Material facts and retail disclosures

Section 30 of the Motor Vehicle Dealers Act, 2002 tells every registered Ontario dealer to disclose, in writing, the prescribed information to every customer at the prescribed time. The list lives in section 42 of Ontario Regulation 333/08, the general regulation under the Act, and a parallel list for dealer-to-dealer trades sits in section 5 of Ontario Regulation 332/08, the Code of Ethics. This category is about the retail list: 25 paragraphs of facts about a used or new vehicle that have to appear, in writing and in plain view, on the sale or lease contract before the customer signs.

These rules apply to every retail sale and every retail lease made by a registered dealer to a person who is not another registered dealer. They apply equally to a salesperson handling the file. Wholesale dealer-to-dealer disclosure is its own category and uses a parallel list under the Code of Ethics.

What this category covers

This category is the section 42 list and how it interacts with the rescission right in section 50 of the regulation. It covers what counts as previous use, what counts as history, what counts as quality or condition, the $3,000 collision-damage trigger, the mileage statement (and the 5 per cent or 1,000 kilometre tolerance), the irreparable, salvage, and rebuilt brands set out in section 199.1 of the Highway Traffic Act, and the catch-all material-fact paragraph that closes the list.

Key rules to remember

Disclosure must be in writing, on the contract, before signing

Verbal disclosure does not satisfy section 30 of the Motor Vehicle Dealers Act, 2002. Section 39 (for new vehicle sales), section 40 (for used vehicle sales), and section 41 (for leases) of Ontario Regulation 333/08 all import the section 42 list as a paragraph of mandatory contract content. The contract has to be presented, signed, and copied to the customer immediately after signing, with the section 42 facts written out in a way that is clear, comprehensible, and prominent.

Previous use: rental, taxi, limo, police, emergency

Paragraph 7 of section 42 requires a written statement if the vehicle was previously leased on a daily basis (a daily rental), used as a taxi or limousine, or used as a police cruiser or to provide emergency services. The daily-rental disclosure carries forward through the chain of ownership unless the vehicle was, at some point, owned by a person other than a registered dealer. Once a non-dealer consumer has owned the vehicle, the next dealer is no longer required to repeat the daily-rental disclosure, but the taxi, limousine, police, and emergency-service disclosures travel with the vehicle for life.

History: collision, fire, flood, structural, total loss, branding, theft

Paragraphs 8 through 24 of section 42 cover the things that have happened to the vehicle. The contract must say so if total repair costs to fix damage from any one incident exceeded $3,000 (with the actual cost stated, if the dealer knows it), if the vehicle was damaged by fire, if it was damaged by liquid that reached the interior floorboards, if there has been structural damage or any structural repair, replacement, or alteration, if two or more adjacent non-bumper panels have been replaced, if the manufacturer’s warranty was cancelled, if an insurer declared the vehicle a total loss (whether or not it was branded), if it has been classified under section 199.1 of the Highway Traffic Act as irreparable, salvage, or rebuilt (with the most recent classification stated), and if it had been recovered after being reported stolen. Paragraph 22 captures out-of-province history: if the vehicle was previously registered outside Ontario, the contract must name the jurisdiction, unless the vehicle has since carried Ontario permits for at least the seven previous consecutive years.

Quality or condition: airbags, ABS, drive-train repairs, badges

Paragraphs 11 through 18 cover what is currently wrong with, or unusual about, the vehicle. The contract must say so if any airbag is missing or non-operational, if the ABS is non-operational, if the vehicle needs repair in the engine, transmission or power train, the subframe or suspension, the computer equipment, the electrical system, the fuel operating system, or the air conditioning, if the vehicle is materially different from the original or advertised production specifications, if a badge or other indication on the vehicle relates to a different model, and if any other fact, disclosed, would reasonably be expected to influence a reasonable buyer.

Mileage and the 5 per cent or 1,000 km tolerance

Paragraphs 1 through 6 cover odometer disclosure. For a used vehicle the dealer must state the total distance driven if the dealer can determine it. If the dealer cannot determine the total but can determine the distance as of some past date, the contract must give that distance and date with a statement that the true total is believed to be higher. If the dealer can determine neither, the contract must say the total distance is unknown and may be substantially higher than the reading shown on the odometer. The contract must also disclose if the odometer is broken or faulty, has been replaced, has been rolled back, or is in miles. Section 50(4) of the regulation deems an odometer disclosure accurate only if it is within the lesser of 5 per cent or 1,000 kilometres of the correct distance.

The catch-all: any other material fact

Paragraph 25 of section 42 closes the list with a catch-all: any other fact about the vehicle that, if disclosed, could reasonably be expected to influence the decision of a reasonable buyer or lessee on the terms of the contract. Section 5 of the Code of Ethics (Ontario Regulation 332/08) carries a similar catch-all for wholesale trades. A dealer cannot defend a non-disclosure by pointing out that the fact is not enumerated in paragraphs 1 through 24.

Common mistakes

• Verbal disclosure only. The salesperson tells the buyer about the prior taxi use during the test drive, but the contract is silent. Section 30 of the Act and section 42 of the regulation require the statement on the contract.
• Treating damage repair under $3,000 as nothing to disclose. Paragraph 19 only triggers the dollar-figure statement above $3,000, but paragraph 25’s material-fact rule still bites: a $2,500 collision repair is a material fact and has to go on the contract.
• Skipping the prior-use line because the dealer “did not know”. Section 50(2) of the regulation lets the buyer cancel even if the dealer did not know and honestly believed the contract was accurate.
• Recording an odometer reading that is more than 1,000 kilometres off, or more than 5 per cent off, the true distance. Section 50(4) makes that a cancellation trigger.
• Hiding the disclosure in fine print or burying it on a back page. Section 39(2) of the regulation requires the section 42 statements to be clear, comprehensible, and prominent.
• Selling a previously branded vehicle (irreparable, salvage, or rebuilt) without naming its most recent classification, or using vague phrases like “rebuilt title” without the prescribed statement.
• Failing to repeat a taxi or limousine disclosure on resale. Once a vehicle has been a taxi or limousine, the disclosure follows it through every later retail sale.

How OMVIC enforces this

OMVIC inspectors pull contract files on routine inspections and check them against the section 42 list, often cross-referencing a vehicle history report and the Ministry’s permit history. Most disclosure complaints reach OMVIC through the buyer: the consumer notices a prior accident, a rental history, or a brand after the sale, contacts OMVIC, and OMVIC opens a complaint file. The cleanest consumer remedy is a section 50 rescission: written notice within 90 days of receiving the vehicle, dealer takes the vehicle back, and the dealer refunds every payment made under the contract. Where the breach is part of a pattern, OMVIC can refer the registrant to the discipline committee for a Code of Ethics breach, can carry a registration proposal to the Licence Appeal Tribunal, and on conviction under section 32 of the Motor Vehicle Dealers Act, 2002, the registrant faces a fine of up to $50,000 for an individual or $250,000 for a corporation.

Where to learn more

The full retail list is on this site at Ontario Regulation 333/08, with anchors that take you straight to sections 39, 41, 42, and 50. The disclosure duty under the Act is at section 30 on the Motor Vehicle Dealers Act, 2002 page, and the parallel wholesale list is at section 5 of the Code of Ethics regulation. The DealerPrep iPhone app carries the wider question pool with scenario items on prior-use chains, the $3,000 trigger, and the mileage tolerance.