The state of Florida requires auto dealerships to be licensed and to obtain a Florida Motor Vehicle Dealer Bond. According to Google’s Bard, Florida ranks 3rd in the USA for total car dealerships, behind California (15,241) and Texas (12,427). This is sourced from the Bureau of Labor Statistics and the National Auto Dealership Association. Learn what these Auto Dealer Bonds guarantee and how to easily obtain one online.
A Florida Motor Vehicle Dealer Bond is a type of License Surety Bond. The bond guarantees that a licensed Florida Motor Vehicle Dealer will uphold Chapter 319 and 320 of Florida Statutes. The bond compensates anyone damaged by the dealer, in a transaction involving the sale or exchange or a vehicle if the dealer violates conditions of Chapter 319 and 320. Among other provisions, common items that could lead to a claim on a Florida Motor Vehicle Dealer Bond include the following:
1. Representation that a demonstrator is a new motor vehicle, or the attempt to sell or the sale of a demonstrator as a new motor vehicle without written notice to the purchaser that the vehicle is a demonstrator. For the purposes of this section, a “demonstrator,” a “new motor vehicle,” and a “used motor vehicle” shall be defined as under 320.60.
2. Unjustifiable refusal to comply with a licensee’s responsibility under the terms of the new motor vehicle warranty issued by its respective manufacturer, distributor, or importer. However, if such refusal is at the direction of the manufacturer, distributor, or importer, such refusal shall not be a ground under this section.
3. Misrepresentation or false, deceptive, or misleading statements with regard to the sale or financing of motor vehicles which any motor vehicle dealer has, or causes to have, advertised, printed, displayed, published, distributed, broadcast, televised, or made in any manner with regard to the sale or financing of motor vehicles.
4. Failure by any motor vehicle dealer to provide a customer or purchaser with an odometer disclosure statement and a copy of any bona fide written, executed sales contract or agreement of purchase connected with the purchase of the motor vehicle purchased by the customer or purchaser.
5. Failure of any motor vehicle dealer to comply with the terms of any bona fide written, executed agreement, pursuant to the sale of a motor vehicle.
6. Failure to apply for transfer of a title as prescribed in s. 319.23(6).
7. Use of the dealer license identification number by any person other than the licensed dealer or his or her designee.
8. Failure to continually meet the requirements of the licensure law.
9. Representation to a customer or any advertisement to the public representing or suggesting that a motor vehicle is a new motor vehicle if such vehicle lawfully cannot be titled in the name of the customer or other member of the public by the seller using a manufacturer’s statement of origin as permitted in s. 319.23(1).
10. Requirement by any motor vehicle dealer that a customer or purchaser accept equipment on his or her motor vehicle which was not ordered by the customer or purchaser.
11. Requirement by any motor vehicle dealer that any customer or purchaser finance a motor vehicle with a specific financial institution or company.
12. Requirement by any motor vehicle dealer that the purchaser of a motor vehicle contract with the dealer for physical damage insurance.
13. Perpetration of a fraud upon any person as a result of dealing in motor vehicles, including, without limitation, the misrepresentation to any person by the licensee of the licensee’s relationship to any manufacturer, importer, or distributor.
14. Violation of any of the provisions of s. 319.35 by any motor vehicle dealer.
15. Sale by a motor vehicle dealer of a vehicle offered in trade by a customer prior to consummation of the sale, exchange, or transfer of a newly acquired vehicle to the customer, unless the customer provides written authorization for the sale of the trade-in vehicle prior to delivery of the newly acquired vehicle.
16. Willful failure to comply with any administrative rule adopted by the department or the provisions of s. 320.131(8).
17. Violation of chapter 319, this chapter, or ss. 559.901-559.9221, which has to do with dealing in or repairing motor vehicles or mobile homes. Additionally, in the case of used motor vehicles, the willful violation of the federal law and rule in 15 U.S.C. s. 2304, 16 C.F.R. part 455, pertaining to the consumer sales window form.
18. Failure to maintain evidence of notification to the owner or co-owner of a vehicle regarding registration or titling fees owed as required in s. 320.02(16).
According to Florida Statute: “No person shall engage in business as, serve in the capacity of, or act as a motor vehicle dealer in this state without first obtaining a license therefore in the appropriate classification as provided in this section.”
A Motor Vehicle Dealer is defined by the state as: “any person engaged in the business of buying, selling, or dealing in motor vehicles or offering or displaying motor vehicles for sale at wholesale or retail, or who may service and repair motor vehicles pursuant to an agreement as defined in s. 320.60(1). Any person who buys, sells, or deals in three or more motor vehicles in any 12-month period or who offers or displays for sale three or more motor vehicles in any 12-month period shall be prima facie presumed to be engaged in such business. The terms “selling”, and “sale” include lease-purchase transactions.”
New, Used and Franchise Auto Dealers all need a Florida Motor Vehicle Dealer Bond under Florida law. Owners of vehicles titled in their own name do not need a license or dealer bond.
Florida requires Motor Vehicle Dealers to obtain a bond in the amount of $25,000. $25,000 is the maximum amount the surety bond will pay regardless of how many claims may be filed against the bond or the dollar value of the claims. The Dealer Bond does not relieve the dealer of further damages, however.
The motor vehicle dealer is referred to as the “principal” on the bond. The dealer pays a third-party bond company, called “the surety” a premium and agrees to indemnify them for losses. In exchange, the surety provides a financial guarantee to the state of Florida, who is called “the obligee.” Should the motor vehicle dealer violate Florida dealer laws, a damaged party can file a claim with the state. If the claim is valid, the surety will pay the claim and come back to the dealer for reimbursement. This process allows affected parties to recover financial damages quickly and easily without having to file suit against the motor vehicle dealer.
The cost of a Florida Motor Vehicle Dealer Bond can vary between 1% - 4% annually, depending on the credit or financial strength of the dealer. However, most dealers will only pay 1% per year. Dealers willing to provide strong company financial statements may pay even less. Some surety bond companies will offer discounts for dealers who are willing to purchase multiple years in advance.
Florida Motor Vehicle Dealers can obtain bonds online with a simple credit check. Most dealers can have their bond in just a few minutes. Dealers with credit challenges or seeking better terms may need to provide additional information such as company financial statements and personal financial statements.
Generally, yes. Even dealers with credit challenges can usually obtain Motor Vehicle Dealer Bonds. Be prepared to explain the reasoning behind the credit challenges. Dealers should also be prepared to submit additional financial information. Fortunately, there are many surety bond companies that write Florida Motor Vehicle Dealer Bonds and even those with credit challenges can usually get bonded at a reasonable cost.
As an alternative to a Florida Motor Vehicle Dealer Bond, the state will accept an Irrevocable Letter of Credit (ILOC). The ILOC must also be in the same amount and must also be for the benefit of anyone harmed by the dealer’s violation of the law. The ILOC must be issued by a bank licensed in the state of Florida.
There are reasons that dealers may want to consider using surety bonds over ILOCs though. ILOCs may tie up a dealer's assets or borrowing ability that is needed to run their business. Florida dealers can read more about the differences between ILOCs and surety bonds here.
Florida Motor Vehicle Dealer Bonds must be written for a period of one year. The bond must also be continued or replaced annually for each year that the dealer maintains a license in the state.
The Surety may cancel the bond at any time by giving thirty days written notice to the state. The cancellation must be sent by certified mail. The surety will still be liable for any claims that occurred while the bond was active and during the thirty-day notice. The surety must also provide the state with the reason for cancellation.
Claims against the Motor Vehicle Dealer Bond must be reported to the state along with the reason and the amount of the claim. The state must also notify the surety if a dealer’s license has been suspended, denied or revoked.
Florida Motor Vehicle Dealers may also need other surety bonds as well. Common bonds include notary bonds and other license bonds. Many of these bonds can also be purchased online instantly by visiting the Florida Surety Bond page.
Florida Motor Vehicle Dealer Bonds are required to operate as a licensed dealer in the state of Florida. These bonds play an important role in protecting the public. Fortunately, they are inexpensive and can be purchased online instantly. Contact Axcess Surety any time with questions. Dealers can also visit our Surety Bonds page to learn more about bonds including frequently asked questions.
Get a free copy of a Florida Motor Vehicle Dealer Bond Form by clicking on the image.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
