Title Documents vs. Vehicle Permits: Canadian Practice In Automotive Lease Transactions

The Globe and Mail Report on Business for April 11, 2011 reported that GM was expanding the availability of lease financing for its vehicles. With developments such as this, it may be that securitizations of automotive leases will return in some volume to the securitization marketplace. Each automotive lease securitization presents the issue of how to deal with the vehicle permits for the vehicles subject to the transaction. Because practice differs between Canada and the United States, there is usually cause to revisit and explain the Canadian approach.

In the United States, there is a government issued "title" document for each vehicle which records the owner of the vehicle and liens affecting the vehicle. The similar concept in Ontario is a "vehicle permit." While a vehicle permit is commonly relied upon as evidence of ownership, it is not a "title" document and liens are not recorded against it. Rather, a lien against a vehicle is recorded against the