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Expert Surety Bonds Since 2004
Need assistance? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Expert Surety Bonds Since 2004
A Florida auction is a motor vehicle dealer license, classification VA, and section 320.27(10) puts the bond at a flat $25,000. Two things about it are worth knowing before you buy. Your license expires April 30, not at year end like a franchise dealer, and the bond has to be back on file with the department within 10 days of any renewal, continuation or change. The bond itself is the easy part of the application. The 16 hour seminar and the location approval are what take time.
Florida requires a $25,000 surety bond or irrevocable letter of credit from every motor vehicle dealer applicant under section 320.27(10), Florida Statutes, and a motor vehicle auction is one of the dealer classifications in section 320.27(1)(c). The bond is written on FLHSMV form HSMV 86020 in favor of the Director of the Division of Motorist Services. It is conditioned on the dealer complying with the conditions of any written contract made in connection with the sale or exchange of a motor vehicle and not violating chapter 319 or chapter 320. It runs in favor of any person in a retail or wholesale transaction who suffers a loss from those violations.
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Section 320.27(1)(c)4 defines a motor vehicle auction as any person offering motor vehicles or recreational vehicles for sale to the highest bidder where the buyers are licensed motor vehicle dealers. That person may not sell a vehicle to anyone other than a licensed motor vehicle dealer. FLHSMV codes the license class VA. It sits alongside independent dealers coded VI, wholesale dealers coded VW, salvage dealers coded SD and franchise dealers coded VF.
For a VA auction the bond is $25,000. Section 320.27(10)(a) states it plainly: annually, before any license is issued to a motor vehicle dealer, the applicant-dealer shall deliver a good and sufficient surety bond or irrevocable letter of credit in the sum of $25,000.
FLHSMV's own guidelines put the same $25,000 on the VI, VW, SD and VF classes. The other classifications are different, which is where people get their wires crossed. Recreational vehicle dealers coded RV and used recreational vehicle dealers coded RU carry $10,000, rising to $20,000 where there are four or more locations. Mobile home dealers coded DH and mobile home brokers coded BH carry $25,000, rising to $50,000 at four or more locations. If you hold more than one class, check the figure for each.
The statute accepts a surety bond or an irrevocable letter of credit, and FLHSMV publishes a form for each, HSMV 86020 for the bond and HSMV 86057 for the letter of credit. The bond has to be executed by a surety company authorized to do business in Florida as surety, and the letter of credit issued by a bank authorized to do business in Florida as a bank. A letter of credit ties up $25,000 of bank capacity for as long as you hold the license.
Each license issued to an independent or wholesale dealer or auction expires April 30 of the year of its expiration. Franchise dealer licenses expire December 31. The department mails the renewal forms at least 60 days before the expiration date.
The bond has to be for the license period, and a new bond or a proper continuation certificate has to be delivered to the department at the beginning of each license period. On top of that, section 320.27(10)(a) gives you 10 calendar days after any renewal, continuation or change of the bond or letter of credit, or after issuance of a new one, to deliver a copy to the department in the manner it prescribes. That 10 day rule is the one most often missed, because it applies to changes mid term, not just to renewals.
The condition is compliance with the terms of any written contract made in connection with the sale or exchange of a motor vehicle, and no violation of chapter 319 or chapter 320 in the conduct of the licensed business. It runs to the department and in favor of any person in a retail or wholesale transaction who suffers a loss from a violation of those conditions. When the department determines a person has incurred such a loss, it notifies that person in writing that the bond exists.
Aggregate liability of the surety in any one year can never exceed the sum of the bond, and the same cap applies to a bank on a letter of credit. FLHSMV form HSMV 86020 carries the same annual aggregate limit, and gives the surety the right to terminate liability by written notice sent by United States registered mail, with discharge thirty days after service. If a license is denied, suspended or revoked, the department notifies the surety or the issuing bank in writing and states the reason.
The application is FLHSMV form HSMV 86056, with a $300 fee per location. An applicant may extend the licensure period by one additional year for a total of two years, paying $300 for the first year and $75 for the second. Renewal is $75 for a one year renewal or $150 for a two year renewal. A change of location is $50 for the VI, VW, SD, VA and VF classes and $25 for RV, RU, DH and BH. A name change is $25.
Applicants also need garage liability insurance, or a general liability policy coupled with a business automobile policy, with at least $25,000 combined single limit liability coverage including bodily injury and property damage protection plus $10,000 personal injury protection. Salvage dealers are the exception, exempt from the garage liability requirement. Proof of ownership or lease of the business location, business registration through the Florida Department of State, a sales tax number and a federal employer identification number round out the packet.
FLHSMV requires a dealer training seminar certificate, 8 hours for franchise dealers and 16 hours for everyone else, which includes an auction applicant. Completing the seminar satisfies its own requirement and nothing else. The bond, the insurance and the location approval all still apply.
Section 320.27(1)(c) excludes from motor vehicle dealer status persons not engaged in the purchase or sale of motor vehicles as a business who are disposing of vehicles acquired for their own use or for use in their business, or acquired by foreclosure or by operation of law, provided the vehicles are acquired and sold in good faith and not to avoid the law. A bona fide employee buying, selling or dealing at wholesale or with auctions on behalf of a licensed dealer does not need a separate wholesale dealer license.
$25,000. Section 320.27(10)(a) sets that sum for a motor vehicle dealer applicant, and FLHSMV applies it to the VA auction classification along with VI independent, VW wholesale, SD salvage and VF franchise dealers.
No. FLHSMV's guidelines put recreational vehicle dealers coded RV and RU at $10,000, rising to $20,000 at four or more locations, and mobile home dealers coded DH and brokers coded BH at $25,000, rising to $50,000 at four or more locations. VI, VW, SD, VA and VF sit at $25,000.
Yes. The statute accepts an irrevocable letter of credit issued by a bank authorized to do business in Florida, on form HSMV 86057. It holds the full $25,000 of bank capacity for the life of the license, which is why most applicants buy the bond.
April 30 of the year of its expiration for an auction, independent or wholesale license. Franchise dealer licenses expire December 31. The department mails renewal forms at least 60 days before the expiration date.
Section 320.27(10)(a) requires a licensee to deliver a copy of the bond or letter of credit to the department within 10 calendar days after any renewal, continuation or change of it, or after a new one is issued. It applies to mid term changes as well as to renewals.
Compliance with the conditions of any written contract made in connection with the sale or exchange of a motor vehicle, and no violation of chapter 319 or chapter 320 in the conduct of the licensed business. It runs in favor of any person in a retail or wholesale transaction who suffers a loss from those violations, and the surety's aggregate liability in any one year cannot exceed the sum of the bond.
No. FLHSMV requires 8 hours for franchise dealers and 16 hours for all other classes including an auction applicant. It is a separate condition of licensure. The bond, the garage liability insurance and the location approval all still apply.
$300 per location on the initial application. An applicant may extend to a two year period at $300 for the first year and $75 for the second. Renewal is $75 for one year or $150 for two. A change of location is $50 for VI, VW, SD, VA and VF, and a name change is $25.
Florida does not set a rate. The surety prices the $25,000 bond off the owner's personal credit and the business financials, then quotes a premium for the license period. Because the bond has to match the license term and be recertified each period, ask how the surety handles the continuation certificate.
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