Disclaimer: The content of this document applies to personal property laws of Alberta, Canada only.

There are a lot of myths and misinformation on the internet about liens and your rights as a buyer when purchasing a used vehicle through private sale. According to Service Alberta, the buyer will assume all risks when purchasing a used vehicle. As quoted from a Service Alberta representative, it is “buyer beware”.

Facts

1. Having a lien on a vehicle does NOT stop a vehicle from being registered in Alberta. If the vehicle was leased, the system will block the registration if the hold is not removed by the leasing company.
2. Nobody can remove a lien except for the Secured Party. The secured party in this case is the lender. A letter stating that the debt is paid in full does nothing for you.
3. It is the buyer's decision whether or not to purchase the vehicle with a known lien against it. The buyer assumes all risks if there is a lien claim against the vehicle.
4. There are no regulations on how quickly a Secured Party must discharge the lien after being paid in full.
5. It can take up to 45 days for Alberta Registries to remove the lien from the vehicle. A letter will be mailed to the registered owner when the lien is removed.
6. A lien search at your registry does not cover enforceable liens registered in other provinces.

Tips for Buyers

1. Always ask if there is a lien against the vehicle and when it was settled. Irregardless of the response, spend your money on a Carproof report available online or through your registry agent. A Carproof report will show you all liens registered against the vehicle across Canada.
2. Do not purchase a vehicle with a lien. If the owner had just recently paid off the lien, it usually takes up to 10 business days to discharge the lien. If you insist on taking the vehicle before the lien is discharged, ask the seller to provide a letter from the Secured Party stating that the loan has been paid in full and that the secured party has no interest in the vehicle. This letter must also include the Serial #/VIN and a description of the vehicle. In the event that your lien case has to be taken into court, this will be your only defense. This letter cannot be used to remove the lien. Only the Secured Party can remove the lien.
3. Do not trust the seller.
4. Do not trust the Secured Party. Often times, the Secured Party will tell you over the phone that the loan has been paid in full and that the lien will be discharged shortly. There are numerous cases where the record of payment is lost and the lien is never removed. Buyer beware! Get it in writing.
5. Ensure that your deposit is “refundable subject to a lien check”. This will ensure that your deposit is refunded if the seller is unable to discharge the lien with his Secured Party in a reasonable time frame.

Tips for Sellers

1. Pay your loans weeks in advance of your intentions to sell the vehicle.
2. If the loan was just recently paid off, ensure that you have a letter from the Secured Party stating that the loan has been paid in full and that the secured party has no interest in the vehicle. This letter must also include the Serial #/VIN and a description of the vehicle. This information will be needed by the seller and will accelerate your sale.

Contact Alberta Registry

You can contact Alberta Registry over the phone by contacting (780) 427-7013. They are open starting at 8:15AM. All of my information were gathered from an interview with an Alberta Registry agent and phone conversation with Service Alberta, Department of Registry.