Protections when buying privately
If a private seller doesn’t have clear legal ownership
How am I protected if a private seller still owes money on what I bought?
Contract and Commercial Law Act 2017, ss 135, 136, 195; Consumer Guarantees Act 1993, ss 2 (“consumer” definition), 41, 43
You have the right to a refund or damages (“compensation”) if you’re sold goods in a private sale and, unknown to you, the seller didn’t have the right to sell the goods, or owed money on them, or had used them as security for a loan.
When you buy privately – for example, through the “For Sale” column of a newspaper – rather than from a shop or other business, the Contract and Commercial Law Act automatically makes the following things part of your contract with the seller (unless the contract explicitly says otherwise):
- the seller has the right to sell you the goods
- no-one else (for example, a finance company) holds a security interest in the goods that the seller hasn’t told you about
- the goods are the same as any samples the seller showed you, and they match any description you were given.
Those protections under the Contract and Commercial Law Act may also cover you in the following situations, which aren’t covered by the wider protections in the Consumer Guarantees Act:
- if you’ve bought commercial goods (the kind of things that aren’t usually bought for personal, domestic or household use – a photocopier for example)
- if you’ve bought personal or household goods to use in business, and the seller contracted out of the Consumer Guarantees Act
- if you’ve bought goods to re-sell them or to use in a manufacturing process.
The Contract and Commercial Law Act doesn’t cover services. But if you buy services that aren’t covered by the Consumer Guarantees Act, you may have a claim against the other person under the ordinary rules of contract law, see below, “Other contract breaches”.
Note: If you agree with the seller that the Contract and Commercial Law Act won’t cover you, you lose your protections under this Act.
When a third person may be able to take the goods from you
Personal Property Securities Act 1999, ss 52–54; Contract and Commercial Law Act 2017, s 149
If you buy goods privately and the seller still owes money on the goods, or some other third person or company has a security interest over the goods, the creditor may be able to repossess the goods from you if:
- the item was worth more than $2,000 when the seller originally bought it or used it as security to take out a loan, or
- you knew about the security interest when you bought the goods, regardless of the value of the goods.
If the creditor does repossess and sell the goods, you may be able to make a claim against the seller for a breach of the Contract and Commercial Law Act 2017.
Note: When buying privately, you should check the Personal Properties Securities Register (PPSR) to see if there is any money owing on the item that could affect the seller’s ownership of it. You need to register to do this, but registration is free. There is a small cost to search the register. For information on searching the PPSR, see “Where to go for more support” at the end of this page. You can also text to check if there is money owing on a motor vehicle, see “Buying a motor vehicle privately”.