If a business operator wants to add consignment sales to their business licence, they must apply through AMVIC and submit a security in the form of cash, a surety bond or irrevocable letter of credit.
There are specific laws under the Automotive Business Regulation (ABR) that automotive businesses must follow when partaking in consignment. Please note that the below is only a summary and businesses should consult the ABR for more information.
Laws to be aware of:
- The business must pay the seller within 14 days after the vehicle is sold.
- The business must provide the seller with a detailed statement of account along with the payment.
- When entering into a consignment agreement, the business must include the following details in the written agreement:
- Name, address and phone numbers for the business and the vehicle owner.
- Description of the vehicle that includes the year, make, model, colour, number of doors and options.
- Vehicle Identification Number (VIN).
- Current odometer reading.
- The vehicle history, setting out any accident, special uses of the vehicle (such as police or taxi), whether it was owned by a rental company and any other facts that would affect the price a buyer might be willing to pay.
- Consignor’s ownership interest in the vehicle.
- Liens against the vehicle.
- When the agreement ends and what happens to the vehicle if it has not been sold before the agreement ends.
- Who will insure the vehicle while it is on consignment. Check with the insurer for more information.
- Fees the business will charge for their services.
- Any repairs or other work on the vehicle that the consignor authorizes the business operator to perform, and who is responsible for paying for the repairs or other work.
- Minimum amount that the consignor will receive from the business operator for the sale of the vehicle, and whether the consignor will accept another vehicle or other personal property as part of the minimum amount.
Important information for businesses licensed for consignment
Effective Sept.1, 2018, businesses licensed for consignment now must provide AMVIC $300,000 in security. The security can be in the form of cash, irrevocable standby letter of credit or surety bond.
To ease the impact of the new requirement for businesses licensed for consignment before Sept. 1, 2018, there is an incremental transition plan. For licence renewals beginning Sept. 1, 2018, the following securities are required to be in place before renewal:
- For licence renewals beginning Sept. 1, 2018, a business that was licensed for consignment prior Sept.1, 2018 and has $50,000 security in place will need to increase the security to $100,000 prior to renewal of the consignment licence.
- For licence renewals beginning Sept. 1, 2018, a business that was licensed for consignment prior Sept.1, 2018 and has $100,000 security in place will need to increase the security to $200,000 prior to renewal of the consignment licence.
- For subsequent licence renewals, security will need to be increased by $100,000 prior to renewal until $300,000 is reached.
Alternatively, businesses licensed for consignment can:
- Increase the amount of security to $300,000 immediately, or
- Remove consignment from licensed activities.
Licensed businesses that cannot provide the required security will not meet the requirements for consignment sales. These businesses will not be permitted to conduct consignment sales in Alberta.
Please call AMVIC’s licensing department at 1-877-979-8100 ext. 2001 for more information.