USED Motor Vehicle Dealer ($100,000) Bond - Statewide in Arizona

Brief Summary

$100,000 is right for a used motor vehicle dealer, but two things decide what you actually buy. First, check your licence class. R17-5-402 puts new dealers, used dealers and public consignment auction dealers at $100,000, brokers and wholesale dealers and wholesale auction dealers at $25,000, and automotive recyclers at $20,000. Second, and the one that catches multi lot operators, the rule requires a separate original bond for each application and for each county where you have an established or principal place of business. Lots in Maricopa and Pima means two $100,000 bonds, not one.

Arizona Administrative Code R17-5-402 requires a $100,000 bond for a used motor vehicle dealer licence, the same amount as a new motor vehicle dealer and a public consignment auction dealer. Brokers, wholesale motor vehicle dealers and wholesale motor vehicle auction dealers post $25,000, and automotive recyclers post $20,000. A.R.S. 28-4362 requires the bond to be in a form approved by the director, executed by a surety company authorized to transact business in Arizona with the applicant as principal obligor and the state as obligee, and cancellable only on at least sixty days prior notice to the director. The rule requires a separate original bond for each application and for each county in which the applicant or licensee has an established place of business or a principal place of business.

We can help with all Arizona bonds!

How to Apply for a USED Motor Vehicle Dealer ($100,000) Bond:

• Confirm your licence class. $100,000 applies to a used motor vehicle dealer, a new motor vehicle dealer and a public consignment auction dealer. Brokers and wholesale dealers are $25,000 and automotive recyclers are $20,000.
• Count the counties where you have an established place of business or a principal place of business. R17-5-402(B) requires a separate original bond for each one.
• Legal entity name exactly as it appears on the ADOT application.
• Owner or principal information and authorization for a credit review, plus business financial statements at this bond size.
• Complete the bond application, review the quoted premium, and pay it.
• Have each bond written for $100,000 with the applicant as principal obligor and the State of Arizona as obligee, by a surety authorized to transact business in Arizona.
• Use the original vehicle dealer bond form prescribed by the Director, form 38-1301. The Department will not accept a handwritten bond.
• Attach a power of attorney for the attorney in fact where applicable.
• Have the applicant sign, plus all partners for a partnership, or one officer for a corporation.
• Check that the completed form carries an embossed stamp, seal, or sticker from the bond company.
• Include a copy of your current transaction privilege tax license with the application.
• Pay the $15.00 filing fee and the annual licence fee, $100.00 or $400.00 if you have a contractual relationship with a third party lender.
• Submit fingerprint cards in the provided envelope sealed by the fingerprint technician, with the $22.00 certified check or money order payable to the Department of Public Safety.
• If you later add or change a partner or stockholder owning twenty percent or more, notify the department within thirty days.
• Ask ADOT whether education and training currently applies to your initial or renewal used dealer licence.

Detailed Information About the Arizona USED Motor Vehicle Dealer ($100,000) Bond:

The per county rule

This is the part that changes the cost of the file, and almost nothing published about Arizona dealer bonds mentions it.

R17-5-402(B) requires an applicant to submit a separate, original bond for each application and for each county in which an applicant or licensee has an established place of business or a principal place of business.

A used dealer running one lot files one $100,000 bond. A used dealer with a lot in Maricopa County and another in Pima County files two. The amount does not split across them and it does not reduce.

Count your counties, not your lots, before you get a quote.

Confirm your licence class

R17-5-402(A) sets three tiers, and being on the wrong one is the other common error.

$100,000 for a new motor vehicle dealer, a used motor vehicle dealer, or a public consignment auction dealer.

$25,000 for a broker, a wholesale motor vehicle dealer, or a wholesale motor vehicle auction dealer.

$20,000 for an automotive recycler.

If you are selling wholesale only to other licensed dealers, you are at $25,000, not $100,000. ADOT's own material is blunt about what wholesale means. You may not advertise or give the appearance of selling or offering to sell retail, and non compliance can bring civil penalties per sale or offer to sell plus loss of the licence.

What the statute requires of the bond itself

A.R.S. 28-4362 sets the frame that the rule sits inside. The bond must be in a form approved by the director, in an amount prescribed by the director of at least twenty thousand dollars for an automotive recycler's license and not more than one hundred thousand dollars for all other licenses.

So $100,000 is the statutory ceiling, and the Department has set the used dealer tier at that ceiling by rule.

The bond must be executed by a surety company authorized to transact business in this state as surety, with the applicant as principal obligor and the state as obligee. It is cancellable only on at least sixty days prior notice to the director.

What it covers

Narrower and more specific than a general compliance bond, and worth reading before you assume what a claim looks like.

The bond inures to the benefit of a person who suffers loss because of either nonpayment by the dealer of customer prepaid title, registration or other related fees or taxes, or the dealer's failure to deliver in conjunction with the sale of a vehicle a valid vehicle title certificate free and clear of any prior owner's interests and all liens except a lien created by or expressly assumed in writing by the buyer of the vehicle.

Title and payoff failures, in other words. Taking a customer's registration money and not remitting it, or delivering a car with a lien still attached. Those are the claims that get filed against Arizona dealer bonds.

Form 38-1301 is the Department's Vehicle Dealer Bond form. It names the State of Arizona as obligee, tracks the same two conditions, and requires at least sixty days prior notice to ADOT before cancellation, with liability terminating after that period unless a new bond is filed.

How the bond has to be executed

R17-5-402 is fussy about the paper, and these are the reasons filings bounce.

The bond goes on the original vehicle dealer bond form prescribed by the Director. A power of attorney for the attorney in fact must be attached, if applicable. The applicant signs, in addition to all partners for a partnership, or one officer for an incorporation. The completed form must carry an embossed stamp, seal, or sticker from the bond company.

And one flat prohibition. The Department shall not accept a handwritten bond.

What else goes with the application

A.R.S. 28-4362 also requires a copy of the dealer's current transaction privilege tax license alongside the bond and the fees.

The fees at 28-4302 are modest. Fifteen dollars to file each application for a dealer's licence. Ten dollars for a provisional dealer's, automotive recycler's or wholesale motor vehicle dealer's licence filed in conjunction with a dealer's or automotive recycler's application. One hundred dollars for the annual licence, except that if a dealer has a contractual relationship with a third party lender the fee is four hundred dollars. Continuation is one hundred dollars, or two hundred fifty dollars with a third party lender relationship. A branch licence is fifty dollars to file or continue. Off premises exhibition permits and off premises display and sale permits are twenty five dollars each.

The ADOT application checklist adds a twenty two dollar certified check or money order payable to the Department of Public Safety for the criminal records check, with fingerprint cards submitted in the provided envelope sealed by the fingerprint technician.

The background check reaches your owners

Under 28-4361(C), each applicant who owns twenty percent or more of an entity, and each partner or stockholder who owns twenty percent or more, seeking a new licence must provide a full set of fingerprints for a state and federal criminal records check under section 41-1750 and Public Law 92-544, plus the nonrefundable DPS fee.

Subsection (D) keeps that running. If a licensee adds or changes a partner or stockholder who owns twenty percent or more and who was not in the prior check, the licensee must notify the department within thirty days and submit an application and, if applicable, fingerprints and the fee. If that individual is ineligible under 28-4365, the licence will be revoked unless the individual is removed.

The check does not apply to a manufacturer, importer, factory branch or distributor, or to a person under eighteen on the filing date. It may not apply on a subsequent licence where the twenty percent owners submitted to a check in the past five years or are currently licensed. And it does not apply to a new motor vehicle dealer who has paid fees under 28-4302.

What gets an application denied

Under 28-4365 the director may deny for a misrepresentation, omission or misstatement made to conceal a matter that may cause denial. For a conviction for fraud or an auto related felony within the ten years immediately preceding completion of the records check. For any other felony within the five years immediately preceding it. For failing to meet the requirements of law or a rule. Or where a similar licence was suspended, revoked or cancelled in this or any other state within five years preceding the application.

The director approves or denies within twenty days after completion of the criminal records check. An individual whose information is found to be a misrepresentation, omission or misstatement is not eligible to reapply for twelve months from the date of denial.

A denied applicant has thirty days to petition the director in writing for a hearing under 28-4366, gets written findings within ten days after it, and may appeal a final denial to the superior court in Maricopa county within thirty days, tried de novo.

Education and training

Worth knowing because it lands on used and wholesale dealers specifically.

Under 28-4361(F) the director may establish education and training for a person applying for an initial or a renewal used motor vehicle dealer or wholesale motor vehicle dealer licence, may contract with a private entity to deliver it, and that private entity may charge a fee.

Completing it does not replace the bond. It sits alongside it.

Eligibility and Requirements for a Arizona USED Motor Vehicle Dealer ($100,000) Bond:

• A $100,000 bond for a used motor vehicle dealer licence under Ariz. Admin. Code R17-5-402(A)(1).
• A separate original bond for each application and for each county with an established or principal place of business.
• A surety company authorized to transact business in Arizona, with the applicant as principal obligor and the state as obligee.
• Cancellation only on at least sixty days prior notice to the director.
• Coverage for nonpayment by the dealer of customer prepaid title, registration or other related fees or taxes.
• Coverage for failure to deliver a valid vehicle title certificate free and clear of prior owner interests and all liens, except a lien created by or expressly assumed in writing by the buyer.
• The original vehicle dealer bond form prescribed by the Director, form 38-1301.
• A power of attorney for the attorney in fact attached where applicable.
• Signature by the applicant, plus all partners for a partnership or one officer for an incorporation.
• An embossed stamp, seal, or sticker from the bond company. No handwritten bond is accepted.
• A copy of the dealer's current transaction privilege tax license.
• Entity name on the bond matching the ADOT application exactly.

Arizona USED Motor Vehicle Dealer ($100,000) Bond FAQs:

Official and Additional Resources for the Arizona USED Motor Vehicle Dealer ($100,000) Bond: