Purchase and Sale of Vehicle Allocation Certificates
Today, automobiles are widely regarded as investment assets, and many individuals seek to invest by purchasing vehicles. Due to the significant difference between the factory price of a new vehicle and its price in the open market or on a commodity exchange, many buyers seek to acquire vehicle allocation certificates from individuals selected through the centralized vehicle sales system.
This article examines the legal aspects of purchasing and transferring vehicle allocation certificates and outlines the applicable conditions.
Risks of Purchasing Incomplete or Suspicious Vehicle Allocation Certificates
A vehicle allocation certificate is a contractual arrangement under which the automobile manufacturer undertakes, in exchange for payment, to deliver a specified vehicle to the purchaser at a predetermined date. In essence, the certificate reflects the purchaser’s right to receive the vehicle under the manufacturer’s sales scheme.
Participants who are selected through official vehicle sales lotteries may purchase vehicles at prices lower than those prevailing in the open market. After selection, the purchaser is required to pay an initial installment and enter into an agreement with the manufacturer in the form of a vehicle allocation certificate.
The manufacturer then undertakes to deliver the vehicle on a specified date, subject to payment of the remaining installments.
The allocation certificate typically includes the following information:
- Details of the purchaser.
- Specifications of the vehicle.
- Details of the manufacturer.
- Purchase price and financial terms.
- Insurance information.
- Official stamp and signature of the authorized dealership.
Some individuals transfer their allocation certificates to others. In such cases, the selected purchaser transfers their right to receive the vehicle to a third party in exchange for a profit margin.
The new buyer thereby acquires the vehicle at a price below the market rate.
However, purchasing incomplete or suspicious certificates may expose the buyer to risks such as cancellation by the manufacturer, non-delivery of the vehicle, lack of legal capacity of the parties, or potential fraud.
Legal Conditions for the Purchase and Sale of Vehicle Allocation Certificates
Participants selected through vehicle lotteries may decide, for various reasons, to transfer their allocation certificates rather than complete the purchase. Financial inability to pay installments is one common reason.
The parties must carefully observe the following considerations:
- The vehicle subject to the allocation certificate may be transferred through a formal settlement agreement executed before a Notary Public. However, in recent practice and to prevent fraud, certain forms of assignment, including proxy-based transfers and assignment of the allocation certificate itself, have been restricted or removed from standard manufacturer contracts.
- The automobile manufacturer or its authorized dealership may retain the right to rescind the transaction if the allocation certificate is transferred in violation of contractual conditions.
- The parties must have legal capacity, meaning they must be of legal age, of sound mind, and legally competent.
- The agreement should be executed either at an official Notary Public Office or through an authorized dealership of the manufacturer.
Types of Vehicle Allocation Certificate Agreements
Official Settlement Agreement
The parties may transfer the allocation certificate by means of a formal settlement agreement executed before a Notary Public.
Power of Attorney
The original holder of the allocation certificate may grant a power of attorney to the buyer, authorizing the buyer to receive the vehicle in their name or to perform other necessary actions on their behalf.
Transfer of the Vehicle After Delivery
Certain manufacturers, including major domestic producers, have declared that the assignment of allocation certificates is prohibited. Nevertheless, after delivery of the vehicle, the selected purchaser may intend to sell it.
If the vehicle’s ownership document is pledged to the manufacturer, the vehicle generally cannot be transferred for one year to protect the secured party’s rights.
During this period, the purchaser is typically restricted from transferring ownership. Any violation may create legal complications, particularly if traffic offenses or liabilities arise while the vehicle remains registered in the original purchaser’s name.
Frequently Asked Questions About the Purchase and Sale of Vehicle Allocation Certificates
A vehicle allocation certificate is an agreement under which a manufacturer undertakes to deliver a specified vehicle to the purchaser at a determined date in exchange for payment. It represents the purchaser’s right to receive the vehicle under the sales scheme.
It may be lawful if conducted in compliance with applicable regulations, through a formal settlement agreement or valid power of attorney, and subject to the contractual terms imposed by the manufacturer.
Risks include cancellation by the manufacturer, non delivery of the vehicle, lack of legal capacity of the parties, contractual restrictions, and potential fraud.
Transfers may be structured through a formal settlement agreement executed at a Notary Public Office or through a power of attorney granted by the original holder to the buyer.
If the ownership document is pledged to the manufacturer, transfer is generally restricted for one year. After the restriction period and subject to compliance with applicable regulations, transfer may be possible.
The parties must have legal capacity, the agreement must comply with manufacturer regulations, and the transfer should be executed through legally recognized instruments such as a formal settlement agreement or power of attorney, where permitted. What is a vehicle allocation certificate?
Is the purchase and sale of a vehicle allocation certificate legal?
What risks are associated with purchasing a defective or suspicious allocation certificate?
What types of agreements are used to transfer an allocation certificate?
Can the vehicle be transferred after delivery?
What legal conditions must be satisfied for transferring an allocation certificate?
