Dealer of Modular Building Units ($50,000) Bond - Statewide in Tennessee

Brief Summary

Every sales lot needs its own $50,000 bond. A Tennessee modular dealer with two places of business files two bonds, and each renewal by June 30 needs a new bond or a continuation certificate. Get that right up front and the bond is one of the simpler pieces of the dealer license.

Tennessee requires a $50,000 surety bond from anyone engaged in business as a dealer of modular building units, meaning anyone who sells, brokers or distributes modular building units or components to buyers who do not intend to resell them. Under Tenn. Comp. R. & Regs. 0780-02-13-.03 a separate bond is required for each place of business. The bond is filed with the Tennessee Department of Commerce and Insurance along with the $150 nonrefundable application fee and the $500 license fee, and dealer licenses expire on June 30 each year.

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How to Apply for a Dealer of Modular Building Units ($50,000) Bond:

• Count your places of business. Each one needs its own $50,000 bond.
• Have the legal business name and each business address exactly as they appear on the dealer license application.
• Complete the bond application and review the quoted premium.
• Have the bond issued on the Department's Dealer of Modular Building Units Surety Bond form.
• Submit the application form, bond form and bond with the $150 application fee and $500 license fee.
• Before June 30 each year, renew the license for $250 and submit a new bond or continuation certificate.

Detailed Information About the Tennessee Dealer of Modular Building Units ($50,000) Bond:

One bond for each place of business

Rule 0780-02-13-.03 says a separate bond is required for each place of business operated by a manufacturer, dealer or installer. A dealer with a main lot and a second sales location needs two $50,000 bonds, not one. This is the detail most often missed.

Who needs the dealer license

No person may engage in business as a dealer of modular building units in Tennessee without a dealer's license from the Department of Commerce and Insurance. A dealer is anyone engaged in the sale, brokerage or distribution of modular building units or components to purchasers who do not intend to resell them. Manufacturers and installers hold different licenses with different bonds, $100,000 for a manufacturer and $25,000 for an installer.

What the bond covers

The bond is executed by the dealer as principal and by a surety company qualified to do business in Tennessee. It is for the benefit of any person who suffers loss or damage from code-related non-compliance with the Tennessee Modular Building Act, T.C.A. 68-126-301 and following sections. Each bond covers code-related non-compliances occurring during the license period, and the surety's liability in no event exceeds the amount of the bond for that year.

Fees, term and renewal

The application fee is $150, nonrefundable, and the license fee is $500. Dealer renewals are $250. All licenses expire on June 30 of each year and are invalid after that date unless renewed. A new bond or a proper continuation certificate must be submitted with each renewal application. The Department processes the application form, bond form and bond together before the license is issued.

Existing coverage

The rule says a separate bond is not required if the applicant shows proof of an effective bond or insurance coverage that would cover the manufacture of a modular building unit, such as a requirement under the Board for Licensing Contractors. If you plan to rely on existing coverage, get the Department's approval before you skip the dealer bond.

Eligibility and Requirements for a Tennessee Dealer of Modular Building Units ($50,000) Bond:

• Bond amount of $50,000 for each place of business.
• Surety company qualified to do business in Tennessee.
• Tennessee Department of Commerce and Insurance as the licensing agency and bond holder.
• Bond for the benefit of any person harmed by code-related non-compliance with the Tennessee Modular Building Act.
• Owner credit review by the surety.

Tennessee Dealer of Modular Building Units ($50,000) Bond FAQs:

Official and Additional Resources for the Tennessee Dealer of Modular Building Units ($50,000) Bond: