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Motor Vehicle Dealing (Ontario)
Legal Guide
Ch.2 - Exemptions
(20 June 2021)- Full Exemptions
. Wholesale Auctions
. Wreckers
. Court-ordered Receivers
. Insolvency Receiver
. Estate Trustees
. Lawyers
. Sole Proprietor Business Use, or their Personal and Family Use
. Business Corporate Director, Officer or Employee Use, or their Personal and Family Use
. Power-Assisted Bicycles
. Car Rental Agencies
. Receivership of an MVDA Dealer's Business
. Closing Business Fleet Auction
. Charities
. Re-possessors by Creditor
. The One-Time Non-Dealer Repo Agency Seller
. Non-for-Profit Advisors
. MVDA Fund Board of Trustees
. Motor Vehicles Over 21 Tonnes
. Bus and Commercial Motor Vehicles, Unless Personal
. Insurers Taking Possession/Ownership of Stolen or Wrecked Motor Vehicle After Claim
. When Motor Vehicles Sourced by Associated Manufacturer or Trader is Authorized Distributor
. Trade-Ins re Immediately Above
- Personal and Family Trading Exemptions
- Financing Exemptions
(a) Dealer-Financer Transaction
(b) Customer-Financer Transaction
- Lease Finance Dealer and Fleet Lessor Dealer Exemptions
(a) General
(b) LF/FL Dealer Exemption re Salespersons
(c) Exemption for Salespeople Employed by LF/FL Dealers
(d) Exemption for LF/LF Dealer Corporate Disclosure by MV Dealers on Registration or Renewal, and Updating
(e) Exemption When Either LF or FL Dealer
(f) Trades Between LF and FL Dealers Generally Exempt, Records Exception
(g) Fleet Lessor Exemption for Certain Records
- Advertising Exemptions by Class of Dealer
- Code Exception for Dealer Duty to Ensure Salespeople Comply with MVDA
1. Full Exemptions
The following categories of persons or entities are fully exempt from the MVDA when dealing with motor vehicles [Reg 2]:- Wholesale Auctions
Auctioneers and their employees and agents, if all of the following conditions are met [Reg 2(1)1,(3)]:
- Consignor has No Property Interest
Neither the auctioneer nor it's employee or agents have a property interest in the motor vehicles being sold;
- Limited Consignors (Sellers) Only
Only MVDA dealers, those exempt from the MVDA, or the Crown may consign (sell) motor vehicles for sale.
A general dealer who arranges for the auction shall ensure that [Reg 46]:. only dealers, those exempt from the Act or the Crown may sell at the auction,
. "the dealer clearly discloses on whose behalf the vehicle is being sold, if it is not being sold on the dealer’s behalf", and
. before a motor vehicle is sold, "the person selling the vehicle appears, on a reasonable basis" to have complied with their disclosure duties [set out in Ch.5, s.3: "Code of Ethics: Vehicle History/Disclosure When Customer is Another Dealer"], "whether or not that regulation applies to the person selling the vehicle." - Auctioneer Best Efforts to Ensure Consignor Complies with Disclosure under Code of Ethics
The auctioneer "uses best efforts to ensure that, before a motor vehicle is sold", the consignor "appears, on a reasonable basis" to have complied with the dealer-to-dealer disclosure requirements of the Code of Ethics [see Ch.5, s.3 "Code of Ethics: Vehicle History/Disclosure When Customer is Another Dealer"] - "whether or not that regulation applies to the person selling the vehicle" (ie. whether or not the consignor is exempt from the MVDA);
- Access to Bidder Area Limited with Physical Restriction and Photo ID
Only the following people are allowed in such an auction, and - if the auction is conducted in-person - only the following are allowed in the restricted area for bidding, and they must have visible photo ID [Reg 2(3)4]:
- registrants (MVDA dealers and salespeople);
- the MVDA registrar, deputy registrars, the director, deputy directors, investigators and inspectors;
- law enforcement officers;
- auction staff;
- directors and officers of a corporate auctioneer;
- "persons in the company of" the auctioneer, or in the company of corporate directors and officers' of a corporate auctioneer;
Photo ID for this status of person shall identify their status [Reg 2(4)].
- consignor employees or agents "who attend the auction for the purpose of the sale of the vehicle by the seller".
Photo ID for this status of person shall identify their status [Reg 2(4)].
Registrants "shall not facilitate access into the bidding area by persons" other than those allowed in [Reg 34(1)].
- Bidder (Buyer) Electronic Access Limited to Dealers
If the auction is conducted so that bidders have access electronically, "the electronic access is provided through a secure means that ensures that only registrants have the electronic access".
No registrant "shall permit or facilitate access to the auction" to an electronic auction by non-registrants [Reg 34(2)].
- Registrar Has Info and Record Demand Authority
The MVDA registrar may request, and the auctioneer shall provide then "with information about any trade conducted in the auction and with access to the person’s records relating to: i. the persons allowed in the bidding area, and
ii. the persons who are allowed to bid in the auction through electronic means"; - Limited Bidders (Buyers) Only
Motor vehicles may only be sold to MVDA dealers, to bidders in a non-Ontario jurisdiction who are "registered in that jurisdiction as persons with equivalent status to registered motor vehicle dealers".
- Wreckers
A wrecker licensed under the Highway Traffic Act [HTA 59(1)].
- Court-ordered Receivers
A person performing duties under an order of a court.
- Insolvency Receiver
"An assignee, a custodian, a liquidator, a receiver, a trustee or another person", if they trades in motor vehicles in the course of performing their duties under the Bankruptcy and Insolvency Act (Canada), the Business Corporations Act, the Companies’ Creditors Arrangement Act (Canada), the Courts of Justice Act or the Winding-up and Restructuring Act (Canada).
- Estate Trustees
"An executor or estate trustee" who trades in motor vehicles in the course of performing their duties, or an auctioneer selling motor vehicles for them.
- Lawyers
A lawyer in the course of acting in his or her professional capacity.
- Sole Proprietor Business Use, or their Personal and Family Use
A person that trades in a motor vehicle for use as business sole proprietor, or for the personal use of the person or a member of their family, "but not if the person is in the business of trading in motor vehicles or repairing them".
- Business Corporate Director, Officer or Employee Use, or their Personal and Family Use
A person that trades in a motor vehicle for use by an individual who is a director, officer or employee of a business corporation, or for the personal use of the person or a member of their family, "but not if the person is in the business of trading in motor vehicles or repairing them".
- Power-Assisted Bicycles
A person who trades in one or more power-assisted bicycles equipped with both a pedalling device and an auxiliary motor.
- Car Rental Agencies
A person or entity who leases motor vehicles to lessees if:. the person does not own the vehicle,
. the lessee does not buy the vehicle at the end of the lease term,
. the lease is for a term of no more than 120 consecutive days,
. the lessor has filed with the registrar, upon request, a declaration stating that the lessor will not trade in the vehicle after the vehicle is no longer going to be leased, except to lease it as described here, and
. the lessor does not trade in the vehicle after the vehicle is no longer leased, except to lease it as described here. - Receivership of an MVDA Dealer's Business
A receiver and manager appointed to wrap-up up an MVDA dealership [under MVDA 21].
- Closing Business Fleet Auction
An open-to-the-public auction of motor vehicles if:. the motor vehicles were from a business fleet and the sale is "part of the sale of the assets of that business for the purposes of the business ceasing operations",
. the auction is held at the owner’s place of business or at another location that the auctioneer arranges, and
. the auctioneer is retained only for this business-ceasing sale and does not acquire a property interest in any of the vehicles. - Charities
A registered charity [under Income Tax Act (Canada) s.248(1)].
- Re-possessors by Creditor
A creditor, other than a registrant, who:i. lawfully takes possession of a debtor’s motor vehicle or has a lawful lien against it, and
ii. sells the vehicle to or through an MVDA dealer, or by an agent who sells it through a dealer and who is not otherwise in the business of trading in or repairing motor vehicles. - The One-Time Non-Dealer Repo Agency Seller
The one-time non-dealer repo facilitating agent in the paragraph immediately above.
- Non-for-Profit Advisors
A not-for-profit corporation that assists a person in making a decision regarding a trade in a motor vehicle if:. before providing the assistance, the corporation discloses what they receive from third-parties for providing the assistance,
. the corporation does not have a property interest in the vehicle,
. the corporation does not handle the person’s payment for the trade in the vehicle,
. the corporation makes reasonable efforts to ensure that no member of the corporation is a registrant,
. no director, officer or employee of the corporation is a registrant, an insurer under an insurance policy that covers theft of the vehicle or damage to the vehicle or a person in the business of repairing motor vehicles, and
. the corporation files with the registrar annually [Reg 2(5)]: A. a statement outlining the consideration, if any, that it has received from registrants and listing the corporation’s members, directors, officers and employees, and
B. an affidavit attesting to the information contained in the statement mentioned in sub-subparagraph A. - MVDA Fund Board of Trustees
The board of trustees for the Fund, the Trustee of the Fund or a person that acts on behalf of the board of trustees for the Fund.
- Motor Vehicles Over 21 Tonnes
A person or entity who trades in a motor vehicle that has a gross vehicle weight rating of more than 21 tonnes [as defined in Reg 2(6)].
- Bus and Commercial Motor Vehicles, Unless Personal
A person or entity who trades in buses or commercial motor vehicle [both as defined at HTA 1(1)], except if the person trades the vehicle primarily for personal use or that of their family [MVDA 5].
- Insurers Taking Possession/Ownership of Stolen or Wrecked Motor Vehicle After Claim
A motor vehicle insurer takes possession of a motor vehicle after paying on a claim as a result of the vehicle having been stolen or wrecked, is exempt if they sell the vehicle to or through a dealer, if either:. the Registrar of Motor Vehicles has classified the vehicle as irreparable or salvage [under s.199.1 HTA], or
. the vehicle is registered in the name of the insurer. - When Motor Vehicles Sourced by Associated Manufacturer or Trader is Authorized Distributor
A person or entity trading in motor vehicles that are manufactured by persons 'associated' with them, or that the person or entity distributes as the authorized distributor of the manufacturer [with a filed declaration: Reg 2(9)], is exempt from the MVDA. However, such a person or entity selling or leasing to consumers [under CPA 1], is only exempt when the transaction is through a general dealer in the new/used sub-class [Reg 2(7-8)].
- Trade-Ins re Immediately Above
A person who receives a motor vehicle from a purchaser or lessee as all or part of the consideration for supplying a motor vehicle under a trade described immediately above.
2. Personal and Family Trading Exemptions
An individual who trades a motor vehicle "on his or her own account or on the account of a member of the individual’s family" is exempt from these dealer and salesperson registration rules, "if the motor vehicle is used primarily for the personal use of the individual or a member of his or her family" [MVDA 5].
I'll call such traders 'personal/family traders'. MVDA s.5 makes them exempt for the general dealer/salespersons registration duties, but the question can still arise as to whether they are exempt from all the MVDA Act and regulations - ie. provisions that do not apply expressly to registered dealers and salespeople. If they were, then an unregistered 'dealer' would be exempt from most of the MVDA [though they would be chargeable under the main MVDA s.4(1) 'mandatory registration' duty, chargeable under the Act 32(1)(c)].
Thankfully, the General Regulation clarifies that such personal/family traders, and auctioneers who "make(s) such a trade" on behalf of only one such person" [ie. only one such personal/family trader], are "exempt from the Act and the regulations in connection with that trade" [Reg s.2(2)]. This - counter-intuitively - is actually a broader exemption from that found in the MVDA Act itself, and renders personal/family traders as essentially MVDA-exempt.
3. Financing Exemptions
(a) Dealer-Financer Transaction
The term "trade" as used in the MVDA is broad enough to capture the lien-type chattel property interest 'exchanged' in most financing arrangements between the dealer and the financer, which would - otherwise - bring them under much MVDA regulation:MVDA s.1(1)
“trade” includes buying, selling, leasing, advertising or exchanging an interest in a motor vehicle or negotiating or inducing or attempting to induce the buying, selling, leasing or exchanging of an interest in a motor vehicle, and “trade” when used as a noun has a corresponding meaning; But - quite sensibly - financing transactions "between or through a registrant and any of the following persons" are mostly exempt from the MVDA [Reg 2.1(1)]:- a bank, or an authorized foreign bank;
- a subsidiary or an affiliate of a bank (as above);
- a loan and trust corporations;
- a credit union, or a subsidiary or an affiliate of a credit union.
Still applicable to dealers in such transactions are the MVDA record-keeping duties regarding 'all motor vehicles coming into the dealer's possession' (both dealer-owned and otherwise) [Reg 52], and 'trades and contracts (eg. sales, leases, trade-ins, facilitated sales, consignment sales, purchases by the dealer, extended warrranty ales, etc) [Reg 53].
This financing exemption applies "howsoever the transaction is structured, whether as a bulk purchase, a securitization of assets or otherwise" [Reg 2.1(3)].
(b) Customer-Financer Transaction
As well, the financing 'trade' between the financer and the customer is exempt from the MVDA [Reg 2.1(2)].
The Consumer Protection Act (CPA) [Loan and Credit Regulation
under the CPA] already imposes broad consumer-style disclosure duties on most chattel financing transactions, so without this broad MVDA-exemption financers would find themselves struggling with additional pointless paperwork.
This exemption applies "howsoever the transaction is structured, whether as a bulk purchase, a securitization of assets or otherwise" [Reg 2.1(3)].
4. Lease Finance Dealer and Fleet Lessor Dealer Exemptions
(a) General
Lease finance dealers and fleet lessors ('LF/FL dealers') are separate classes of dealer registration [explained in Ch.3, s.3(g-h): "Motor Vehicle Dealers and their Categories"]. They are subject to a range of (obscure) MVDA exceptions, following [Reg 3(1)].
(b) LF/FL Dealer Exemption re Salespersons
LF/FL dealers are exempt from the following MVDA salesperson provisions [Reg 3(2)], except when a lease finance dealer sells a previously leased vehicle to the previous lessee (or if the lessee was a partnership, to such a partner) [Reg 24(2)(c)(i)]:1. retaining unregistered salespeople [MVDA 4(3)], and
2. five days notice to registrar of commencement or termination of salespeople, and reasons for termination [MVDA 24(1(c)]. (c) Exemption for Salespeople Employed by LF/FL Dealers
Salespeople who are employed by LF/FL dealers are exempt from some provisions of the MVDA [Reg 3(3)], except when the salesperson is involved in a further lease (after a previous lease of at least 120 days):. through a general dealer *or* a salesperson registered to the lease finance dealer [Reg 24(2)]; or
. selling the motor vehicle to the previous lessee, an individual who drove the vehicle during the term of the lease, or - if the lessee was a partnership - to such a partner [Reg 24(2)(c)(i)]. The provisions that they are exempt from are:. the prohibition against unregistered salespeople trading [MVDA 4(1)(b),(5)],
. five days notice to registrar of any change in address for service, and the commencement or termination of their employment and it's date [MVDA 24(1(c)]. (d) Exemption for LF/LF Dealer Corporate Disclosure by MV Dealers on Registration or Renewal, and Updating
The MVDA requires certain shareholder declarations to the registrar [explained at Ch.3 "Administration and Registration", s.2(p) "Registration: Corporate Disclosure by MV Dealers on Registration or Renewal, and Updating"]. LF/LF dealers are exempt from these rules [Reg 4].
(e) Exemption When Either LF or FL Dealer
The MVDA provides for the appointment of receivers and managers on wrap-up of a dealership, and freeze orders for assets [MVDA 21-22] [see Ch.9, s.1: "Enforcement and Offences, Enforcement"]. Dealers are exempt from these rules when they are registered either as a lease finance dealers and fleet lessors [Reg 5].
(f) Trades Between LF and FL Dealers Generally Exempt, Records Exception
A trade between a "lease finance dealer or as a fleet lessor or both" and anyone else is mostly MVDA-exempt. The exception is where the financing is "a bulk purchase, a securitization of assets or otherwise", in which case the dealer shall record [Reg 2.1(4), 53(i)(k)]:. the name of the person or entity mentioned in that subsection,
. the date of the trade and the vehicle identification number of the vehicle, and
. all documents or portions of them evidencing the trade. (g) Fleet Lessor Exemption for Certain Records
The MVDA requires that upon any change in officers or directors in a corporation or partnerships that the dealer shall notify the registrar within five days [MVDA 24(1)(b)] [see Ch.3, s.2(n): "Registrant Information Changes"]. Lease finance dealers are exempt from this rule, as are fleet lessors if they are only registered in that dealer class [Reg 6].
Fleet lessors are also exempt from the financial statements duties if they are only registered in that dealer class [under MVDA 24(4)] [see Ch.3, s.2(o): "Financial Statements] [Reg 6].
5. Advertising Exemptions by Class of Dealer
Wholesaler, exporter, outside Ontario and fleet lessors are exempt from the main MVDA advertising rules [Reg 7, 36] [see Ch.7: "Advertising"].
6. Code Exception for Dealer Duty to Ensure Salespeople Comply with MVDA
Generally, the MVDA requires dealers to ensure that their salespeople comply with the Act [MVDA 23]. However this is exempted for Code of Ethics duties [Reg 35].
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