Motor vehicle dealer licensing on a sale in Nova Scotia

Buying a vehicle dealership in Nova Scotia means asking what the dealer licence is attached to. The Registry of Motor Vehicles, which sits within Service Nova Scotia, issues the dealer licence and dealer plates. Its permits-directory page describes an application built around the applicant: a registered name if a company name is used for the dealership, a letter about zoning from the municipality, references from a used car applicant, a qualified mechanic, a copy of the lease if the premises are rented, and insurance information. That page does not say what happens to a licence when the dealership changes hands. This guide sets out what the page does say, so that you can put the right questions to the Registry before a closing date is fixed.

Who needs the licence

According to the Registry’s page, the licence is for anyone who sells or trades motor vehicles in Nova Scotia at or above a stated count within 12 consecutive months. The test is activity, not a sign over the door. A buyer who intends to keep selling vehicles from the first day after closing should therefore treat the licence as a closing condition rather than a task for later. Read the count on the Registry’s page yourself, and ask the seller how many vehicles the business has sold or traded in its last 12 months.

What the application asks the applicant to show

The page lists requirements that attach to the applicant and the premises. If a company name is used for the dealership, the name must be registered. A letter from the city, town or municipality must verify that the address is zoned to permit a motor vehicle dealer operation. A new car dealer must supply a manufacturer’s certificate. A mechanic must show qualifications, and the page sets different mechanic requirements for new and used dealers. A used car applicant provides a character reference and a business reference in letter form. The page also sets requirements for building space, outside parking, weekly hours of business, tools and equipment, and servicing at the dealer’s principal place of business.

Several of those items belong to a person or a lease rather than to the dealership as a going concern. A buyer cannot assume that the seller’s licence has already satisfied them on the buyer’s behalf.

The seller’s licence and the buyer’s application

The page describes how to apply and how to renew. It does not describe assigning a licence to a new owner. Ask the Registry in writing whether the licence can be assigned, whether a buyer must apply as a new applicant, and what becomes of the dealer plates issued to the seller. Keep the answer with the deal file. The page also says an applicant can get a copy of the dealer regulations and an Order in Council Compliance Division policy from the Access Centres, and those are the documents to read before relying on a summary page.

On timing, the Registry’s page states a waiting period of 10 business days once all the items that must accompany the application have been received. That period runs from a complete application, so gather the zoning letter, references, mechanic credentials and lease first.

Term and renewal dates

The Registry says its licences and permits are valid for up to one year, covering the period from January 1 to December 31, with a renewal period from November 1 to December 31. It adds that the Department sends the renewal form to the licence holder, and that insurance information is required whenever plates are issued or renewed. If a closing falls in the autumn, ask who will complete the renewal and in whose name, because the page says the Department sends the renewal form to the licence holder, and it does not say who that is after a sale.

The corporate side of the sale

Nova Scotia’s business registration pages say a sole proprietor using only a personal name need not register, but a trade name such as “John Smith & Associates” must be registered with the Registry of Joint Stock Companies, subject to the other exceptions those pages list, and registrations are renewed each year the business continues to operate. How you buy shapes the licence question. In a share purchase, the company that holds the licence stays the same. In an asset purchase, the buyer’s entity is a different applicant. Whether the Registry of Motor Vehicles treats either case as needing a new application is a question for it, not an assumption. The comparison in asset sale versus share sale explains the structural difference.

What to ask the seller to produce

• The current dealer licence and the record of dealer plates issued, with the latest renewal form and Statement of Insurance.
• The municipal zoning letter and any correspondence with the municipality about the dealership’s address.
• The lease, and the landlord’s position on a new tenant or a change in who controls the tenant.
• Proof of the mechanic’s qualifications, and any agreement under which a mechanic is engaged rather than employed.
• Any letters from the Registry about conditions, complaints or compliance.