California – Motor Vehicle Dealer ($10,000) Bond

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California – Motor Vehicle Dealer ($10,000) Bond

In order to obtain a license to operate a dealership in the state of California, a California Motor Vehicle Dealer Bond must be posted by the dealership before the license can be issued. A security pledge falls into this category.  The sum of the collateral is determined by a number of variables, including the kinds of vehicles that will be sold, the number of vehicles that you intend to sell, and more.

The cost of the bond, which is also referred to as the bond payment, represents a very small percentage of the total amount of the bond.  To receive an estimate at no cost, you only need to fill out an application.

A security deposit in the amount of $10,000 is required of motorcycle dealerships, motorcycle lessor-retailers, all-terrain vehicle dealerships, and wholesale-only dealerships that sell fewer than 25 vehicles each year.  Every other vendor of industrial vehicles is required to post a security of $50,000.

This pledge ensures that retailers will comply with all the rules and regulations detailed in Section 11711 of the California Vehicle Code. These obligations will continue to be in effect for the entirety of a license’s term.

Despite this, the guarantor has the power to void the bond in compliance with Article 13.02. Title 14.Part.2 of the California Code of Civil Procedure. In order to ensure that the amount of the bond is accurate, the obligee should check the bond amount with the applicant before the applicant applies for the bond.

Bond Amount

In order for merchants to legally operate within the state of California, the Department of Motor Vehicles (DMV) mandates that they submit an application for a dealer license and deposit a dealer surety bond, also known as a Surety Bond of Dealer OL 25 or OL 25B. The following is a list of the security payments, also known as the penalty:

  • $10,000 for merchants who only do commercial business (less than 25 vehicles per year)
  • $10,000 for those who are in the business of selling motorcycles and all-terrain vehicles (ATVs)
  • $50,000 for vehicle sellers

Coverage

The California Motor Vehicle Dealer Bond imposes an obligation on the dealer (the proprietor) to abstain from deception, as well as any fraudulent practices or representations that result in monetary loss for a purchaser, vendor, financial agency, or governmental agency. This obligation applies to all aspects of the business.

In addition to that, the vendor is obligated to fulfill all requirements stated in Vehicle Code section 11711. In the event that parties are injured as a consequence of the dealer’s failure to comply with the conditions of the bond, the guarantor is obligated to cover losses for those parties up to the total amount of the bond’s punishment.

Qualifications/Requirements

Surety Bond-California – Motor Vehicle Dealer Bond Qualifications

  • ADM 9050, Appointment of Director as Agent for Service of Process
  • OL 902, Property Use Verification for Vehicle Dealer’s License OL29B, Application for Occupational License Personal History Questionnaire, Part B, Business Licensing Unit OL 902, Property Use Verification for Vehicle Dealer’s License OL 902, Property Use Verification for Vehicle Dealer’s License (Required for each person listed under ownership on form OL 12)
  • Certificate of Proposed Franchise, Form OL 124 (new automobile, commercial, motorcycle, all-terrain vehicle, motorhome, and recreational trailer dealers only)
  • Authorization to Release Financial Information Form OL 53
  • OL 25, Surety Bond of Dealer or OL 25B, Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer, or Wholesale-Only Dealer (Less Than 25 Vehicles Per Year) or OL 25E, Deposit Agreement and Assignment OL 25, Surety Bond of Dealer or OL 25B, Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, All-Terrain Vehicle Dealer or Wholesale-Only Dealer
  • Use either the OL 248A, New Dealer Application Checklist, or the OL 248B, Used Dealer, Dealer-Wholesale Only, and Auto Broker Application Checklist.
  • Part A of the Original Application for an Occupational License, Form OL 21A
  • Part C of the OL 12 Application for an Original Occupational License

There is a possibility that additional things will be required, and the precise requirements may change depending on the candidate, the license class, or the obligee’s discretion. For further information, you can get in touch with the obligee personally or look at the links provided for the obligee and the state in the section titled “Other Helpful Information and Links.”

Frequently Asked Questions

Who Requires a Motor Vehicle Dealer Bond in the State of California?

The Department of Motor Vehicles requires all motor vehicle dealers and lessors, including those who work with automobiles, motorcycles, and all-terrain vehicles (ATVs), as well as those who engage only in commercial transactions, to keep a California Motor Vehicle Dealer Bond in good standing.

How Much Does It Cost To Get a Bond for Being a Motor Vehicle Dealer in California?

The Department of Motor Vehicles in California mandates a security deposit of $50,000 from most sellers of motor vehicles. The only exception to this rule is for merchants who only sell second hand vehicles, motorcycles, or ATVs and who sell fewer than 25 vehicles annually. In that scenario, a security bond in the amount of $10,000 is required.
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