NEW Motor Vehicle Dealer ($50,000) - Shepherd Bond - Statewide in Oregon

Brief Summary

This is the filing that turns a finished dealer application into a dealer number. Oregon takes the bond on its own form, wet signed with the surety seal, and you pay an annual premium rather than tying up the penal sum. The bond is continuous, so it carries across your three year certificate and into renewals without being rewritten each time.

ORS 822.030 requires a surety bond or an irrevocable letter of credit from every Oregon vehicle dealer certificate applicant, executed to the State of Oregon. For a general dealer the bond is $50,000 for each year the certificate is valid. A dealer certified to deal exclusively in motorcycles, mopeds, Class I all-terrain vehicles or snowmobiles posts $10,000 instead. The bond goes on DMV form 735-370B with the application packet, and the certificate itself runs three years.

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

• Confirm which amount applies. Dealing exclusively in motorcycles, mopeds, Class I all-terrain vehicles or snowmobiles is $10,000. Everything else is $50,000 for each year the certificate is valid.
• Have the legal name, assumed business name and Oregon Business Registry number, plus the exact main business location, as they appear on the dealer application.
• Owner, partner, member or corporate officer information for the surety's underwriting review.
• Complete the bond application and review the quoted premium.
• Receive the executed bond on DMV form 735-370B with the surety's signature and corporate seal, and sign it yourself in wet ink. No alterations.
• Submit it with the three year dealer certificate application form 735-370, the Certificate of Insurance or exemption, the education certificate or exemption form 735-370C, photo identification for all owners, and the fees, to the DMV Business Licensing Unit in Salem.

Detailed Information About the Oregon NEW Motor Vehicle Dealer ($50,000) - Shepherd Bond:

Two amounts, and one of them gets missed

ORS 822.030 sets the bond or letter of credit at $50,000 for each year the certificate is valid for a general vehicle dealer. If the certificate is limited to dealing exclusively in motorcycles, mopeds, Class I all-terrain vehicles or snowmobiles, the amount drops to $10,000. That is the whole tier structure. Nothing scales with sales volume, inventory or the number of plates you buy.

The DMV bond form 735-370B carries the statutory language word for word. It binds the principal and surety to the State of Oregon in the penal sum of $50,000 for each year the certificate is valid, and it states that the maximum amount payable for claims by persons other than retail customers of the vehicle is $10,000. So a wholesaler or another dealer claiming against you is working against a much smaller pool than a retail buyer is.

The bond is one continuing obligation. It becomes effective when DMV issues the certificate, stays in effect for the entire certification period and for each succeeding period on renewal until depleted by claims paid, and surety liability is limited to the penalty of the bond no matter how many years it stays in force. A surety cancels only by giving written notice to DMV.

A letter of credit is a real alternative

ORS 822.030 accepts an irrevocable letter of credit issued by an insured institution in place of the bond, on the same terms. Most applicants use the bond because a letter of credit ties up bank collateral, but the option is in the statute if a surety will not write you.

Who has to post it, and who is outside the whole program

Anyone who needs a vehicle dealer certificate under ORS 822.005 needs the bond. The people who avoid it are the ones ORS 822.015 puts outside the certificate requirement altogether, and that list is specific: owners selling a vehicle they held primarily for personal, family or household purposes, receivers, trustees, personal representatives and public officers acting in their official duties, lessors and security interest holders, manufacturers selling vehicles they manufactured in Oregon, insurance adjusters disposing of vehicles for salvage, people selling vehicles used in their own business, people receiving no compensation for the transaction, collectors restoring vehicles as a hobby, lien claimants foreclosing a possessory lien, and towers who took title after a theft recovery. Certain vehicle types are outside it as well, including farm tractors, farm trailers, implements of husbandry, emergency vehicles, well drilling machinery and boat or utility trailers with a gross weight of 1,800 pounds or less. There is no grandfather clause for dealers already operating.

Two prerequisites people mistake for a bond substitute

Dealer education is required, not optional, and it does not touch the bond. An original applicant needs 8 hours from a DMV approved provider, and a renewal applicant needs 4 hours per year in the licensing period, which is 12 hours for a three year certificate. Some renewal applicants qualify for an exemption filed on form 735-370C, and original applicants can substitute a precertification education certificate from a current certified Oregon dealer. None of that reduces or waives the bond.

Liability insurance is also separate. ORS 822.033 requires a dealer to carry vehicle liability insurance and to file a Certificate of Insurance with the Business Licensing Unit at every original and renewal application, and DMV does not accept ACORD forms or binders. ORS 822.033(3) exempts dealers who deal exclusively in certain vehicle types, filed on a certification of exemption. That insurance exemption is not a bond exemption.

Get the names right the first time

The owner names, the legal name, the business name and the business location on the bond have to match the dealer application exactly, and the bond needs the original wet signature of the owner, partner or member along with the surety's signature and corporate seal. Any alteration voids the bond. If you later change your business name, your location, or both, you file a correction application on form 735-371 and it has to include a rider from your bonding company.

What it costs to file and how long it lasts

A vehicle dealer certificate issued or renewed under ORS 822.020 expires three years after issuance or renewal. The original certificate fee on the current application is $1,188.00 and includes one plate, with additional locations at $350.00 each on a supplemental application, form 735-372. The packet, including the bond, goes to the DMV Business Licensing Unit at 1905 Lana Ave NE, Salem OR 97314.

If the bond lapses

DMV mails a Notice of Cancellation when a bonding company sends a cancellation notice. The dealer has to stop all business requiring a valid dealer certificate until coverage is back in place, and within 45 days must either have the bonding company send a reinstatement email to DMVINSERT@odot.oregon.gov or file a new bond on the DMV form. A dealer without continuous bond coverage is not allowed to conduct dealer activity during any period not covered.

Eligibility and Requirements for a Oregon NEW Motor Vehicle Dealer ($50,000) - Shepherd Bond:

• Corporate surety licensed to do business in Oregon, or an irrevocable letter of credit from an insured institution.
• Executed to the State of Oregon on DMV form 735-370B.
• Penal sum of $50,000 for each year the certificate is valid, or $10,000 for a dealer exclusively in motorcycles, mopeds, Class I all-terrain vehicles or snowmobiles.
• Maximum payable for claims by persons other than retail customers is $10,000.
• Owner names, legal name, business name and business location matching the dealer application exactly.
• Continuous form, effective when the certificate is issued and running through renewals until depleted by claims paid, cancelable by the surety only on written notice to DMV.

Oregon NEW Motor Vehicle Dealer ($50,000) - Shepherd Bond FAQs:

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