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Consumer Law And Used Vehicles (NSW)

The buying and selling of used vehicles in New South Wales is governed by the Motor Dealers and Repairers Act 2013 and Australian Consumer Law. Which laws apply depend on whether the vehicle was bought from a vehicle dealership, a private seller, at auction, from a vehicle market, or online.

From a dealer

There are several protections available to a consumer who buys a vehicle from a dealer.

Mandatory disclosure

Under the Act, a motor dealer must disclose to consumer information that might affect a consumer’s decision to buy a vehicle or at a certain price. The information must be included to the dealer notice attached to the vehicle for sale. It includes:

  • any major modifications;
  • past flood or hail damage;
  • whether a vehicle has been written-off in the past;
  • whether odometer tampering is suspected.

Dealer guarantee

The limitation period for a dealer guarantee on a used vehicle begins when the consumer takes possession of the vehicle or the sale is completed, whichever happens first. A dealer guarantee for a vehicle which has travelled fewer than 160,000km, and is less than 10 years old, is limited to 5000km or three months, whichever occurs first.

The dealer guarantee does not apply when:

  • a vehicle is sold unregistered and in need of substantial repair;
  • there is incidental or accidental damage to the vehicle after the sale when it was not in the possession of the dealer;
  • damage is caused to the vehicle due to negligence or misuse by the driver;
  • superficial damage to the paintwork or upholstery of the vehicle would have been apparent on reasonable inspection at the time of sale;
  • a prescribed defect notice and inspection report were attached to the vehicle, including an estimate of the cost to repair the vehicle.

A used car that has travelled more than 160,000km or is more than 10 years old does not have a dealer guarantee.

Motor Dealers & Repairers Compensation Fund

A consumer can make a claim from this fund for compensation when attempts to recover money from a licensed repairer or dealer have failed. This includes when:

  • a dealer fails to meet warranty obligations;
  • a dealer sells a person an encumbered vehicle (such as a stolen vehicle);
  • a dealer fails to return a deposit;
  • a dealer fails to pass on proceeds from the sale of a vehicle sold on the person’s behalf;
  • repairs are not carried out competently.

The maximum compensation payable is $40,000, and a claim must be lodged within 12 months of the loss.

Compensation orders

A court can order the payment of compensation to a consumer who bought a vehicle relying on a false representation about the vehicle’s year of manufacture, year of registration or model.

It can also order the payment of compensation to a consumer who bought a vehicle after a person had altered the reading on the vehicle’s odometer, or after a person had fraudulently replaced the odometer.

From a private seller

Under Australian Consumer Law a used vehicle sold privately must come with clear title but no dealer guarantee is provided. A Personal Property Securities Register check will show whether the vehicle is encumbered, stolen or unregistered. A buyer should ask for:

  • current registration papers;
  • a safety check inspection report (pink slip) that is no more than 6 weeks old;
  • proof the seller is the owner of the car, such as a driver licence;
  • the Vehicle Identification Number or chassis number.

The buyer should then check that the details in the paperwork match the vehicle.

At an auction

A used vehicle bought at auction is not covered by a dealer guarantee. The auction house must ensure the vehicle is unencumbered. If a vehicle is sold with number plates attached, a pink slip must be provided. The slip must not be more than one month old, state the vehicle is fit for registration, be attached to the vehicle when the vehicle is offered or displayed for sale, and be provided to the buyer at the vehicle handover.

Under the Act, a Form 11 should be displayed when a vehicle is displayed at auction. The form must state the vehicle does not have a dealer guarantee but consumer guarantees under Australian Consumer Law can still continue to apply depending on whether a dealer is selling the car.

From a vehicle market

This is similar to buying privately, with no guarantee of title or dealer guarantee. If the vehicle is unregistered, it will need to be taken to an Authorised Unregistered Vehicle Inspection Station. At the station, a roadworthiness check and vehicle identification will be done so the vehicle can be registered with Roads and Maritime Services.

Buying online

Different rules apply depending on whether the used vehicle is being bought online from a dealer or private seller. A vehicle bought from overseas is not covered by Australian Consumer Law. A vehicle bought from another state or territory is subject to Australian Consumer Law but is not covered by laws that regulate the motor vehicle industry in New South Wales.

For advice or representation in any legal matter, contact Armstrong Law.

Sally Crosswell

This article was written by Sally Crosswell

Sally Crosswell has a Bachelor of Laws (Hons), a Bachelor of Communication and a Master of International and Community Development. She also completed a Graduate Diploma of Legal Practice at the College of Law. A former journalist, Sally has a keen interest in human rights law.

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