Canadian Laws Around Lemon Cars


You’ve probably heard of the term “lemon” car, and if you haven’t, it means a car that wasn’t manufactured properly and has a long list of issues that can’t be fixed. So obviously, whether you’re looking to buy a new car or a used car, you want to avoid buying a lemon car. If you’re concerned about buying a lemon car, you should learn about the laws in place that protect Canadian car buyers. You don’t need to worry too much about buying a lemon car as it’s quite uncommon. It’s estimated that only 1% of all cars manufactured have long-term defects. 

What is a Lemon Law?

In Canada, there is actually no such thing as a “lemon law”, instead, Canada has certain standards for manufacturers must adhere to. These standards revolve around disclosures and arbitration processes that are used to protect Canadian car buyers. 

In the United States, however, all 50 states have lemon laws for new cars and several states have laws in place for used cars. While the specifics of the lemon laws vary from state to state, generally, a lemon car refers to a car with a significant defect that occurs several times within a certain amount of time of owning the vehicle. 

What Info do Canadian Car Dealers Have to Disclose?

Anytime there is damage or mechanic problems with a car, Canadian car dealerships need to be fully transparent about this information with their customers. Specifics around what they need to disclose varies from province to province. 

In Ontario, for example, car dealers must make the buyer aware of the following information:

  • Any water or fire damage the vehicle has sustained
  • Any repairs required due to structural damage
  • Any significant repairs that cost more than $3,000 due to collision or incident damage
  • Major systems that no longer operate properly (engine, A/C, transmission, computer, power train, electrical, fuel, suspension)
  • Had multiple body panels replaced
  • Had the vehicle’s warranty voided
  • Been classified as irreparable, salvage or rebuilt status
  • Been stolen and recovered
  • Been registered in another province
  • If the vehicle was used as a taxi, emergency vehicle, lease or rental
  • If the ABS brakes or airbags aren’t functional 
  • Had the odometer rolled back or replaced

Knowing the information above should give you an increased level of confidence when buying from a dealership. You now know this is all information they need to share with you and there’s recourse if they fail to share this information.

What Info Do Private Sellers Have to Disclose?

Buying a car privately is much riskier as the seller doesn’t need to disclose any of the information listed above. If the seller deliberately lied about a significant issue with the car you may be able to fight them in small claims court, but this isn’t a route anyone wants to take. If you do decide that buying privately is right for you, do proper research and get a vehicle history report and an inspection from a third-party mechanic. 

What to do if you Bought a Lemon Car from a Dealership

The first thing you need to do might be self-explanatory but we’ll say it anyway, get in contact with the dealership right away and let them about the issues you’re having. It’s possible that the issue you’re having is still covered by the warranty and you may be able to have it fixed at the manufacturer’s expense. However, if the issue persists and the dealer refuses to pay to fix it, you’ll want to seek arbitration through the Canadian Motor Vehicle Arbitration Plan (CAMVAP). 

What is the Canadian Motor Vehicle Arbitration Plan (CAMPVAP)?

CAMVAP was made to be a mediator and settle any disputes that consumers have when they claim their car is constantly having mechanical issues or is unsafe to drive. Most car manufacturers are involved with CAMPVAP, covering 94% of new car sales in Canada. 

Vehicles are only eligible for CAMVAP if they are less than four years old and have less than 160,000km. Depending on the circumstance, CAMVAP can help lead you to a variety of outcomes. They may be able to have the manufacturer pay the bills for any ongoing repairs or have them buy back the defective vehicle entirely. 

What If My Vehicle is Ineligible for CAMVAP?

If your car is ineligible for CAMVAP, depending on the province your in, you may be able to get some provincial help. If you’re in Ontario for example, the Ontario Motor Vehicle Industry Council (OMVIC) may be able to help you out. If you’re in British Columbia, Motor Vehicle Sales Authority of British Columbia (MVSABC) may be able to help you out. These organizations and other similar organizations in other provinces should be able to assist you in settling a dispute between you and a dealership or online retailer. 

What to do if you Bought a Lemon Car from a Private Seller

If you buy a lemon car from a private seller, unfortunately, there’s not a lot that can be done. One of the biggest reasons this is the case is because cars that are bought privately are ineligible for CAMVAP. Depending on the circumstances you may be able to take the seller to small claims court, but you’ll need to be able to prove that the seller had knowledge of damage or defect that he/she failed to tell you about. Usually, the cost of going to small claims costs more than the actual damage or even the cost of replacing the car. 

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