Can a Bank Take Back a Car You Bought Without Knowing About a Lien?
No — at least not on an emergency basis, and not without solid proof. An Ontario Superior Court recently refused to grant a bank interim possession of a vehicle after the buyer showed they had checked a CARFAX report and a Used Vehicle Information Package (UVIP) that both came back clean. The decision is a useful reminder of how courts weigh the rights of secured lenders against the rights of innocent purchasers.
The case is Royal Bank of Canada v. Sajawal, 2026 ONSC 3320 (CanLII), available at https://www.canlii.org/en/on/onsc/doc/2026/2026onsc3320/2026onsc3320.html.
What Is Interim Possession and Why Is It So Hard to Get?
Interim possession is an emergency court order that lets one party take back physical property before a case is fully decided. Courts treat it as an extraordinary remedy — meaning it is reserved for truly exceptional situations.
Under the test set out in Ontario case law, the moving party must show a high degree of certainty that they are entitled to the property and that the other side is unlawfully holding it. A general claim of ownership or a registered security interest is not enough on its own. The court must be satisfied on the evidence before it, not on bare assertions.
What Did the Bank Need to Prove to Get the Vehicle Back?
The bank needed to clear two main hurdles: first, that it had substantial grounds for entitlement to possession; and second, that the buyer was unlawfully detaining the vehicle. On both points, the court found the bank’s record fell short.
The bank did not file a loan statement or any supporting documentation to prove the buyer was actually in default. The court noted these were bare assertions — statements without backup. When you are asking for an extraordinary remedy, that kind of evidentiary gap is fatal to the motion.
Does a PPSA Registration Automatically Beat a Private Buyer?
Not necessarily. The Personal Property Security Act (PPSA) allows lenders to register security interests in vehicles, and that registration is meant to give the world constructive notice of the lien. In theory, a buyer who searches the registry before purchasing should find the lien and take the vehicle subject to it.
But the buyer in this case pointed to something important: both the CARFAX report and the government-issued UVIP showed no lien at the time of purchase. The buyer also raised the possibility of identity fraud in how the vehicle came to be sold. The court found the bank had not established, to the required standard, that the buyer was bound as a bona fide purchaser who should have known about the security interest. That question was left for the full hearing.
How Did the Balance of Convenience Factor Into the Decision?
Even when a moving party clears the legal threshold, a court will still ask: who is harmed more by granting or refusing the order? Here, that analysis also favoured the buyer.
The buyer had been in possession of the vehicle for a significant period of time. There was no evidence the vehicle was being damaged, hidden, or about to be sold. A summary judgment motion was already scheduled in the near future, meaning the full merits would be decided soon anyway. The court also noted the bank’s own delay in bringing the motion. Taken together, maintaining the status quo until the summary judgment hearing made more sense than disrupting it.
What Should You Do If You Bought a Car and a Lender Is Claiming It?
Get legal advice immediately. If a bank or finance company contacts you claiming an interest in a vehicle you purchased, do not hand over the car without understanding your rights. You may have strong defences, especially if you did your due diligence before buying.
Keep every document from the purchase: the bill of sale, the UVIP, any CARFAX or similar reports, proof of payment, and any communications with the seller. These records are exactly what a court will want to see if the dispute goes to a hearing. Our Ontario employment lawyers regularly advise clients on creditor and debtor issues that intersect with workplace and personal finance matters — if you are unsure where to turn, a general consultation is a good first step.
If you are in the Greater Toronto or Golden Horseshoe area, our team serving Burlington and Mississauga can help you assess your situation quickly.
Practical Takeaways for Vehicle Buyers
- Keep your due-diligence records. A clean CARFAX and UVIP at the time of purchase can be a meaningful defence if a lender later claims the vehicle.
- Do not surrender the vehicle voluntarily without speaking to a lawyer first — handing it over may waive rights you did not know you had.
- Watch for identity fraud angles. If the seller’s identity or the vehicle’s history seems inconsistent, that is a red flag worth investigating before you complete the purchase.
- Act quickly if served with a motion. Interim possession motions can move fast. Missing a deadline could result in an order against you even if you have a strong defence on the merits.
- Gather proof of default claims. If you are the one asserting a security interest, understand that courts require concrete documentation — not just a registered lien — before granting emergency relief.
If a lender has threatened to repossess a vehicle you purchased in good faith, or if you are a creditor trying to enforce a security interest, UL Lawyers offers a free initial consultation from their Burlington office and serves clients across Ontario. Reach out to speak with our team about your vehicle security and creditor rights options today.
This article is automated commentary on a public court decision and is for general information only — not legal advice. Decisions rely on facts unique to each case. If you are affected by a similar issue, contact a lawyer for advice specific to your situation.
FAQ
Frequently asked questions
It depends on whether you qualify as a bona fide purchaser for value without notice. If you did reasonable due diligence — such as checking the UVIP and a vehicle history report — you may have a strong defence against repossession, but you should get legal advice right away.
The Personal Property Security Act lets lenders register security interests in vehicles. Buyers are generally expected to search the PPSA registry before purchasing, but courts will also look at what steps the buyer actually took and whether the registration was discoverable in the circumstances.
An interim possession motion asks a court to order you to hand over property before the full case is decided. Courts set a high bar for granting these orders, and you have the right to respond with your own evidence — acting quickly with a lawyer's help is essential.