Motor Vehicle Dealer ($50,000) Bond - Statewide in Colorado

Brief Summary

The $50,000 is the standard Colorado figure and it does not move with sales volume, but three details around it are worth knowing before you buy. Only dealers who sell nothing but small utility trailers weighing under two thousand pounds get the reduced $5,000 amount. You may file a savings account, deposit or certificate of deposit meeting section 11-35-101 instead of a bond. And a dealer already bonded under section 44-20-412, the powersports provision, does not have to furnish a second bond for this license.

Before the board issues a motor vehicle dealer, used motor vehicle dealer, wholesaler, wholesale motor vehicle auction dealer or business disposal license, C.R.S. 44-20-112 requires the applicant to file a good and sufficient bond with corporate surety licensed in Colorado, approved as to form by the attorney general, conditioned that the applicant will not practice fraud or violate the fraud related provisions of part 1. The amount is $50,000 for those license types.

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

• File a $50,000 bond with corporate surety licensed in Colorado, approved as to form by the attorney general, with the board through the executive director
• Check whether you are already bonded under section 44-20-412, since that removes the need for an additional bond here
• Consider the alternative of a savings account, deposit or certificate of deposit meeting section 11-35-101 if you would rather post funds than premium
• Confirm you are not in the small utility trailer category, which posts $5,000 for dealers selling only trailers under two thousand pounds
• Complete the Auto Industry Division prelicensing education if you are a used motor vehicle dealer applicant and no exception applies
• Pay the license fees on the current DR 2246 fee schedule for the applicable state fiscal year
• Renew the bond annually at the same time the license is renewed, by new bond or continuation certificate

Detailed Information About the Colorado Motor Vehicle Dealer ($50,000) Bond:

The amounts

Section 44-20-112(2)(a) sets $50,000 for a motor vehicle dealer applicant, used motor vehicle dealer applicant, wholesale motor vehicle auction dealer applicant, business disposal applicant or wholesaler applicant. The single exception is $5,000 for dealers who sell only small utility trailers that weigh less than two thousand pounds. Nothing scales by revenue, inventory or number of locations.

Three alternatives and exemptions people miss

First, the statute permits evidence of a savings account, deposit or certificate of deposit meeting the requirements of section 11-35-101 in place of a bond. That parks the money instead of paying a premium.

Second, a motor vehicle dealer, business disposer or used motor vehicle dealer need not furnish an additional bond, savings account, deposit or certificate of deposit under this section if the dealer already furnishes one under section 44-20-412, which covers the powersports side. Dealers who hold both kinds of license often do not need two bonds.

Third, the Auto Industry Division's prelicensing education requirement for used motor vehicle dealer applicants comes with its own carve out for applicants who already hold a recent license, but completing or being excused from that education has no effect on the bond.

How a claim actually works

The bond reimburses loss or damage suffered by a retail consumer caused by fraud, or by a violation of part 1 related to fraud, by the dealer. In a wholesale transaction the bond is available to each party, except that a retail consumer involved in the transaction has priority to recover. No corporate surety is required to make any payment until a final determination of fraud has been made by the board or by a court of competent jurisdiction. Aggregate liability of the surety for all transactions is limited to the amount of the bond, regardless of the number of claims or claimants. Colorado courts may also administer an interpleader action for competing claims against a licensee's bond.

Renewal

All bonds required under this section are renewed annually at the same time the bondholder's license is renewed, and the renewal may be done through a continuation certificate issued by the surety. That means the bond and the license move on the same clock rather than on the anniversary of the bond purchase.

Form and filing

Corporate surety duly licensed to do business in Colorado, on a bond approved as to form by the attorney general, filed with the board through the executive director. The Auto Industry Division publishes its fee schedule as form DR 2246, issued for each state fiscal year running July 1 through June 30, so check the version that matches your application year.

The bond gets the license issued. Buyers still have to find the lot. 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 Colorado Motor Vehicle Dealer ($50,000) Bond:

• Bond amount of exactly $50,000 for a motor vehicle dealer, used motor vehicle dealer, wholesaler, wholesale auction dealer or business disposal applicant
• Corporate surety duly licensed to do business within Colorado
• Bond approved as to form by the attorney general and filed with the board
• Condition that the applicant will not practice fraud or violate the fraud related provisions of part 1
• Aggregate surety liability limited to the amount of the bond regardless of the number of claims or claimants
• Business name on the bond matching the license application exactly
• Credit review of the owners, which shapes the rate rather than eligibility for most applicants at this bond size

Colorado Motor Vehicle Dealer ($50,000) Bond FAQs:

Official and Additional Resources for the Colorado Motor Vehicle Dealer ($50,000) Bond: