Record-keeping 101 for car dealerships
By AdvocateDaily.com Staff
Automobile dealerships that want to remain on good terms with regulators should pay close attention to how and where they keep their records, says Toronto licensing and compliance lawyer Anar Dewshi.
During an inspection, representatives of the Ontario Motor Vehicle Industry Council (OMVIC) will want to look at a variety of records and the process can go smoothly if they are well-organized and kept on-site, she tells AdvocateDaily.com.
“The inspection can be very random to ensure they’re complying with the legislation,” says Dewshi, principal of Dewshi Law Practice. “One of the most important aspects of an inspection is a thorough review of all the dealership records."
That means it's important to have them on-site at the office and easily accessible, which is also a better way to run the business, she says.
Bills of sale, lease agreements, worksheets, invoices as well as staff records are part of the inspection.
Because disclosure is important in transactions, Dewshi says the inspector will want to see that the paperwork is organized and in the right order. That means relevant documents including worksheets, invoices, safety certificates, financing documents, ads, history reports, and reconditioning records for the vehicle are all filed together.
“If you have everything in one place, it makes it much easier for you when you’re being inspected,” she says.
Staff records must also be kept on the premises, which involves maintaining proof of sales licences and listing the individual’s position, pay and dates of employment and the employer is also obliged to ensure licences are renewed when the time comes, Dewshi points out.
Failure to maintain staff records can lead to repercussions for both the salesperson and the dealership,” she says. “While they’re unlikely to face revocation, they could face disciplinary action such as being fined or forced to undergo training.”
Where the salesperson's licence isn’t renewed and they continue working for the dealership, both the salesperson and the dealership could end up appearing before the Licence Appeal Tribunal, Dewshi says.
“If they employ someone who doesn’t have a licence, they’re in violation of compliance,” she says. “So they need to ensure all their staff members have their licences updated.”
Dewshi says dealerships are also required to keep all bills of sale.
“For trade-ins, that includes all the forms dating back to the original deal, such as the consumer trade-in disclosure forms, documentation of the trade-in related to the sale and what the purchaser traded the vehicle for,” she says.
Records should also be kept of warranties, lines of credit and proof of the legislative requirement to make the payment within seven days, Dewshi adds.
“The dealership should also be prepared to demonstrate that the terms for lease and finance agreements are included in the bill of sale. There should also be proof of records of incentives provided to the customer,” she says.
When it comes to the vehicle transaction, Dewshi says the dealer needs to keep files and documents of agreements, and each vehicle's history reports and invoices together, which will document any of its prior use including as a taxi or police vehicle.
“You want to show that you’ve done your due diligence” as well as have proof of damage values, she says.
“Your records need to be organized and contain all the required documents,” Dewshi says. “It’s a good day-to-day practice that will pay off if and will ensure that the inspection will run smoothly.”