Selling a car dealership involves far more than handing over the keys and signing a settlement statement. In Victoria, your LMCT licence is tied to you personally, not to the business premises or the vehicles on the lot, so it doesn’t automatically pass to whoever buys your dealership. Understanding exactly what happens to your licence during a sale can save both sides from compliance headaches, delays, and even penalties under Victorian law.
Your LMCT Licence Doesn’t Transfer With the Sale
An LMCT (Licensed Motor Car Trader) licence is issued to a specific individual, company, or trust under the Motor Car Traders Act, and it can’t simply be signed over to a new owner the way a car’s registration can. When you sell your dealership, your licence stays with you (or is surrendered), and the buyer must go through their own licensing process from scratch, even if they’re taking over your exact premises, stock, and staff.
This catches a lot of first-time sellers off guard. Some assume that because the business name, dealer plates, and premises are staying the same, the licence should carry over too. In reality, Consumer Affairs Victoria (through the Business Licensing Authority) assesses every applicant on their own merits, regardless of who previously held the licence at that address.
Asset Sale vs Entity Sale: Why the Structure Matters
How your sale is structured changes what actually happens to the licence.
Selling the Business Assets
If you’re selling the stock, goodwill, fixtures, and dealer plates as assets, your LMCT licence simply doesn’t come with the deal. The buyer needs to lodge a fresh application before they can legally trade, which is worth understanding in detail if you’re weighing up buying an existing dealership vs starting fresh.
Selling the Company or Trust
If the buyer is purchasing the shares or units in the entity that holds the licence rather than the physical assets, things get more nuanced. The licence is still attached to the original entity, but a change in directors, shareholders, or trustees typically needs to be reported to the licensing authority, and in many cases the buyer will still need to be individually assessed. Choosing the right business structure before you sell, or buy, makes this process considerably smoother.
Steps to Take Before You Hand Over the Keys
Sellers shouldn’t wait until settlement day to think about licensing. A few things worth sorting out early:
- Notify Consumer Affairs Victoria of your intention to cease trading or transfer the business
- Hand over accurate, complete trading records, since incoming buyers and regulators will expect the mandatory trading records every LMCT holder is required to keep
- Confirm whether your dealer plates need to be surrendered or can be reissued to the new owner
- Check the premises still meet the standards inspectors look for before a new licence is approved, particularly if the buyer plans to keep operating from the same site
Skipping these steps doesn’t just slow the buyer down, it can leave you exposed if trading continues under an invalid licence during the handover period.
What the Buyer Needs to Do
Whoever is buying your dealership can’t legally sell a single car until their own licence is approved. That means they’ll need to:
- Apply for their own licence, the same way anyone looking to operate a car dealership in Victoria must
- Provide financial records, a business plan, and identification documents specific to their application
- Pass the same probity and background checks every applicant faces
- Arrange premises approval, even if it’s the same location you traded from
Buyers often underestimate how long this takes, and sellers should factor licensing timeframes into the settlement date rather than assuming a same-day handover is possible. It helps to review a full checklist of documents before the process even starts.
Timing the Sale Around the Licensing Process
Because the buyer’s licence has to be approved before they can trade, it’s common for sellers to keep operating, and stay compliant under their own licence, right up until the new owner is cleared. Understanding what happens once a licence is approved gives both parties a realistic picture of how long the gap between signing and trading might be, and helps avoid a period where nobody is legally licensed to run the business.
Common Mistakes When Selling a Licensed Dealership
- Assuming the licence transfers automatically with the sale contract
- Continuing to trade, or letting the buyer trade, before their licence comes through, which risks the serious consequences of trading without a valid licence
- Not disclosing past compliance issues, which can affect the background checks used in dealer licensing for the incoming owner
- Leaving licence cancellation or variation until after settlement, creating a gap where no one holds a valid licence for the business
Topics We’ll Be Covering Soon
We’re also planning deeper guides on Tax Implications of Selling an LMCT-Licensed Dealership, How to Transfer Dealer Plates After a Business Sale, and LMCT Licence Succession Planning for Family-Owned Dealerships — worth bookmarking if you’re mid-sale.
Selling a dealership is rarely as simple as a straightforward asset handover, and getting the licensing sequence wrong can delay settlement or expose both parties to penalties. If you’re planning a sale or purchase, get in touch with our licensing specialists before you sign anything, so the transition happens without unnecessary risk or downtime.
Frequently Asked Questions
No. LMCT licences are issued to a specific person, company, or trust and cannot be transferred to a new owner. The buyer must apply for and be granted their own licence before they can legally trade.
No. The buyer can only start selling vehicles once their own LMCT licence has been approved by the Business Licensing Authority, regardless of how quickly the sale itself settles.
Yes, if you’re not continuing to trade elsewhere. You should notify Consumer Affairs Victoria that you’re ceasing to trade under your licence so it can be formally cancelled or surrendered.
Trading without a valid licence is a serious offence in Victoria and can lead to criminal penalties for whoever is running the business, whether that’s the buyer, the seller, or both.
Yes. Even if the premises stay the same, the buyer’s application still needs premises approval as part of their licence assessment, so it’s worth preparing the site in advance.
Processing times vary, but buyers should generally allow several weeks to a few months for their application to be assessed, especially if premises inspections or background checks are involved. Building this timeframe into the settlement date helps avoid a gap where nobody is licensed to trade.
No. Trading under someone else’s LMCT licence isn’t permitted, even temporarily. The buyer must wait until their own licence is approved before selling any vehicles, regardless of how the settlement timeline is structured.
Dealer plates are linked to your licence, not the business itself, so they generally need to be surrendered once you cease trading. The buyer will need to apply for their own plates after their licence is approved.
Yes. Each LMCT application is assessed on its own, so even an existing licence holder buying a second dealership will typically go through the same probity and background checks again for the new entity or location.