Seize or Sue in BC – PPSA rules

vehicles BC PPSA rules seize or sue

seize or sue rules in BC under PPSA for vehicles

The following question was asked via CECraig.com:

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Subject: seize or sue in bc – PPSA rules

Question:
I have a vehicle that I cannot make payments on anymore. I understand that there is a seize or sue in BC (under PPSA rules) that may affect me?  I have notified the dealership that holds the in-house finance promissory note and need to know what happens if they decide to sue me instead of seize the car. If they tell me that I am going to be sued< do I own the car outright at that point? or do they still own the car until the end of the court case?

Confused, BC
Hello Confused BC

With respect to your vehicle and the seize or sue rules, if you reside in BC and your car is registered in BC, then the “seize or sue” rule applies to you. If you dealership decided to “sue” you rather than “seize” the vehicle, then their security is no longer valid. A secured creditor, in order to enforce their security against third parties, like a bankruptcy trustee other creditors, must register their interest under the provincial Personal Property Security Registry- PPR (per the PPSA rules – Personal Property Security Act) Once registered, then there is a “secured lien” on your vehicle which alerts anyone looking into ownership of that vehicle to see that there is a prior charge.

Once they have opted to sue you, then this charge, it is no longer valid and you are free to deal with the car as if there were no charges. So, long windy answer that yes, if you are sued (served court Notice is sufficient), then you will own the car without any liens (the car will always be in your name even if you have a secured charge – only exception to “ownership” is if you are leasing the vehicle, where it is usually registered in the leasing company’s name) . Now, the registration under the PPSA rules in BC, the registration does not automatically disappear and you may have to do things to have the charge removed. (Send a demand letter for instance)

Why do you care if there is security registered against the vehicle? This would be of interest to you because if you wanted to sell that car, someone coming along to buy it would want to make sure that there were no liens registered under the PPSA rules because if there were registered liens (that were properly registered and enforceable) then the liens would move along with the car no matter who is the registered owner. This is one reason why if you are purchasing a vehicle personally you should do a PPR search to ensure that you vehicle of choice doesn’t have any such charges. Unwitting consumers can be ripped off if they purchase a vehicle that has a charge as the charge owner has the right to repossess the vehicle notwithstanding that you may have purchased it in good faith (and paid good money). If you paid for a vehicle that was subsequently repossessed by a secured creditor, you only recourse would be to sue the person that sold you the vehicle in the first place, and they may be long gone or even declared personal bankruptcy which would mean you would lose the ability to proceed against that person in the courts.

Hopefully this answers your questions

Kind regards

Colleen Craig, CA, CIRP
C.E. Craig & Associates Inc.
204-2736 Quadra Street
Victoria, BC
V8T 4E6
Phone: 250-386-8778
Fax: 250-386-6864
Email. colleen@cecraig.com

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7 Comments
  1. Jody 1 year ago

    Does the seize or sue rule also apply to a vehicle purchased under a company instead of personal?

    • Author
      colleen 1 year ago

      No, unfortunately the seize or sue rules only apply to consumer goods so a vehicle owed by a corporation is not considered a consumer good rather it is considered a commercial good.

    • Author
      colleen 1 year ago

      Unfortunately, the seize or sue rule only applies to consumer goods. If the car is owned by a corporation then it is not considered a consumer good and the seize or sue rule does not apply.

  2. Nicole 11 months ago

    Hi there,

    I am the only name listed on a car loan for $50,000. The car is registered to someone else who was supposed to be making the payments. That person has handed me the keys and walked away. I can’t even put storage insurance on the vehicle, as I am not the registered owner. No payment has been made for 10 months and the bank has finally contacted me. I told them the situation and was told that they will sue me, which will mean a lien will be placed on my home. What are my options at this point? If I can find the registered owner, to sign transfer papers, and then I can sell the car, will the bank still sue me for the difference owing on the load? Will they consider reducing interest charges? I could use all the help I can get. I am a single mother with 4 children and no child support. I can’t afford to pay for this vehicle.

    • Author
      colleen 10 months ago

      Hello
      Yes, the seize or sue law only applies to the primary owner of the debt – I am assuming that you are a guarantor for the debt? Or did you take the debt out in your own name and loaned the money to your friend? It may make a difference.
      From what you have said it appears that the bank has no choice but to sue you (as they don’t have security on the car), so yes, the best bet is to try to find the person who owns the car to execute documents into your name to sell. Better yet, if you can find the person, just sell the car to a third party otherwise you will have to pay PST on the fair value of the car when you transfer into your name.

  3. john ingram 11 months ago

    What about snowmobiles?

    • Author
      colleen 10 months ago

      The seize or sue rule applies to “consumer goods”

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