New Motor Vehicle Dealer ($50,000) - Daimler Bond - Statewide in Alabama

Brief Summary

The franchise line on the record does not change anything about this bond. Alabama issues one master dealer license, and Code of Alabama 40-12-398 requires the same surety bond of not less than $50,000 from a new motor vehicle dealer, a used motor vehicle dealer, a motor vehicle rebuilder and a motor vehicle wholesaler alike. Selling Mercedes-Benz, Ford or anything else does not move the number. What does catch applicants is the rest of the filing: the bond doubles as your designated agent bond under Title 32, blanket motor vehicle liability insurance has to be filed with the application or the license is denied, and the license year starts October 1 with only thirty days of grace.

Before Alabama will issue a master dealer license to a new motor vehicle dealer, used motor vehicle dealer, motor vehicle rebuilder or motor vehicle wholesaler, the applicant must deliver a surety bond of not less than $50,000, executed by a corporate surety qualified to do business in the state, on a form approved by the commissioner. The bond is payable to the Commissioner of Revenue and to successors in office, and it runs in favor of any person who recovers a judgment for a loss caused by a violation of its conditions.

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How to Apply for a New Motor Vehicle Dealer ($50,000) - Daimler Bond:

• Execute the $50,000 Motor Vehicle Surety Bond on ALDOR form MVT 4-3, payable to the Commissioner of Revenue of the State of Alabama
• Use a corporate surety company qualified to do business in Alabama
• File evidence of blanket motor vehicle liability insurance covering business and inventory vehicles with the license application
• State the number of new and used vehicles sold during the previous calendar year on the application
• Identify the manufacturer and line make you are franchised to represent
• Maintain a permanent location with space to display one or more vehicles, an appropriate sign, and books and records available for inspection
• Provide your state sales tax number with the application
• Pay the master dealer license fee of $125, plus $5 for each additional place of business and $25 per dealer plate
• Renew on October 1 each year and file within the thirty day grace period to avoid delinquent license penalties

Detailed Information About the Alabama New Motor Vehicle Dealer ($50,000) - Daimler Bond:

One amount, one license

Alabama does not tier this bond. Section 40-12-398 sets a sum of not less than fifty thousand dollars, or an amount as prescribed by the department, for every applicant in the four covered classes. There is no scale by sales volume, franchise line, number of locations or years in business, and no reduced figure for an established dealership. The Department of Revenue states the same $50,000 continuous bond requirement on its dealer license page, and Administrative Code rule 810-5-12-.02 repeats it for motor vehicle dealers, automotive dismantlers and parts recyclers, licensed wholesale auctions, designated agents and title service providers.

What the bond is conditioned on

Two things, and the second one saves you a filing. First, the dealer must comply with the conditions of any contract made in connection with the sale or exchange of a motor vehicle and must not violate the laws governing the licensed business. Second, the statute states that the bond serves in lieu of the bond provided for in subsection (b) of Section 32-8-34 and is additionally conditioned on performance of the dealer's duties as a designated agent under Chapter 8 of Title 32. A dealer who is also a designated agent does not buy a second bond. ALDOR confirms that a non dealer acting as a designated agent must post its own separate $50,000 bond.

Penalties under the dealer licensing article, and the tax liability incurred under Chapter 23 on the sale of a motor vehicle, may be assessed against the bond. That is broader than most dealers expect.

The insurance filing that stops applications

Section 40-12-392(c) requires new and used motor vehicle dealers, rebuilders and wholesalers to maintain blanket motor vehicle liability insurance on vehicles operated on public streets and highways, including dealership inventory. Evidence of that coverage has to be filed with the license application, and the application shall be denied if proof satisfactory to the commissioner is not provided. Letting the policy lapse during the licensing period carries a civil penalty of up to $5,000, and that penalty may be assessed against the bond.

Dates

A master dealer license is valid for one year from the first day of October and is renewed on October 1 each year, with thirty days of grace allowed without penalty before delinquent license penalties apply. ALDOR opens the renewal window in early September and has assessed a penalty of 15 percent of the license amount plus interest on renewals filed after October 31. The bond's coverage period begins on the issuance date of the applicable license.

Form and cancellation

The prescribed form is ALDOR Motor Vehicle Surety Bond MVT 4-3. The obligee is the Commissioner of Revenue of the State of Alabama and successors and assigns. A surety that wants off the bond files a written request with the Department of Revenue, and the release takes effect sixty days from that filing date.

Fees

ALDOR lists a master dealer license fee of $125, $5 for each additional place of business, $25 for an off site sales license, $25 for dealer plates and manufacturer plates, and $17 for motorcycle dealer and motorcycle manufacturer plates. The application must state the number of new and used vehicles sold during the previous calendar year, describe a permanent location with space to display vehicles and an appropriate sign, and identify the manufacturer and line make the applicant is franchised to represent.

A bond gets the license issued. It does not put buyers in the showroom. Any licensed dealer can also claim a free listing at BestAutoDealerIn.com, a directory searchable by zip code and state, with a backlink that helps your own SEO, sends referrals, and gets a blog post written about your dealership.

Eligibility and Requirements for a Alabama New Motor Vehicle Dealer ($50,000) - Daimler Bond:

• Bond in the sum of not less than $50,000, or an amount as prescribed by the department
• Corporate surety qualified to do business in the state, on a form approved by the commissioner
• Commissioner of Revenue and successors in office named as obligee
• Legal business name and addresses on the bond matching the license application, with authorized representative and surety signatures, effective date and issue date
• Coverage period beginning on the issuance date of the applicable license
• Sixty days from the surety's written request to the Department of Revenue before a release takes effect

Alabama New Motor Vehicle Dealer ($50,000) - Daimler Bond FAQs:

Official and Additional Resources for the Alabama New Motor Vehicle Dealer ($50,000) - Daimler Bond: