Motor Vehicle Lessor Retailer ($50,000) Bond - Statewide in California

Brief Summary

If your leasing or rental company sells its returned units to the public, the California DMV wants a $50,000 bond on file before it issues or renews the lessor-retailer license. Get the bond on form OL 25C with the name exactly as it appears on your license application, and the DMV has one less reason to bounce the file.

California Vehicle Code 11612 requires a lessor-retailer to file the same bond a vehicle dealer files under section 11710 before the license is issued or renewed. That is $50,000, or $10,000 if the business deals only in motorcycles or all-terrain vehicles. The DMV form is OL 25C, written to the People of the State of California by an admitted surety insurer. Claims follow the same rules as dealer bond claims under section 11711.

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How to Apply for a Motor Vehicle Lessor Retailer ($50,000) Bond:

• Check whether every sale you make goes to an excluded buyer, such as a lessee of one year or more, a commercial buyer or a government agency.
• Decide whether you will sell under a lessor-retailer license or a vehicle dealer license, since Vehicle Code 11600 accepts either.
• Have the principal name exactly as it will appear on the DMV license application.
• Obtain the $50,000 bond on form OL 25C, or OL 25B if you deal only in motorcycles or all-terrain vehicles.
• Submit the bond with form OL 12 and the $175 application fee plus the $1 family support fee.
• Add $70 for each branch location.

Detailed Information About the California Motor Vehicle Lessor Retailer ($50,000) Bond:

Who needs a lessor-retailer license

The DMV says you need this license if you sell previously leased or rented vehicles to the public. Three kinds of sale do not trigger it: a sale to an individual who has leased the vehicle for at least one year, a sale to a buyer for agricultural, business or commercial purposes, and a sale to a government agency.

Vehicle Code 11600 makes it unlawful for a lessor-retailer to make a retail sale without first holding either a vehicle dealer license or a lessor-retailer license or temporary permit.

The amount

Section 11612 does not set its own figure. It borrows the dealer bond rules in sections 11710 and 11710.2. Section 11710 sets the dealer bond at $50,000, except for a business dealing exclusively in motorcycles or all-terrain vehicles, which posts $10,000. The DMV lists form OL 25B for motorcycle lessor-retailers and OL 25C for everyone else. Form OL 25C prints the $50,000 figure with no blank to change it.

What the bond protects against

The bond is conditioned that the licensee will not practice fraud or make a fraudulent representation that causes a monetary loss to a purchaser, seller, financing agency or governmental agency. Any claim that could be made against a dealer bond under section 11711 can be made against a lessor-retailer bond.

Term and cancellation

Under OL 25C the bond runs concurrently with the license period and carries forward through each successive license period. The surety may cancel in accordance with Article 13 of the Code of Civil Procedure, beginning with section 996.310.

Cash instead of a bond

The DMV also accepts a Deposit Agreement and Assignment on form OL 25E in place of the surety bond.

Eligibility and Requirements for a California Motor Vehicle Lessor Retailer ($50,000) Bond:

• Bond written by an admitted surety insurer.
• Bond approved as to form by the Attorney General, as section 11710 requires.
• People of the State of California named as obligee.
• Bond on file before the license is issued and before every renewal.
• Renewal fee of $125 plus $1 family support and $70 per branch.

California Motor Vehicle Lessor Retailer ($50,000) Bond FAQs:

Official and Additional Resources for the California Motor Vehicle Lessor Retailer ($50,000) Bond: