The importance of checking for liens

DATE: | Industry bulletins

When buying a vehicle or accepting one on trade you should always do your due diligence to check for liens. Protect yourself and your customers:

  • Obtain a vehicle history report. A vehicle history report can tell you if there are liens registered against the vehicle.
  • Copy the VIN off the vehicle itself and not from another document which may be in error.
  • Check for liens even if the seller tells you there are no liens on the vehicle. If the seller tells you that there is a lien, you should still do a search to verify there is a lien and balance owing on the lien.
  • If you discover there is a lien, check with the lien holder (secured party) to determine if the lien is still valid.

What is a lien? As most of you know, a lien on a vehicle is when a creditor lends money to a debtor with the vehicle as security. This means that if the debtor defaults on the loan payments, the creditor has a right to collect what is owing on the vehicle through such means as repossessing the vehicle.

Business-to-business

Buying from another business? Make sure you do your own lien check because the business you purchase from may not have done a lien search or may have made an error.

Buying a vehicle with a lien

If you agree to purchase the vehicle with a lien, you are responsible for the amount that is owed or the vehicle could be legally seized.

Remember

As an AMVIC-licensee your industry expects a high standard of professional conduct. Customers have a right to expect that there will be no liens on any vehicle purchased from an AMVIC-licensed business. A bad consumer experience can negatively impact all of industry.

It is best practice to always obtain a history report on every vehicle you buy from a seller so you can disclose all information to potential buyers. Under the Fair Trading Act section 6, 4(h) it is an unfair practice for a supplier to represent that “goods have or do not have a particular prior history or usage if that is different from the fact.”

Visit amvic.org for more information on researching a vehicle