Acquiring a Used Automobile: an Additional Search Is Now Required

A prudent and diligent purchaser of a used automobile for personal or commercial use will always consult the Register of Personal and Movable Real Rights (the “RPMRR”) before concluding the transaction.

The RPMRR will show whether the vehicle is charged with any real rights in favour of a third party, such as a reservation of ownership or a movable hypothec.

Now however, following the coming into force of Quebec’s new Code of Civil Procedure in January of this year, such a search is no longer sufficient to ensure that a used vehicle is free and clear of any such rights.

While the previous Code of Civil Procedure (“CCP”) did not contain any specific provisions on the seizure of road vehicles, article 730 of the new CCP institutes a new measure to protect the interests of judgment creditors in that regard. It provides that the Société de l’assurance automobile du Québec (the “SAAQ”), which registers transfers of ownership of road vehicles, may not register the transfer of a vehicle once it has been served by a bailiff with the notice of execution of a judgment against the property of the vehicle’s owner (the judgment debtor) until such time as it has been informed that a release of seizure has been granted. This measure ensures that the judgment debtor cannot transfer the vehicle in order to avoid the consequences of the judgment.

While this new measure makes enforcing judgments easier, it complicates matters for prospective purchasers of used vehicles, as the notice of execution served by the bailiff on the SAAQ is not published in any register accessible to the public.

Consequently, a prudent and diligent purchaser who does an RPMRR search has no way of knowing whether the vehicle in question is subject to seizure pursuant to article 730 CCP. The purchaser must make a further investigation before being satisfied that the vehicle is free and clear of any third-party rights and paying the purchase price for it.

The prospective purchaser will currently have to telephone the SAAQ for confirmation that the vehicle is not subject to seizure, as the SAAQ’s online service regarding vehicle registrations does not provide any information on potential seizures pursuant to Article 730 CCP.

In the absence of an appropriate public register, the most prudent course for the moment would appear to be to have the registration transferred before paying the purchase price for the vehicle.

Pending clarification by the courts or the creation of a public register by the SAAQ, acquirers of used vehicles must take care to ensure they don’t find themselves in a situation where they cannot transfer a vehicle’s registration despite having paid for it.

The author would like to thank Marie-Pier Auger, a student-at-law at Langlois Lawyers, for her research assistance in connection with this article.