The purpose of maintaining a trust account is to ensure car-buyers who leave large deposits (greater than $10,000) or give the dealer vehicles to be sold on consignment have their money protected until the deal is completed.
The trust account must be set up at a financial institution that is a bank, a loan or trust corporation, a credit union or an authorized foreign bank under Section 2 of the Bank Act.
The name on this account should contain the words: Motor Vehicle Dealers Act, 2002 trust account and the registered name of the dealer. If there is not enough room for both, just use the words: trust account and the dealer’s registered name.
A general dealer must have a trust account to hold any deposit of more than $10,000 received from a vehicle purchaser. Further, all money received by the dealer from a consignment sale must be deposited in a trust account when the consignor is an individual who purchased the vehicle for personal or family use.
Trust account monies must be kept separate from the dealer’s general funds and can never be used as collateral. Details of the dealer trust account must be filed with OMVIC. For more information review the relevant sections of the Motor Vehicle Dealers Act.
In the case of a consignment deal, the dealer must deposit all money received from the buyer directly into the trust account. None of this money can be taken out, except to make a payment to the consignor in accordance with the written consignment agreement.
Only after that may the dealer withdraw any excess (for example, monies received from the buyer that were greater than what was owed the consignor). It is essential that the trust account be reconciled monthly.
