Stay Compliant: Key Obligations for Auctions 

OMVIC is issuing this bulletin to address the following issues related to auctions:

1. auctions not meeting their disclosure obligations pursuant to the Motor Vehicle Dealers Act, 2002 (the “Act”); and
2. auctions operating unlawfully under the exempt status.

Earlier this year, OMVIC issued a reminder to dealers of their disclosure obligations. Today’s follow up bulletin provides additional detail.

Disclosure Obligations 
Exempt Auctions
Auctions that wish to be exempt from registration, must ensure that they meet, with each trade, certain prescribed criteria found in section 2(3) of Ontario Regulation 333/08. An example of the prescribed conditions is that exempt auctions must ensure that the person selling the vehicle is a registered dealer, is exempt from registration or is the Crown, and the person purchasing the vehicle is also a registered dealer within Ontario or holds a similar registration status in another jurisdiction. These auctions are commonly referred to as wholesale auctions and are not regulated by OMVIC.

Although exempt auctions are not regulated by OMVIC, they are nonetheless mandated to ensure that disclosure obligations are met when a vehicle is sold through them. Exempt auctions must use best efforts to ensure that vehicle sellers have reasonably met all their disclosure obligations before selling a vehicle to a buyer. This obligation is a mandatory condition to maintain their exempt status.

Auctions that violate these rules may be subject to an appropriate administrative action by OMVIC. Auctions are reminded that, exemption status notwithstanding, the Registrar has the authority to request information about any trade conducted in the auction to ensure compliance with the exemption condition(s).

Registered Auctions
Conversely, some auctions choose to voluntarily become registered under the Act. They may choose to do so for reasons that include the ability to directly engage in vehicle trades, allow any person, not just registered dealers, to use their services, and the reputational appeal of a registered dealer. Once registered, these auctions are immediately bound by the same rules and regulations as other dealers. This includes all the disclosure obligations to a vehicle purchaser prior to the sale.

OMVIC reminds both dealers and auctions that disclosure requirements still apply in an auction environment. Both the vehicle seller and the auction are responsible for meeting their respective obligations, as proper disclosures are paramount in sustaining consumer protection and advancing registrant professionalism.

Unregistered Auctions 
Auctions that do not meet, or, during the course of their business, violate any of the prescribed exemption criteria in relation to any trade must obtain registration under the Act. This includes Ontario auctions that are open to the public within or outside the province.

Violations 
When OMVIC receives a complaint about the conduct of an auction, OMVIC will review the conduct of the seller and the auction. Failure to fulfill disclosure requirements and breaches of any of the exemption requirements, may result in appropriate administrative action, including charges under the Provincial Offences Act.

Informational Webinar   
OMVIC will be hosting an informational webinar on Thursday, November 7 at 11:00 a.m. to address any questions or comments you may have. Click here to register through Zoom.

Additional Questions? 
For more information on auction requirements, please refer to OMVIC’s Auction Guideline.
Registered auctions and non-registered auctions are encouraged to consult with OMVIC’s Dealer Support department to seek clarity on legislative and regulatory compliance requirements. Please contact Dealer Support at [email protected] or by calling 1-800-943-6002 and leave a message if you have any questions or concerns. Messages are returned in a priority sequence.