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Selling a used vehicle by auction

Consumer protections for used car buyers increased from 1 September 2019.

Licensed motor dealers and chattel auctioneers must provide a ‘class B’ statutory warranty when selling a car that is 10 or more years old or has an odometer reading of 160,000km or more. The warranty period is for 1 month or 1,000km, whichever comes first.

You must follow the rules of chattel auctioneering when you auction a used vehicle. You must also follow certain rules of motor dealing.

Find the rules for chattel auctions

Find the rules of motor dealing

Receiving the vehicle

To hold an auction of a used vehicle, you may either:

  • own the vehicle yourself
  • be the appointed agent of a seller (sell by consignment).

Reserve price

You must ask the seller to set a reserve price.

Store book

You must keep an auction store book. This will record relevant information about both the vehicle and the auction.

Your store book must remain at your registered office.

When you acquire a vehicle (by purchase or consignment), you must record:

  • a description of the vehicle
  • any identifying marks or numbers (such as a serial number)
  • the reserve price of the vehicle
  • the seller’s name and address
  • the date you received the vehicle.

Display

When you put the vehicle on display, you must:

  • make sure any signage or prices are not misleading
  • display the safety certificate (formerly called a roadworthy certificate).

Preparing for the auction

Registered bidders

You must keep a register of all bidders at an auction.

This means you will need to:

  • register them with you before the auction starts
  • see suitable identification (e.g. drivers licence) before you allow a bidder to register
  • give each bidder an identifying marker (e.g. a numbered card or baton) that they must use to indicate a bid
  • announce at the start of the auction that only registered bidders may bid.

You must not identify any bidder during the auction. After the auction, you may only do so in order to help finalise the property sale.

You must not identify a bidder in any other circumstances, except to an inspector or a court.

Disclosures to bidders and conditions of sale

As a chattel auctioneer, you must display your name at the site of an auction.

It must be in:

  • clear and legible text
  • a conspicuous position in the premises.

A conspicuous position might be:

  • by the entrance to the premises
  • at an obvious location on the lot (visible during the auction).

Some limited exemptions apply—for instance, if:

  • you are moving around a large, open outdoor area
  • bad weather makes it impossible to use the sign.

For example, this might be:

  • an auction of multiple vehicles in a large, open lot
  • an outdoor auction in very strong wind.

In these cases, you must announce your name at the start of an auction.

You must also disclose the conditions of sale at the start of an auction. These might include:

  • the required deposit
  • inspection details
  • any other relevant details.

Announcing relevant details

You must announce certain details at the start of the auction.

Buyer’s premium

You may charge a fee to the buyer (usually a percentage of the sale price) when you finalise the sale. This is known as a buyer’s premium and is in addition to your commission.

You must have the seller’s written consent to charge a buyer’s premium.

In order to charge a buyer’s premium, you must tell all buyers that you charge this fee, and at what percentage.

You will need to:

  • make the statement verbally at the start of the auction (except for online auctions)
  • display the statement so it is visible to each prospective bidder (including at an online auction)
  • include it on all advertisements.

Statutory warranty — warranted and unwarranted vehicles

You must give a 'class A' statutory warranty for a used vehicle when it has:

  • an odometer reading of less than 160,000km on the day of its sale
    and
  • a built date of no more than 10 years before the day of its sale.

The warranty expires after 3 months or the first 5,000km, whichever occurs first. During this period, you must fix any defects that the warranty covers.

From 1 September 2019, you must give a 'class B' statutory warranty for a used vehicle when it has:

  • an odometer reading of 160,000km or more on the day of its sale
    or
  • a built date of more than 10 years before the day of its sale.

The warranty expires after one month or the first 1,000km, whichever occurs first.

You do not need to offer a ‘class B’ statutory warranty for vehicles more than 20 years old that you are offering for sale for restoration. These are called restorable vehicles.

Find out more about statutory warranties.

You must tell all bidders if a vehicle does not have a statutory warranty. To do this, you must:

  • clearly display the words “No statutory warranty” on a sign on the vehicle
    and
  • verbally announce this at the very start of an auction.

Written-off vehicles

You need to tell prospective buyers if the vehicle has been written off.

A written-off vehicle isn’t fit to register for safety reasons. This could be:

  • a repairable write-off
  • a statutory write-off.

You must announce before the bidding for a repairable write-off that it:

  • is subject to the Transport Operations (Road Use Management) Act 1995
  • must pass a written-off vehicle inspection under that Act
  • cannot be registered until it does.

You must announce before the bidding for a statutory write-off that the vehicle can never be registered. Usually, these vehicles sell for parts or scrap metal.

Restorable vehicles

You must announce before the bidding for a restorable vehicle that:

  • the vehicle is a restorable vehicle because it is more than 20 years old and is for sale for restoration
  • is the buyer is considered to have waived the vehicle’s statutory warranty.

Multiple written-off or restorable vehicles

For an auction of 2 or more repairable write-offs or restorable vehicles in a row, you may make a single announcement. This must:

  • clearly identify which vehicles are affected
  • take place before you auction the first of the vehicles.

Finalising a sale

Previous owner and clear title statements

You need to give the buyer a signed statement telling them about the vehicle’s previous owner. You can include this information in the contract for sale.

The details must include:

  • the current date
  • the name of the immediately previous owner (this is you, unless you’re selling on consignment)
  • the vehicle’s
    • engine number (or chassis number if it’s a caravan)
    • identification number and registration number
    • built date
    • odometer reading (both in words and figures)
  • the price the buyer is paying.

You must include if you are aware that:

  • the odometer has ever been replaced
  • the engine has ever been replaced (include the date, if you know it).

A vehicle that has a clear title of ownership is:

  • entirely owned by the seller (this is you, unless you’re selling on consignment) and
  • may legally be sold by that person
  • not subject to any mortgage, security or debt.

You must guarantee to a buyer that a vehicle has clear title. You must include this guarantee as a statement in your contract.

Motor dealer and trust account receipts

Motor dealer receipt

You must give a correct motor dealer receipt whenever you accept any money from a buyer.

A receipt will need to include:

  • your name and signature
  • name of your principal licensee
  • buyer’s name
  • total cost of the vehicle
  • amount of money paid in that transaction.

The receipt must also clearly describe the vehicle by including its:

  • make, model and colour
  • identification and registration numbers
  • engine number (for most vehicles) or chassis number (for caravans).

If you auction the vehicle on consignment, you must:

As soon as possible after the auction, you must record in your store book:

  • the date of the auction
  • a description of the goods
  • the sale price
  • the name and address of the buyer
  • a cross-reference to the relevant entry when you acquired the vehicle.