Buying and selling tow truck licences (which can sell for up to several hundred thousand dollars each) can be a tricky business. Due to their scarcity, their cost and the cost of getting it wrong, careful consideration should be given to properly documenting these transactions on a case by case basis.

 

The nature and number of tow truck licences in Victoria

As with a taxi licence, obtaining a tow truck licence is not as easy as popping down to VicRoads and handing over an application form.

A tow truck licence, be it a regular tow truck licence or heavy tow truck licence (the latter being necessary to provide accident towing services to vehicles of a gross mass of 4 tonnes or more), is granted to a vehicle, not a person, making them a commodity which is notoriously hard to get hold of.

In Victoria, the Minister for Roads authorises the issue of only a limited number of tow truck licences which are allocated to particular areas. This means that they must be purchased from existing licence holders. The fact they don’t come with an expiry date (they can only be cancelled, surrendered or suspended) makes them hot property which can sell for several hundred thousand dollars each.

Buying and selling a tow truck licence

Accordingly, if you are in the market to buy a tow truck licence, or if you are looking to sell one of more of your tow truck licences, it is important to obtain appropriate legal advice in regard to, and to document, the transaction.

In short, selling or transferring a tow truck licence to an “Accredited Operator” (which is a separate application process in itself), involves submitting an “Application for Transfer of Tow Truck Licence” with VicRoads. This requires the purchaser to:

(a) complete an application form;

(b) hold a full Victorian driver’s licence;

(c) complete the requisite training;

(d) hold an “Accident Tow Truck Driver Accreditation” or “Accident Tow Truck Trainee Permit”;

(e) obtain and provide to VicRoads, a current (not more than 6 months old) National Police Certificate;

(f) provide other supporting documentation; and

(g) pay the $185.10 fee (the 2014/5 fee charged by VicRoads to transfer an existing tow truck licence to another person).

The purchaser will also need to provide proof that they own the premises where they propose to operate the tow truck from (i.e. the proposed tow truck depot), either by way of a rates notice in the purchaser’s name, a leasing agreement between the purchaser and the owner of the premises, or a sub-leasing agreement between the purchaser and the lessee of the premises (together with written consent from the owner of the premises).

Vendor considerations

Due to their expense, in many instances purchasers of tow truck licences will be obtaining bank finance. As the bank won’t necessarily want to release funds (even in to a lawyer’s trust account) before approval has been given by VicRoads, a vendor has to effectively allow the transfer application to be made before they are paid.

In light of the above, it is extremely important that the vendor and purchaser enter into a formal sale of tow truck licence agreement, which sets out the vendor’s rights if the purchaser fails to pay the vendor after VicRoads has approved the transfer. In this regard, strong consideration should be given to registering the Vendor’s interest in the tow truck licence (i.e. its retention of title interest) as a “Purchase Money Security Interest” on the Personal Property Securities Register.

Furthermore, as VicRoads can take up to 30 days to approve a transfer application, consideration should be given to:

(a) having the purchaser pay a deposit (for example, 10% of the purchase price);

(b) ensuring that there is a requirement that the transfer application be submitted within a certain period;

(c) if the sale is subject to the purchaser obtaining finance, clearly documenting that this is the case; and

(d) contemplating what happens if VicRoads refuses to transfer the licence (i.e. whether the vendor is to retain the deposit etc.) because the purchaser, for example, has failed their National Police Check.

Pointon Partners has significant experience in acting for clients who have sold and purchased tow truck licences. If you do need any advice or assistance in this area then please do not hesitate to contact Michael Bishop on (03) 9614 7707.