Buying a motor vehicle from an auction

This Topic Includes:
Trader registration
Consumer Information Notice
Quality of the vehicle
Money owing on the vehicle
If things go wrong - your legal protections

What to check when buying at auction

Trader registration

All auctioneers who sell motor vehicles must be registered as motor vehicle traders.

Registered motor vehicle traders will have a certificate with their trader number on it and the date their registration expires. You can ask to see this certificate. We have developed an example registration certificate so vehicle buyers can see what it should look like. (The certificate is a PDF file - 90kbs. Instructions for obtaining the Adobe Acrobat viewer). 

You can check whether an auctioneer is registered by visiting the Motor Vehicle Traders Register or phone 0508 MOTOR TRADERS (0508 668 678). This service is free.

You can also check the register for a list of people who have been banned from registering as a motor vehicle trader.

If an auctioneer is not registered, you can also report this to the Motor Vehicle Traders Registrar. Vehicle auctioneers can be fined up to $200,000 for not being registered.

Consumer Information Notice

Auctioneers must attach a Consumer Information Notice to every used vehicle they offer for sale. Read the Consumer Information Notice carefully - it contains important information about the vehicle you are buying.

If the notice is missing, inaccurate, not completed, or is misleading you can report this to the Commerce Commission.

The Motor Vehicle Sales Act requires a registered motor vehicle trader to get a written acknowledgement from you that you received a copy of the Consumer Information Notice. This acknowledgement must happen as soon as is practical after the sale.

Quality of the vehicle

Be aware

The guarantees under the Consumer Guarantees Act (CGA) do not cover vehicles sold at auction. Sales by tender are also not covered by the CGA.

Some auctioneers offer vehicles for sale which have been mechanically checked. Make sure you know how thorough the check is. If it as not as thorough as you would like, arrange for an independent mechanical check.

Some auctioneers also sell break-down insurance or extended warranties. If you agree to buy this, check the terms and conditions of the warranty or insurance.

Ask:

• What parts and problems does it cover?
• What does it exclude?
• Do you have to pay an excess on any claims? If so, how much?
• What are the rules about servicing? Many warranties say you must get the vehicle regularly serviced at certain mechanics. Will you be able to do this?

Check whether the warranty or insurance will become invalid if you use other mechanics.

Money owing on the vehicle

Check the Consumer Information Notice. If the auctioneer includes the following statement on the front of the notice...

“There is a security interest registered over this motor vehicle”

...the person or company who has registered the security interest may repossess the vehicle from you.

Read the Consumer Information Notice carefully to make sure this statement is not included. The notice provides more information about what a security interest is.

If you do buy the vehicle with this statement, you take it knowing there is money owing on it and you risk losing it to the person or company that registered the security.

If the statement does not appear on the notice, this means you take the vehicle free of any earlier security interest. The vehicle cannot be repossessed from you.

A law called the Personal Property Securities Act 1999 (PPSA) sets out the rules about security interests.  See Checking if money is owed for more information.

If things go wrong - your legal protections

Fair Trading Act

The auctioneer cannot mislead or deceive you, or make false representations about the vehicle. This means that everything on the Consumer Information Notice must be true and correct, and anything the auctioneer tells you about the vehicle must also be true (this includes advertisements, signs on the car, and statements made by the auctioneer).

The Fair Trading Act gives you the right to claim compensation from the auctioneer, if you were misled or deceived about the vehicle. Check out Back on the Right Road – Consumers’ rights after buying a motor vehicle for more information.

If you have been misled by the auctioneer you can report this to the Commerce Commission.

Sale of Goods Act

Under the Sale of Goods Act the vehicle needs to be of merchantable quality and fit for its purpose - that is, the vehicle is reasonably roadworthy and in a good enough condition to be sellable.

The auctioneer must also have the right to sell the vehicle. If these guarantees are not met, you may have a right to a refund, partial reimbursement or compensation.

Be aware

Auctioneers can contract out of the Sale of Goods Act at the time of sale. They may do this by making a statement at the auction or posting a notice in the auction rooms that the Sale of Goods Act does not apply.