Used Motor Vehicle Dealer ($25,000) Bond - Statewide in Oklahoma

Brief Summary

The $25,000 figure is right for a standard Oklahoma used motor vehicle dealer, and it is the tier most applicants are in. It is not the only tier. Run an auction or a consignment operation of any size and the number can double before you file. Confirm which line of 47 O.S. 583(E) applies to you, then buy the bond, because the Commission will not put your application in front of the board without it.

Oklahoma requires a $25,000 surety bond from each applicant for a used motor vehicle dealer's license under 47 O.S. 583(E)(1)(a), filed with the Oklahoma Used Motor Vehicle, Dismantler, and Manufactured Housing Commission on the Commission's own Used Motor Vehicle Dealer's Bond form. The bond form has to be approved as to form by the Attorney General. Wholesale used motor vehicle dealers post the same $25,000. Auctions and large consignment operations post more.

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

• Confirm your tier under 47 O.S. 583(E): standard dealer $25,000, auction $50,000, auction with $50,000 check and title insurance $25,000, primarily non-auction consignment projected at $500,000 or more in gross annual sales $50,000, wholesale $25,000, plus $15,000 more if you are adding a rebuilder certificate.
• Check the exclusions in 47 O.S. 581(19)(b) before assuming you need the license at all.
• Have the exact legal business name as it will appear on the Commission application.
• Owner or principal name, home address and Social Security number for the credit review.
• Complete the bond application and review the quoted premium.
• Have the surety execute the Commission's Used Motor Vehicle Dealer's Bond form.
• File the bond with the Commission along with the application, the $600 fee, the OSBI reports, the financial statement, the $25,000 liability insurance certificate and the rest of the checklist, at least eleven days before the second Tuesday board meeting.

Detailed Information About the Oklahoma Used Motor Vehicle Dealer ($25,000) Bond:

The tiers in 47 O.S. 583(E)

A used motor vehicle dealer's license takes a $25,000 bond. A new applicant for a used motor vehicle dealer's license for the purpose of conducting a used motor vehicle auction takes $50,000, unless the applicant provides proof of check and title insurance of not less than $50,000, in which case the bond drops back to $25,000. A new applicant whose business will consist primarily of non-auction consignment sales projected to equal $500,000 or more in gross annual sales takes $50,000. A wholesale used motor vehicle dealer takes $25,000. A used motor vehicle dealer who applies for a rebuilder certificate under 47 O.S. 591.5 takes an additional $15,000 bond on top of everything else. For reference, a manufactured home dealer or restricted manufactured home park dealer takes $30,000, and so does a manufactured home manufacturer selling directly to a licensed Oklahoma dealer.

The consignment tier is the one that catches people. It is keyed to projected gross annual sales, not to units, and $500,000 in consignment volume is not a large operation.

Who is not a used motor vehicle dealer

47 O.S. 581(19)(b) lists the exclusions, and they are worth reading before assuming you need a license. Receivers, trustees, administrators, executors, guardians and others appointed by or acting under a court order are out. Public officers performing official duties are out. Employees of a dealer performing their duties as employees are out. Mortgagees and secured parties selling collateral are out, so long as they take nothing for their own account beyond the outstanding secured balance plus collection costs. An auctioneer engaged to run an estate auction or liquidation is out. A business selling its own vehicles in liquidation, and an agent in that sale, is out, though that does not extend to a business whose trade is buying, selling or renting vehicles. An auctioneer running an auction held at a licensed dealer location is out, but that exclusion stops at five or more used motor vehicles auctioned in a nonliquidation sale at a licensed dealer location not regularly used as a vehicle auction. A retail implement dealer selling all terrain vehicles, utility vehicles and off road motorcycles is out.

One license per location, and the bond follows the license

Section 583(A)(2)(a) requires a current license for each place where the business is carried on. A second lot is a second license at $200 under the fee schedule, and the bond has to cover the licensure the Commission issues. Section 583(E)(2) says the bond must be maintained throughout the period of licensure, and that if the bond is canceled for any reason the license is revoked as of the cancellation date unless a new bond is furnished before then. The Commission's bond form gives the surety a 30 day written cancellation notice to the principal and to the Commission.

The dates

Since January 1, 2016 licenses are issued for a two year period, and the Commission's dealer application says licenses expire December 31 of odd numbered years. The Commission's bond form expires December 31 of each odd numbered year to match. Renewal applications have to be submitted by November 1 of each year of expiration, and completed renewals received by November 1 are issued by January 10. Miss it and the license expires December 31, it becomes illegal to act as a dealer, and tag agents are notified not to accept your dealer titles until the license is issued.

The fees

A used motor vehicle dealer's license or a wholesale used motor vehicle dealer's license is $600, and $300 on each subsequent renewal in the same classification. An applicant who already holds an automotive dismantler and parts recycler license pays $200 initial and $200 renewal. An applicant applying at the same time for a license under 47 O.S. 591.5(1) pays $400 initial. A holder of a valid new motor vehicle dealer's license from the Oklahoma New Motor Vehicle Commission pays $200 initial and $200 renewal. Each additional place of business is $200. Reinstatement after revocation for cancellation or expiration of insurance is $200. A change of location is $100 and a change of name is $25. The Commission's own application also lists salesperson registration at $50 and additional owner wallet cards at $50 each.

The bond is not the only instrument

Section 583(F) separately requires a used motor vehicle dealer or wholesale dealer to furnish and keep in force a minimum of $25,000 of single liability insurance coverage on all vehicles offered for sale or otherwise used on the streets and roadways. The Commission's application calls for $25,000 combined single limit liability coverage with 30 day cancellation notice to the Commission. Letting that lapse revokes the license and costs $200 to reinstate. The bond does not cover it.

Things that do not waive the bond

The Commission's application requires an OSBI report with name based, sex offender and violent offender searches for every owner, a personal history questionnaire, an Oklahoma driver license, a financial statement, photographs of the office, lot and permanently mounted sign, zoning approval, a listed business phone, sample condition of sale documents, an inspection of the location by a Commission inspector, and attendance at the education program by one owner. Clearing all of that does not remove the bond, and the bond does not substitute for any of it. Applications have to be in eleven days before the second Tuesday board meeting to be heard that month.

What the bond covers, and what it does not

Under 583(E)(1)(g) the bond is conditioned that the applicant will not practice fraud, make any fraudulent representation, or violate Section 581 et seq. in the conduct of the licensed business, and one of its purposes is reimbursement for loss or damage suffered by any person by reason of the issuance of a certificate of title by the dealer. The Commission's bond form says the obligation runs to consumers, dealers and auctions, and does not extend to financial institutions or parties extending floor plans or financing for the dealer's inventory. Do not expect it to answer a floor plan lender.

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

• A surety authorized to write bonds in Oklahoma.
• Bond in the amount set by your license class, $25,000 for a standard used motor vehicle dealer.
• The Commission's Used Motor Vehicle Dealer's Bond form, approved as to form by the Attorney General.
• Oklahoma Used Motor Vehicle, Dismantler, and Manufactured Housing Commission named as the filing authority, with the bond running to the State of Oklahoma and persons with enforceable rights under it.
• Dealer name on the bond matching the license application exactly.
• Bond maintained without a lapse for the whole period of licensure.
• Separate $25,000 combined single limit liability insurance kept in force.
• Owner credit review. At this bond size credit generally shapes the rate rather than eligibility.

Oklahoma Used Motor Vehicle Dealer ($25,000) Bond FAQs:

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