USED Motor Vehicle Dealer ($25,000) Bond - Statewide in Florida

Brief Summary

Independent dealers in Florida run on an April 30 license year, and the bond has to be written for that license period, not for a random twelve months starting whenever you buy it. Form HSMV 86020 asks for an effective date and the term ending date of the license it supports. Fill those to match, file the bond with the application, and this stops being the item holding up your license.

Florida requires a $25,000 surety bond, or an irrevocable letter of credit in the same sum, from every applicant dealer of new or used motor vehicles before a license is issued, under section 320.27(10), Florida Statutes. The amount is flat. It does not move with sales volume, lot size, or number of locations. The bond runs to the Department of Highway Safety and Motor Vehicles and in favor of any person in a retail or wholesale transaction who suffers loss from a violation of chapter 319 or chapter 320. It is written on form HSMV 86020 and filed with the license application, form HSMV 86056.

We can help with all Florida bonds!

How to Apply for a USED Motor Vehicle Dealer ($25,000) Bond:

• Confirm you are applying as an independent motor vehicle dealer under s. 320.27(1)(c)2, meaning a dealer other than a franchised or wholesale dealer.
• Check whether the dealer training school requirement applies. It does not if you held a valid motor vehicle dealer's license continuously within the past 2 years and remain in good standing.
• Dealer legal entity name exactly as it will appear on form HSMV 86056 and on the license.
• Owner, partner or officer name, home address and Social Security number for the credit review.
• Your license term dates. Independent licenses expire April 30, and the bond is written for the license period.
• Complete the bond application and review the quoted annual premium.
• Pay the premium and receive the executed $25,000 bond on form HSMV 86020, signed by the surety's attorney in fact with the power of attorney attached.
• File the bond with the license application and the $300 application fee, along with the insurance certificate.
• At each renewal, deliver a new bond or a continuation certificate at the start of the new license period, and certify the 8 hours of continuing education.

Detailed Information About the Florida USED Motor Vehicle Dealer ($25,000) Bond:

$25,000, no tiers, no grandfather clause

Section 320.27(10)(a) reads that annually, before any license shall be issued to a motor vehicle dealer, the applicant dealer of new or used motor vehicles shall deliver to the department a good and sufficient surety bond or irrevocable letter of credit, executed by the applicant dealer as principal, in the sum of $25,000. Independent, franchise and wholesale dealers all post the same $25,000. Subsection (10) contains no exemption for long established dealers and no reduced amount for small operations.

What it covers, and the annual cap people miss

Section 320.27(10)(b) conditions the bond on the dealer complying with any written contract made in connection with the sale or exchange of a motor vehicle, and on not violating chapter 319 or chapter 320. It runs to the department and in favor of any person in a retail or wholesale transaction who suffers loss from a violation of those conditions.

Then the limit. The aggregate liability of the surety in any one year shall in no event exceed the sum of the bond. Six claims in one license year still share a single $25,000, and the dealer reimburses the surety for whatever is paid out.

Your license year ends April 30

Subsection (10) requires the bond or letter of credit to be for the license period, with a new bond, a new letter of credit, or a proper continuation certificate delivered to the department at the beginning of each license period. Form HSMV 86020 has blanks for the effective date and for the term ending date of the license it supports.

A license issued to an independent or wholesale dealer or auction expires April 30 of the year of its expiration unless revoked or suspended before then. Franchise dealer licenses expire December 31 instead. Bonds written on the franchise calendar by mistake do not match an independent license.

The training requirement that applies to you

This is the biggest difference between an independent applicant and a franchise applicant, and it is not the bond.

Section 320.27(4)(b) requires each initial application for licensure under subparagraph (1)(c)2, the independent motor vehicle dealer, to be accompanied by verification that within the preceding 6 months the applicant successfully completed training at a licensed motor vehicle dealer training school. The applicant here means an owner, partner, officer, or director, or a full time employee in a responsible management level position. The statute requires attendance of no less than 90 percent of the total hours required by the school, and it caps the curriculum at 8 hours for required department topics plus up to an additional 24 hours for topics tied to other regulatory agencies.

There is an exemption, and it is worth checking before paying for a class. An applicant who held a valid motor vehicle dealer's license continuously within the past 2 years and who remains in good standing with the department is exempt from the prelicensing requirement.

Completing the school does nothing to the bond. The bond is filed either way.

Continuing education at renewal

Section 320.27(4)(a) requires each independent dealer to certify that the dealer, meaning an owner, partner, officer, or director of the licensee, or a full time employee in a responsible management level position, has completed 8 hours of continuing education before filing the renewal forms with the department. That is a renewal condition alongside the bond continuation, not a substitute for it.

Insurance, the other filing

Under section 320.27(3), independent dealers may submit either a garage liability insurance policy or a general liability policy coupled with a business automobile policy. Franchise dealers do not get that choice and must file garage liability. The statutory minimum is $25,000 combined single limit liability coverage including bodily injury and property damage protection, plus $10,000 personal injury protection.

Letter of credit instead of a bond

Subsection (10) treats an irrevocable letter of credit in the same $25,000 sum as an equal substitute, and FLHSMV publishes form HSMV 86057 for motor vehicle dealers. It ties up bank capacity rather than costing an annual premium, which is why most independent dealers file the bond.

Fees

The initial application fee is $300 in addition to any other fees required by law, and form HSMV 86056 confirms $300 for independent, wholesale, auction, salvage and franchise applicants. An initial applicant may pay $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, on form HSMV 86720. Supplemental locations carry a $50 annual fee per location, and subsection (10) does not require a separate bond for each supplemental location.

If a surety cancels the bond, section 320.27(10) requires it to notify the department in writing and give the reason. Since the bond is a condition of the license, line up a replacement before that notice lands.

Eligibility and Requirements for a Florida USED Motor Vehicle Dealer ($25,000) Bond:

• A surety company authorized to transact surety business in Florida.
• Bond amount of exactly $25,000, or an irrevocable letter of credit in the same sum on form HSMV 86057.
• Written on form HSMV 86020, Surety Bond Motor Vehicle Dealer, in favor of the Director of the Division of Motorist Services of the State of Florida.
• Effective date and license term ending date completed on the form to match the license period.
• Dealer name on the bond matching the license application exactly.
• Insurance meeting at least $25,000 combined single limit bodily injury and property damage and $10,000 personal injury protection. Independent dealers may use garage liability, or general liability plus a business automobile policy.
• Owner credit review. At this bond size credit generally sets the rate rather than eligibility.

Florida USED Motor Vehicle Dealer ($25,000) Bond FAQs:

Official and Additional Resources for the Florida USED Motor Vehicle Dealer ($25,000) Bond: