other legal process and lodge this form and the stamp duty and transfer fee with VicRoads within 14 days after acquiring the car (reg 76; penalty: 5 pu).

Joint purchasers

Cars can only be registered in the name of one person (aged 17 years or more) or a corporation. Therefore, joint owners must nominate one person to be the car’s registered operator (reg 22 RSV Regulations). A joint owner can transfer registration to another joint owner (reg 78).

Roadworthiness certificates 

Apart from certain exceptions (see regs 72, 75 RSV Regulations), all registered cars must be roadworthy when sold or otherwise disposed of.

Under section 42A of the MCT Act, a person must not sell a registered car (this includes a car with suspended registration) without a current roadworthiness certificate unless the buyer is a licensed car trader, or a special trader, or the car is sold at a public auction by a licensed auctioneer acting on behalf of the owner (penalty: 50 pu). A roadworthiness certificate is current if it has been issued within 30 days prior to the sale or disposal of the car (s 42A(4)).

In order to be sold without a roadworthiness certificate, a car’s registration must be cancelled before the sale (unless the sale falls within one of the exceptions above).

You should think carefully before buying a used car that is being sold without a roadworthiness certificate. Subject to certain exceptions (see reg 12 RSV Regulations), it is an offence to drive an unregistered car (s 7 RS Act). Before registering a car, VicRoads may request evidence verifying that the car complies with the standards for registration (reg 15 RSV Regulations). In the case of a used car, this is usually a roadworthiness certificate (reg 15(b)).

Insurance companies also generally require proof of roadworthiness before they insure a car. If a car has significant problems that need to be fixed to get a roadworthiness certificate (e.g. rust), the cost of these repairs may exceed the car’s purchase price!

Warning about roadworthiness certificates

A roadworthiness certificate is primarily a test of a car’s safety, not its mechanical soundness. If you want to check the mechanical soundness of a car, you should get it inspected by an organisation such as the RACV or the VACC.

If you believe that the roadworthiness certificate misrepresents the condition of the car, you should get another roadworthiness certificate from a licensed tester within 30 days of the date of the certificate provided by the seller. You should then go back to the original tester to discuss any faults that were verified by the second test. If you take the car along, you should ask the tester to contact the tester’s area supervisor to discuss the car.

If the faults are dangerous, or the tester refuses to cooperate, or you suspect the car was actually not at the original tester’s premises on the day the certificate was issued (i.e. that the car was not inspected), you should contact VicRoads. Your complaint will be assessed and referred to VicRoads roadworthiness supervisors if necessary. Although VicRoads cannot force the tester to rectify the faults or compensate you, it can penalise the tester or cancel their licence (s 15A RS Act; reg 211 RSV Regulations). If you want to pursue the tester for compensation, you should seek legal advice about taking civil action in the Victorian Civil and Administrative Tribunal (VCAT) or in court (see Chapter 2.4: Legal services that can help).

If the seller is a car trader and the roadworthiness certificate obtained by you is signif­icantly different from the one provided by the car trader, then you can use the new certificate as evidence to try to force the car trader to cancel the sale contract. You can also complain to Consumer Affairs Victoria.

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