Premises, records, and trust accounts

The back-office side of running an Ontario dealership is governed by a tight set of rules in the Motor Vehicle Dealers Act, 2002 and Ontario Regulation 333/08. The Act sets the duty to maintain a trust account, to notify the Registrar of changes, and to submit to inspection. The regulation fills in the operational detail: what counts as an authorised place of business, the three categories of records every dealer keeps, the six-year retention period, and the precise mechanics of the trust account that holds customer money. None of this is optional. The Registrar uses these rules as the foundation for every routine inspection and as the trigger for a freeze order when something goes wrong.

This category applies to every registered dealer, with class-specific carve-outs. A general dealer carries every obligation in full. Brokers, wholesalers, exporters, outside Ontario dealers, lease finance dealers, and fleet lessors are exempt from some of them, but the records duty in sections 52 to 56 of Ontario Regulation 333/08 reaches almost every class.

What this category covers

This category tests where a dealer is allowed to operate from, the three record types every general dealer must keep, the six-year retention rule, the storage location rules, the trust account conditions in section 25 of the Act and section 58 of the regulation, and the freeze-order power in section 22 of the Act. It also covers the five-day notification duties in section 24 of the Act and section 60 of the regulation.

Key rules to remember

Authorised place of business

Section 28 of Ontario Regulation 333/08 says a dealer must trade only from a place listed on the certificate of registration. Lease finance dealers and fleet lessors do not have places listed on the certificate. Every other dealer must operate from an approved address, and section 28(6) requires that address to be separate from a dwelling unless the dealer is registered only as a wholesaler or a broker. Each authorised place must include an office large enough to securely store the records the regulation requires the dealer to keep there. It is a condition of registration that the dealer comply with all municipal by-law requirements that apply to each place from which the dealer trades. Three narrow carve-outs in section 28(5) let a dealer trade off-site: a consignment sale at the consignee’s authorised place, a sale or acquisition at an auction, and a dealer-to-dealer trade at one of the dealers’ authorised places.

Three record types under sections 52, 53, and 54

Section 52 of the regulation requires a vehicle record for every motor vehicle that comes into the dealer’s possession for a trade. The record has to include the VIN, any safety standards certificate, any inspection result, full particulars of any work the dealer caused to be done (parts source, cost, who did it), odometer-exchange details, and proof of compliance with subsection 11(2) and section 60 of the Highway Traffic Act when those apply.

Section 53 requires transaction records for every consignment, sale, lease, purchase, broker agreement, trade-in, and extended-warranty or service-plan sale. The records must capture the method and amount of every payment, with copies of cheques, receipts, or other proof of payment.

Section 54 requires business records: employee names, positions, dates of employment, pay and proof of payment, the list of associated persons under subsection 1(2) of the Act, financing and credit arrangements, and the bank-account records under section 59. Section 54(2) exempts dealers registered only as lease finance dealers or fleet lessors from this section.

Six-year retention and approved storage

Section 56 of the regulation sets a six-year retention period running from the date of the contract or trade for vehicle and transaction records, and from the date the record was made for business records. The records must be kept at an authorised place of business that is not a dwelling, or at another non-dwelling location chosen by the dealer and approved by the Registrar. The Registrar will only approve an alternate location if the person in charge of it agrees in writing to give OMVIC inspection access during normal business hours. Section 55 requires the dealer to advise the Registrar in writing within five days, and to specify the nature of the force majeure, if a record required under section 52, 53, or 54 becomes unavailable by reason of force majeure.

Trust account in section 25 of the Act and section 58 of the regulation

Section 25 of the Act requires every dealer to maintain a trust account in Ontario at a bank, an authorised foreign bank, a loan or trust corporation, or a credit union, to deposit all money the regulations require to be held in trust, to keep that money separate from the dealer’s own funds, and to disburse it only as prescribed. Section 58(1) of the regulation exempts dealers registered only as brokers, wholesalers, exporters, outside Ontario dealers, lease finance dealers, or fleet lessors. The account name must include the words “Motor Vehicle Dealers Act, 2002 Trust Account”. A dealer must hold the entire deposit in trust whenever a purchaser pays a deposit greater than $10,000, and must hold all consignment-sale money in trust where subsection 45(4) applies. The dealer must file the bank agreement with the Registrar within five days, must reconcile the account each month within 30 days of receiving the financial-institution statement (unless the account is dormant with a zero balance), must have a person with signing authority sign and date the reconciliation, and must immediately top up any shortfall. The trust account cannot be posted as collateral.

Five-day change-of-information notices

Section 24 of the Act requires every dealer to notify the Registrar in writing within five days of a change in address for service, a change in officers or directors, or the start or end of any salesperson’s employment. A salesperson must give the same notice within five days of a change in address for service or a change of employer. Section 60 of the regulation requires the dealer to notify the Registrar within five days of any change in the people who hold signing authority over the dealer’s accounts.

Common mistakes

• Trading from a location that has not been added to the certificate of registration. Section 28(4) treats every off-site sale outside the narrow carve-outs as a breach, and the Registrar can refuse to approve the new place if zoning or by-law issues exist.
• A wholesaler or broker who keeps records at home but does not actually trade only from the dwelling. The home-storage allowance in section 56(2)(a)(ii) only applies to a wholesaler or broker who trades exclusively from the dwelling.
• Treating the six-year clock as starting on the date the file was created. For vehicle and transaction records the clock runs from the date of the trade, so the in-stock vehicle that took eight months to sell adds eight months to the retention.
• Failing to file the trust-account bank agreement within five days, or skipping the monthly reconciliation when the account had even one transaction.
• Depositing dealer money into the trust account to keep it “safe”. Section 58(6) prohibits any deposit other than the trust funds the regulation specifies.
• Missing the five-day notice for a salesperson’s last day. Section 24 of the Act puts that duty on the dealer, not the salesperson.
• Keeping records in a personal cloud storage account without the Registrar’s prior approval of the storage arrangement.

How OMVIC enforces this

OMVIC inspectors check premises and records on every routine inspection under section 15 of the Act. They verify the certificate is posted, the office can secure six years of records, the records exist for the sample of vehicles the inspector picks, and the trust account reconciliations are signed and current. Findings can be addressed through a compliance order, a referral to the discipline committee, or, in serious cases, a proposal to refuse renewal or to revoke the registration. Where customer funds are at risk, the director can issue a freeze order under section 22 of the Act without notice, ordering the dealer’s bank to hold the funds and ordering the dealer not to withdraw them. The freeze power follows a search warrant, a criminal proceeding, or another contravention proceeding. A dealer can apply to the Licence Appeal Tribunal under subsection 22(8) to cancel the order. Section 21 lets the director go further and ask the Superior Court of Justice to appoint a receiver and manager for the business for terms of up to 60 days where the court is satisfied it is in the public interest, with further 60-day extensions available.

Where to learn more

The full text of the records, premises, and trust-account rules sits on this site at Motor Vehicle Dealers Act, 2002 and Ontario Regulation 333/08, with anchored sections so you can jump straight to section 25 of the Act or section 58 of the regulation. OMVIC also publishes inspection bulletins and Dealer Standard articles that walk through real reconciliation findings. The DealerPrep iPhone app carries the full pool of practice questions for this category for paid subscribers, including scenario questions on storage, $10,000 deposit handling, and the freeze-order trigger.