Motor vehicle dealer licensing on a sale in New Brunswick

New Brunswick licenses motor vehicle dealers under the Motor Vehicle Act. The Act says no person unless licensed by the Registrar may carry on the business of a dealer or sub-dealer in new or used motor vehicles, a heavy equipment dealer or a farm machinery dealer, or the business of wrecking or dismantling motor vehicles for resale of the parts. The licence is issued to the applicant, for a place of business, for a calendar year. Those features shape every sale: the buyer needs a licence in its own right, a bond in its own name, and an answer from the Registrar on how the change is handled. This guide covers the provisions that matter and what to ask.

A licence for an applicant, a place and a year

The Registrar issues the licence once satisfied that the applicant is of good character and, so far as can be ascertained, has complied with the Act and regulations. Under section 55 of the Motor Vehicle Act, it is valid up to and including December 31 of each year and entitles the licensee to conduct the business at any one place of business during that year. A licensee must obtain a supplemental licence before moving a place of business, and a special licence before opening a satellite place of business. A buyer that plans to move the operation after closing should treat that as a licensing step, not just a lease decision, and one that wants a second location should ask about the satellite licence first.

What the Act says about transfer

The Act lets the Minister, with the approval of the Lieutenant-Governor in Council, make rules and regulations respecting the issue, transfer, suspension, cancellation, renewal and reinstatement of dealer’s licences. The dealer-licence provisions of the General Regulation cited here, sections 17 and 18, cover application review, suspension, fees and the bond, and they set out no transfer procedure. A buyer of assets should ask the Registrar whether the seller’s licence can move at all or whether a new application is needed, and a share buyer should ask whether a change of control needs anything beyond the officer details the Act asks for on application. See asset sale versus share sale for how the two structures differ.

What the Registrar looks at in an application

An application names the applicant and, for a corporation, its principal officers, and states the place and nature of the business. Under the regulation the Registrar considers the applicant’s financial standing and business integrity and whether it has an established place of business, is engaged primarily in buying, selling and servicing motor vehicles, is able to conduct the business properly, employs a certified mechanic and has proper equipment or contracts with a certified mechanic, and has filed a bond. The Government of New Brunswick’s dealer page adds that a used motor vehicle dealer must meet dealer qualifications and a minimum annual sales requirement. Ask how that requirement is counted when a dealership changes hands partway through a year.

The bond does not simply pass across

Applicants and licence holders must furnish and maintain a security bond to compensate purchasers for losses from dishonest conduct, misappropriation or wrongful conversion. Section 18 of the General Regulation under the Motor Vehicle Act requires a copy to be filed with the Registrar at application or renewal and says the bond may not be cancelled or allowed to expire except after sixty days’ written notice to the Registrar. Under section 54 of the Motor Vehicle Act, a bond also stays in force for two years after the end of its security term for actions arising from acts during the term. A seller should not assume closing ends its bond exposure, and a buyer needs its own bond in place when it applies.

Records, the mechanic contract and stock

Every licence holder must keep a record of each vehicle bought, sold or exchanged, or received for sale, and of each vehicle acquired and wrecked, open to inspection by any peace officer during reasonable hours. A dealer relying on a mechanic contract must notify the Registrar forthwith of changes to it, and the Registrar may suspend a licence if the dealer no longer has an established place of business or fails to maintain its bond. When a dealer acquires a previously registered vehicle, it must immediately notify the Registrar of the former owner’s name, so ask whether that applies to stock bought in bulk. Vehicles held for sale are inventory under the Personal Property Security Act, and security interests are registered in the Personal Property Registry that Act establishes, so request a registry search against the seller.

• Whether the seller’s licence can move or the buyer must apply fresh, and whether a supplemental licence is needed for a new location.
• The buyer’s own bond, filed with its application, and the seller’s bond notice period.
• How the minimum annual sales requirement applies in the year of the sale.
• The certified mechanic arrangement and who notifies the Registrar of changes to it.
• Whether the Registrar needs notice of previously registered vehicles that move to the buyer.