Purchasing a car from a curbsider presents a huge financial risk to the buyer. Vehicles purchased from an individual are considered a private sale with the purchase being “as is”. This means the seller will not be liable for any issues after the sale is completed.
As a prospective car buyer, purchasing from a curbsider is considered illegal and ignorance is not an excuse. You want to avoid curbsider deals because the people looking to exploit the system are the very people who may sell you a problematic car.
What is a Curbsider?
A curbsider is an individual looking to profit from a purchase and subsequent resale of a vehicle without having registered title to the car being sold. They will purchase a car from someone else and sell it to you without registering it, acting as the middleman. The act of failing to register the purchased car is evading taxes owed to the Ministry.
A curbsider can also be a licensed dealer, posing as a regular person selling their car. This is in direct violation of their agreement with the Ministry of Transportation (“MTO”). While they don’t have to register the vehicle and pay tax on their purchases, they do need to report revenue. Selling outside of their business is direct tax evasion.
As a buyer, since the curbsider is posing as a genuine individual selling a car, you will need to look a little more carefully at the paperwork. In the eyes of the MTO you are really buying the car from the person the curbsider bought from.
Curbsiding is tax evasion. Due to Curbsiders skipping the registration of the vehicle before resale, they never legally owned the car and don’t have to pay tax before flipping it to someone else. In reality, 13% HST taxation on vehicle purchases eliminates the majority of the profit for curbsiders. It is very difficult to profit from reselling cars when you lose a 13% margin.
Likelihood of Curbsider
The UCDA conducted a study that resulted in approximately 18-24% of sellers of cars are selling more than one car. While it is possible individuals may sell two cars at once, it is statistically unlikely.
Dangers of buying from curbsider
Aside from profiting from tax evasion, curbsiders are by definition, avoiding the responsibility of selling you a problematic car. Dealers in Ontario are regulated such that loss of license and compensation for damages can occur if they sell a car that has significant undisclosed problems.
Curbsiders generally use temporary phone numbers and meet in public locations, making tracking them difficult if you run into problems later. The UCDA have prosecuted many curbsiders, but unfortunately the nature of their methodology make them hard to round up.
In another article, we cover how to avoid curbsiders.