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Foreign experience of vehicle registration: useful lessons for Ukraine

12.06.2013 ,
Administrative services

The latest in reform within administrative services in Ukraine stipulates the creation of one-stop-shops. These locations throughout the country are united offices where citizens can get most administrative services without having to go to each government body separately.

The latest in reform within administrative services in Ukraine stipulates the creation of one-stop-shops. These locations throughout the country are united offices where citizens can get most administrative services without having to go to each government body separately. The obligation to create one-stop-shops has been assigned to local governments and to district state administrations, both of which will provide their services there. The reform stipulates that some services of the central executive authorities will also be provided through one-stop-shops. Unfortunately, some of these authorities, such as the State Register Service and the State Automobile Inspection, are not going to provide their services there. These bodies want to have their own offices. This is a threat to the main target of this reform, because the comfort and accessibility to citizens can only be achieved by the creation of one-stop-shops with a wide choice of popular services.

A particularly popular service among citizens is vehicle registration, which is in the State Automobile Inspection’s competence. This procedure has recently been simplified. Thus, new car owners have now the possibility to register a car at the nearest administrative service body, regardless of their place of residence. There is no need to remove a car from the register when it is sold from one person to another. A mandatory assessment of the car’s value before its registration has also been cancelled.

It is, however, still necessary to bring a car to the State Automobile Inspection every time it is to change registration. This is done to verify their authenticity by inspecting the vehicle identification numbers found on its body and engine. Only after this procedure it is possible to obtain the registration certificate (a technical passport) and number plates. But how important is it to conduct this inspection during the vehicle registration process? And is it possible to provide this service through one-stop-shops?

One way to answer these questions is to look at foreign experience. The vehicle registration requirements in Ukraine can be compared with the requirements in the United States of America (New York state and California) and three countries in the EU: Sweden, the United Kingdom and France. We have chosen to compare the registration of a car after a change of ownership between two private people. What can the experience of other countries tell us?

Looking first at New York in the United States, we find the relevant procedure in Vehicle and Traffic Law article 14. It is the responsibility of the new owner (the buyer) to report a change of ownership and to re-register the vehicle. To do this, the buyer must produce an original bill of sale proving that they have legally bought and paid for the car (for example a contract, signed by both buyer and seller, stating the date of purchase and the purchase price). It is also the buyer’s responsibility to produce the previous owner’s title certificate (this is what is called the technical passport in Ukraine), proof of New York State sales tax payment, and accepted forms of identification in order to prove the identity of the buyer.

And then there is the issue of insurance. As in Ukraine you must have proof of automobile liability insurance in order to register a vehicle in New York. To get proof of insurance the buyer must take the bill of sale and the vehicle’s old title (the one issued to the previous owner, the seller) to a certified insurance office, which then issues a New York State Insurance Identification Card.

There may be other paperwork that needs to be filled out by the seller in order for the buyer to register the car. This might include odometer disclosure for vehicles younger than 10 years old and a damage disclosure for vehicles younger than 8 years old. Making a formal disclosure for the distance the vehicle has traveled or possible severe damage that the vehicle has suffered is way of protecting the buyer from paying too much for the car and limiting the possibility of cheating.

The buyer then makes an appointment at the New York State Department of Motor Vehicles (DMV) in order to register the car. After filling out a registration form, submitting the other documents in original and paying the required fee, the car is then considered registered. The DMV then sends the buyer a new title, with their name, within 90 days.

The requirements and procedure is similar in California. According to California Vehicle Code Division 3.5 registration requires submitting the previous owner’s title and a bill of sale, this time on a form provided by the state (compare this with New York which does not provide a standard bill of sale). Cars that are over 4 years old must provide a smog certification if it has not been sent to the DMV by the previous owner within the last 90 days (A smog certification is proof that the car has been inspected and cleared concerning certain emission standards). Cars that are younger than 10 years old must provide an odometer disclosure that is the same as the one in New York (This disclosure is federally mandated).

The seller must notify the California DMV within five days when the transfer of ownership has occurred. To do so, they must complete a form and submit it, either in person or by mail. The form relieves the seller of responsibility for civil or criminal actions involving the car after the date of sale.

The buyer has 10 days from the date of sale to report to the DMV about the purchase of the vehicle. The buyer then makes an appointment and travels to the DMV with the required documents and pays the required fees and taxes (Tax payments are based on the new registered owner’s city and county of residence). Ownership is transferred after the paperwork has been successfully filed and fees paid, but the issuance of a new title in the buyers name could take 4-6 weeks.

One interesting fact is that California, unlike New York or Ukraine, does not require proof of insurance in order to register a car. While both states have made it mandatory for all vehicles to be insured, the registration of a car in California is not dependent upon insurance. This means that there are potentially legally registered vehicle driving in California without insurance.

It is also important to mention that vehicles are inspected in New York and California for safety and environmental standards. The inspection is not preformed, however, when a vehicle changes ownership between two private individuals.

On the other side of the Atlantic the registration procedure is similar, but in certain important ways, less demanding. Attempts have been made to harmonize the registration process throughout the EU. This has been done in order to further the basic rights of EU citizens, particularly the right to free movement.

To understand the harmonization process one must look at two separate areas of EU legislation. Legislation concerned with vehicle registration itself stems from Directive 1999/37/EC. This created an outline of a unified registration certificate and the information that the certificate is to contain.

The harmonization of registration requirements must also be seen in the light of harmonization in safety and environmental inspections for vehicles, Directive 2009/40/EC. Included in an annex to this Directive is the minimum inspection requirements, including checking the vehicle identification numbers and comparing it with the numbers found in the registration certificate. This means that every time (the Directive stipulates that cars are to be inspected once a year) a vehicle is inspected for environmental and safety reasons. It is also inspected in order to confirm that the vehicle corresponds to the registration.

According to Article 2 of the 2009 Directive, inspections are to be conducted by the state or “by bodies or establishments designated and directly supervised by the State, including duly authorised private bodies.” This means in some states (including Sweden, for example) inspections are carried out by private companies, whereas in other states the inspections are carried out by government agencies.

Despite efforts at harmonization (and it must be said that some success has been had in this regard) there are still differences between EU member states.

Sweden has perhaps the least burdensome procedure of any of the countries that we look at here. According to Regulation (2001:650) on Registration of Road Vehicles, the only paper required in order to change registration is the most recent original registration certificate issued by the Swedish Transport Agency. On the second page of the registration certificate (this is the same document type as a title in the United States or a technical passport in Ukraine) is a notification of new ownership form (used as a form of sale contract, although it does not include the price paid, as is required in other countries). This form requires the buyer’s name, personal identification number, address, date of ownership transfer and the signature of both seller and buyer.

The notification for change of ownership should be sent by the seller to the Swedish Transport Agency, an agency under the Ministry of Enterprise, Energy and Communication. It is up to the buyer to make sure that the application for change of ownership is actually mailed. Sweden now even offers a digital solution to change of ownership. A notification can also be made via a smartphone app, which can be downloaded free of cost. Instead of mailing by post the second page of the registration certificate, the seller can notify the agency via the internet and a telephone. In order to use the app you must have most recent proof of ownership and both the buyer and the seller must have a valid driving’s license.

Before this the new owner must take out compulsory road traffic insurance. The issuer of insurance then notifies the Transport Agency that the car has been insured. This insurance should apply from the date on which the change of ownership was applied.

If a change of ownership is made in the relevant month for the payment of vehicle tax, this tax obligation does not transfer to the new owner, even if the change of ownership takes place before the tax becomes due for payment. Vehicle tax follows with the vehicle, not the owner.

Transfer of ownership goes directly when both parts have signed the registration certificate. New registration certificate sent within 2-3 days.

The procedure in the United Kingdom is largely the same, if made slightly more complicated by existence of two different forms of registration certificates. The registration of cars in the UK is run by the Driver and Vehicle Licensing Agency (DVLA), an executive agency of the Department of Transport.

According to the Road Vehicle (Registration and Licensing) Regulations 2001 Part III the way a car is registered depends on what sort of certificate the car has. If the current owner has an older form of registration certificate than a separate form must be filled out. But if the seller has the certificate that follows the EU harmonization effort than the procedure is the same as it is in Sweden. The average processing time is 6 weeks to get a new registration certificate to the new owner.

The French requirements are more complicated than the British or Swedish. According to the Decree of 9 February 2009 on the rules for vehicle registration the seller must provide the buyer with a number of documents which some are to remain with the vehicle and others are to be sent to the local prefecture (his status is similar to district state administrations in Ukraine) for registration.

The first document is the registration certificate. France, like the UK, has a problem with older registration certificates. If the seller has an older form of title, which is a single page, then it must be marked “sold”, dated, and signed by the seller. This is kept with the vehicle until a new registration certificate in the buyers name can be issued.

If the seller has the new model of registration certificate with detachable coupon (as is suggested by the EU directive) the upper part is marked with the word “sold”, dated and signed by the seller. The seller keeps this half.The detachable coupon, the lower half, is then completed by the new owner (and signed by both seller and buyer), and acts as a temporary registration certificate that is valid for one month, until receipt of the new registration certificate.

The seller must also create a separate proof of sale, it must be completed on a form provided by the county prefecture (or downloaded from the central website). The proof of sale must be signed by both the seller and the buyer and submitted as well in order to register the vehicle.

The seller also gives the buyer a certificate of administrative status and the conclusions from a safety and environmental inspection which will remain in the vehicle but be shown to the prefecture.

A separate form, known as an assignment statement, must be submitted to the local prefecture as well. This provides all the information about the vehicle and its change of ownership. The administration of the prefecture then registers the vehicle in the buyer’s name and issues a new registration certificate.

As we can see, most democratic countries do not conduct inspections of vehicle identification numbers during registration after change of ownership. The process of registration is not conducted by the internal affairs ministries of those countries either.

In Ukraine the situation is somewhat different. Although the vehicle registration process has recently been simplified, it is possible to make it even easier.

The cancellation of the compulsory inspection after change of ownership will make it possible to provide the vehicle registration through one-stop-shops. In this way, when the buyer gets an invoice or a sale contract (certified by notary), pays the necessary taxes and signs-up for car insurance, he/she can then submit the documents (or even mail them) to the nearest one-stop-shop and get the registration certificate and number plates there.

The issue of potential risk of buying a vehicle with fake identification numbers becomes more relevant when registration is done without the ID-numbers inspection. But we need the systematic approach here. For example, the EU countries provide a complex vehicle inspection once a year. It includes the inspection of the car’s ID-numbers. This inspection is done primarily to improve traffic safety, but also as a check on the trade of stolen vehicles. In order to increase access this inspection may be performed by the private sector.

In Ukraine the technical inspection of motor vehicles is also in the competence of private subjects, but inspection has been cancelled for private cars. It was canceled because of a high level of corruption associated with this service. But in order to provide for citizens’ safety, the Government needs to reestablish one complex inspection for all kinds of vehicles, while at the same time removing the current inspection during registration. The reintroduced safety inspection can be provided by private actors. The State Automobile Inspection will have the possibility to check the documents confirming this inspection. State agents will still be able to punish unscrupulous car owners and to inspect subjects in the event of discrepancy in documents.

Taking into account the Government’s intention to simplify and improve upon the electronic administrative services’ delivery, the Swedish and British experiences are the most relevant for Ukraine. When all necessary documents are ready we can immediately submit them (or send them by e-mail) to the appropriate authority and start using our new car. And no inspection! They are held separately and in order to support road traffic safety and protect the public from fraud.

The State Automobile Inspection’s power concerning vehicle registration should be delegated to local self-government. France is a good example of where this has been done. Local authorities, in turn, should provide this service through one-stop-shops. Maintenance of the Unified State Register should be left in the Inspection’s competence in order to provide the state vehicle accounting and effective response to offences in the vehicle sector.