Motor Vehicle Dealer ($50,000) - Daimler - E FILED Bond - Statewide in California

Brief Summary

California dealers post $50,000 before the DMV issues or renews the license, unless they deal only in motorcycles or ATVs. Wholesale only dealers selling fewer than 25 vehicles a year can skip the bond at renewal with form OL 56, but they must file it before the 25th sale or the license is cancelled.

California Vehicle Code 11710 requires a $50,000 bond from every vehicle dealer before the DMV issues or renews a dealer license. A dealer that deals only in motorcycles or all terrain vehicles posts $10,000 instead. The bond must come from an admitted surety insurer and stay at full value for the life of the license.

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

• Confirm your amount: $50,000 for most dealers, $10,000 if you deal only in motorcycles or ATVs.
• Have the dealership name and ownership exactly as they appear on the DMV application.
• Owner credit review with the surety.
• Pay the premium and have the executed bond filed with the DMV.
• Complete the rest of the DMV dealer application, including live scan fingerprints and the location inspection.
• Keep the bond at full value through every renewal.

Detailed Information About the California Motor Vehicle Dealer ($50,000) - Daimler - E FILED Bond:

Which amount applies to you

Vehicle Code 11710(b) sets the dealer bond at $50,000. The one statutory exception is a dealer who deals exclusively in motorcycles or all terrain vehicles, whose bond is $10,000. Every other dealer, new or used, posts $50,000 before the license is issued and again before each renewal.

The wholesale only exemption at renewal

The DMV lets a wholesale only dealer that sells fewer than 25 vehicles a year apply for an exemption from the $50,000 bond when renewing. The count includes auction sales and direct dealer to dealer sales. The dealer files the $50,000 Bond Exemption Application, form OL 56, with the renewal notice and fees, and has to file it again for each renewal period.

This exemption has a hard edge. The form warns that failing to file a $50,000 bond before the 25th vehicle sale in a one year period results in automatic cancellation of the license under Vehicle Code 11721(b). If your volume is anywhere near 25, get the bond in place first.

What the bond guarantees

The bond is conditioned that the dealer will not commit fraud or make a fraudulent representation that causes a monetary loss to a purchaser, seller, financing agency or governmental agency. It must be written by an admitted surety insurer on a form approved by the Attorney General and filed with the DMV.

Keep it at full value

Liability under the bond has to stay at its full amount. If a claim reduces the bond, or there is an unpaid final court judgment the dealer and surety are liable for, the dealer license is automatically suspended. Getting it back means filing an additional bond, restoring the bond to its original amount, or satisfying the judgment.

Cash deposit instead of a bond

Vehicle Code 11710.2 covers a deposit given in place of the bond. The director can hold that deposit for three years after the dealer stops doing business or stops being licensed, or for five years after the dealer later files a bond, before ordering it returned. That is a long time to tie up cash, which is why most dealers use a surety bond.

Other license items

The DMV application also calls for live scan fingerprints for each owner, a CDTFA resale permit, photographs of the business location and a location inspection. Used and wholesale only applicants complete the dealer education program and pass the DMV dealer test. Renewals require proof of continuing education every two years.

What the premium depends on

The surety sets the premium from the credit and financial strength of the dealership and its owners and from any past claims. Confirm with the surety and DMV Occupational Licensing that the bond has been received before you rely on it for issuance or renewal.

Eligibility and Requirements for a California Motor Vehicle Dealer ($50,000) - Daimler - E FILED Bond:

• An admitted surety insurer in California.
• Bond form approved as to form by the Attorney General.
• Bond filed with the DMV before the license is issued or renewed.
• Liability maintained at full value at all times.
• Wholesale only dealers using the OL 56 exemption must file the bond before their 25th sale in a year.

California Motor Vehicle Dealer ($50,000) - Daimler - E FILED Bond FAQs:

Official and Additional Resources for the California Motor Vehicle Dealer ($50,000) - Daimler - E FILED Bond: