Bought a Lemon in Ontario? Here's What You Can Actually Do

You just bought a used car in Ontario. Within weeks, the transmission fails, the check engine light becomes a permanent fixture, and you discover the odometer was rolled back 50,000 kilometres. You've heard about lemon laws in the United States and wonder: what protections do you have in Ontario?

The bad news first: Ontario has no lemon law. Unlike many U.S. states that mandate buybacks or replacements for defective vehicles, Ontario offers no automatic legal remedy when you buy a problem car. Once you sign that contract, you own it—problems and all.

But here's what most buyers don't know: Ontario's consumer protections are actually stronger than many realize. The Motor Vehicle Dealers Act (MVDA), OMVIC enforcement, and the $45,000 compensation fund create meaningful recourse options. You're not powerless. You just need to know where to fight.

The Reality: Why Ontario Has No Lemon Law

Lemon laws exist in most U.S. states because American consumer advocates pushed for them in the 1970s and 1980s. These laws typically require manufacturers to buy back or replace vehicles that can't be fixed after multiple repair attempts.

Ontario chose a different path. Instead of lemon-specific legislation, the province relies on:

• The Motor Vehicle Dealers Act (MVDA) governing dealer conduct
• OMVIC (Ontario Motor Vehicle Industry Council) for enforcement
• The Sale of Goods Act for general product quality standards
• The Consumer Protection Act for unfair business practices
• CAMVAP for warranty disputes with participating manufacturers

This regulatory framework provides protection, but it requires you to actively pursue your rights rather than invoking an automatic remedy.

The Good News: OMVIC Protections Are Real

OMVIC isn't just bureaucratic window dressing. The organization has real enforcement power and actively investigates dealer misconduct. In 2024 alone, OMVIC conducted over 3,000 inspections and processed thousands of consumer complaints.

What OMVIC Can Actually Do

OMVIC has authority to:

• Investigate complaints against registered dealers
• Issue fines up to $100,000 for individuals and $250,000 for corporations
• Suspend or revoke dealer licences
• Order restitution to consumers
• Refer cases to the provincial prosecutor for criminal charges

When OMVIC finds a dealer violated disclosure requirements, the consequences can be severe. Dealers have lost their licences—effectively ending their businesses—for systematic fraud.

Filing an OMVIC Complaint

To file a complaint with OMVIC:

1. Gather all documentation (sales contract, vehicle history, repair records)
2. Submit your complaint through omvic.on.ca
3. Provide specific details about what the dealer failed to disclose or misrepresented
4. Include any evidence of undisclosed damage, previous use, or odometer discrepancies

OMVIC will investigate and can facilitate resolution. However, OMVIC cannot directly order a dealer to take back your vehicle—that power belongs to the courts or the Licence Appeal Tribunal.

Mandatory Dealer Disclosures: Know What They Must Tell You

Under the MVDA, Ontario dealers must disclose specific information about every used vehicle they sell. If a dealer failed to disclose any of these items, you may have grounds for contract cancellation.

Required Disclosures Under the MVDA

The $3,000 damage threshold is crucial. If a vehicle had $4,000 in collision damage that wasn't disclosed, the dealer violated the MVDA—regardless of whether repairs were done properly.

What "Material Facts" Means

The MVDA requires disclosure of "material facts"—anything that would influence a reasonable buyer's decision. Courts have interpreted this broadly. Examples include:

• Frame damage (even if repaired)
• Flood damage history
• Fire damage
• Known mechanical defects
• Pending recalls affecting safety
• Previous manufacturer buyback

If you can prove a dealer knew about—or should have known about—a material fact and didn't disclose it, you have a case.

The 90-Day Cancellation Right: Your Strongest Tool

Here's the protection most Ontario buyers don't know exists: you can cancel a vehicle purchase within 90 days if the dealer failed to make required disclosures.

How the 90-Day Right Works

Under the MVDA, if a dealer:

• Failed to provide a mandatory disclosure
• Misrepresented a material fact on the contract
• Omitted required information from the bill of sale

You can deliver written notice demanding cancellation within 90 days of the sale. The dealer must then:

1. Refund your purchase price
2. Return your trade-in (or its equivalent value)
3. Reimburse reasonable incidental costs

Exercising Your 90-Day Right

To use the 90-day cancellation right:

1. Document the disclosure failure. Obtain evidence that the dealer knew or should have known about the undisclosed issue.

2. Send written notice. Deliver a formal letter (registered mail, return receipt) stating you're exercising your right to cancel under the MVDA.

3. Specify the violation. Identify exactly which disclosure was missing or misrepresented.

4. Set a deadline. Give the dealer a reasonable timeframe (10-14 business days) to respond.

5. Keep records. Save copies of everything—letters, emails, repair invoices, vehicle history reports.

If the dealer refuses to honour your cancellation, your next step is the Licence Appeal Tribunal or Small Claims Court.

The $45,000 Compensation Fund: When Dealers Can't Pay

What happens if the dealer who sold you a lemon goes out of business, declares bankruptcy, or simply refuses to pay a judgment? Ontario has you covered.

The Motor Vehicle Dealers Compensation Fund

The Compensation Fund protects consumers when registered dealers fail to meet their obligations. It covers:

• Up to $45,000 per claim
• Losses from dealer fraud, misrepresentation, or failure to comply with the MVDA
• Situations where the dealer can't or won't compensate you

Who Qualifies for Compensation Fund Claims

You may claim from the fund if:

• You purchased from an OMVIC-registered dealer
• The dealer made a false or misleading representation
• The dealer failed to make required disclosures
• The dealer's conduct constitutes an unfair practice
• You suffered a financial loss as a result
• The dealer is unable to pay (bankruptcy, licence revocation, etc.)

How to File a Compensation Fund Claim

1. Exhaust other options first. The fund is a last resort. You'll need to show you tried to resolve the issue with the dealer and through other means.

2. Submit your claim to OMVIC with documentation of your loss, the dealer's misconduct, and evidence that the dealer cannot compensate you.

3. Provide proof of loss. Repair invoices, vehicle appraisals, loan statements, and other documentation showing your financial harm.

4. Wait for review. Claims are reviewed by OMVIC, and approved claims are paid from the fund.

Important limitation: The fund doesn't cover losses from private sales—only purchases from registered dealers. This is one reason buying from a registered dealer, despite higher prices, offers meaningful protection.

CAMVAP: For Warranty Disputes With Manufacturers

If your problem is with the manufacturer rather than the dealer—a factory defect that can't be fixed, warranty claim denials, or persistent issues under warranty—CAMVAP may help.

What Is CAMVAP?

The Canadian Motor Vehicle Arbitration Plan (CAMVAP) is a free arbitration program for warranty disputes. Participating manufacturers include most major brands sold in Canada.

When CAMVAP Applies

CAMVAP handles disputes where:

• Your vehicle is still under the manufacturer's warranty
• You've given the manufacturer a reasonable opportunity to repair the defect
• The defect substantially impairs the vehicle's use, value, or safety
• The manufacturer hasn't resolved the problem

What CAMVAP Can Order

CAMVAP arbitrators can order manufacturers to:

• Buy back your vehicle (rare but possible)
• Provide a replacement (extremely rare)
• Pay for repairs not covered under warranty
• Extend warranty coverage for specific components
• Reimburse expenses related to the defect

The catch: CAMVAP decisions are binding on manufacturers but not on you. If you don't like the outcome, you can still pursue other legal options.

Filing a CAMVAP Claim

1. Confirm your vehicle's manufacturer participates in CAMVAP
2. Document your repair attempts (three attempts for the same issue is typical)
3. Submit your application at camvap.ca
4. Attend the arbitration hearing (can be in person or virtual)
5. Receive the decision (usually within weeks)

CAMVAP is free and doesn't require a lawyer, making it accessible for most consumers.

When to Lawyer Up vs. Small Claims Court

Not every lemon situation requires legal representation. Here's how to decide.

Small Claims Court (Up to $35,000)

Ontario's Small Claims Court handles claims up to $35,000. It's designed to be accessible without a lawyer.

Small Claims is appropriate when:

• Your loss is under $35,000
• The facts are straightforward (clear disclosure violation)
• You have strong documentation
• The dealer is still in business and can pay

Costs: Filing fees range from $102 to $238, plus service costs. If you win, you can recover these from the defendant.

Timeline: Expect 6-12 months from filing to resolution.

Superior Court (Over $35,000)

For losses exceeding $35,000, you'll need to file in Superior Court.

Superior Court considerations:

• Legal representation is effectively required
• Costs are significant (potentially $10,000-$50,000+ in legal fees)
• Process takes 2-4 years or longer
• Damage awards can be substantial

When You Need a Lawyer

Consider hiring a lawyer if:

• Your loss exceeds $35,000
• The case involves complex fraud
• You're pursuing a class action
• The dealer has lawyers fighting back
• OMVIC or Compensation Fund claims were denied

Many consumer protection lawyers offer free consultations and work on contingency (they get paid only if you win).

Sale of Goods Act: Your Baseline Protection

Even without lemon-specific laws, Ontario's Sale of Goods Act provides baseline protection for all vehicle purchases.

Implied Conditions Under the Sale of Goods Act

When you buy a vehicle, the law implies that:

• The vehicle is fit for purpose (capable of being driven safely)
• The vehicle is of merchantable quality (reasonably functional for its age and price)
• The vehicle matches its description (what the dealer said it was)

If the vehicle fails these basic standards, you may have a claim for breach of contract.

Important caveat: The Sale of Goods Act doesn't override "as is" sales. If you bought a vehicle explicitly "as is" with no warranty, proving breach of these implied conditions is harder—though not impossible if there was active misrepresentation.

Prevention: Research Before You Buy

The best way to avoid buying a lemon is to never buy one in the first place. Pre-purchase research is your most powerful protection.

Pre-Purchase Checklist

Before buying any used vehicle in Ontario:

1. Get the vehicle history report. Check for accidents, liens, and title brands through CarProof or CARFAX.

2. Verify the UVIP. Every used vehicle sale in Ontario requires a Used Vehicle Information Package showing registration history and lien status.

3. Check for open recalls. Unrepaired recalls are safety hazards. Use Cardog's recall lookup tool or Transport Canada's database.

4. Get a pre-purchase inspection. Pay an independent mechanic $150-$200 to inspect before you buy. It's the best money you'll spend.

5. Verify the dealer is registered. Search OMVIC's database to confirm the dealer is in good standing.

6. Read the contract carefully. Don't sign until you've reviewed every disclosure checkbox and understood all terms.

7. Research market prices. Know what the vehicle should cost so you can spot deals that seem too good to be true.

Cardog's AI analyzes real-time pricing data across thousands of Ontario listings to help identify vehicles priced appropriately for their condition and history. Combine this market intelligence with a thorough inspection, and you dramatically reduce your lemon risk. Browse vehicles in Ontario with transparent pricing and market context.

Key Takeaways

Ontario's lack of a formal lemon law doesn't mean you're unprotected. Here's what matters:

• OMVIC regulates dealers and can investigate misconduct, impose fines, and revoke licences
• Mandatory disclosures mean dealers must reveal damage over $3,000, previous commercial use, branded titles, and accurate odometer readings
• The 90-day cancellation right lets you cancel if a dealer failed to make required disclosures
• The $45,000 Compensation Fund protects you when dealers can't pay
• CAMVAP provides free arbitration for manufacturer warranty disputes
• Small Claims Court (up to $35,000) is accessible without a lawyer for straightforward cases
• Prevention through research is your best defence against buying a lemon

The system requires you to advocate for yourself. Know your rights, document everything, and don't hesitate to escalate to OMVIC, the courts, or legal counsel when dealers don't play fair.

Frequently Asked Questions

Does Ontario have a lemon law?

Can I return a used car in Ontario?

What is OMVIC and how can they help me?

What must a dealer disclose when selling a used car in Ontario?

What is the Motor Vehicle Dealers Compensation Fund?

How do I file a complaint against a car dealer in Ontario?

What is CAMVAP and when should I use it?

Can I sue a dealer in Small Claims Court for selling me a lemon?

Additional Resources

• OMVIC - Ontario Motor Vehicle Industry Council
• Motor Vehicle Dealers Act - Full text of the legislation
• CAMVAP - Canadian Motor Vehicle Arbitration Plan
• Ontario Small Claims Court - How to file a claim
• Consumer Protection Ontario - Provincial consumer rights