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MOTOR VEHICLE DEALER BOND

Florida Motor Vehicle Dealer Bond / Auto Dealer Bond

 

Getting a Florida motor vehicle dealer bond is a key step to becoming a licensed car dealer in the state. The motor vehicle dealer bond serves as an extra guarantee that your dealership will follow all rules and regulations that govern motor vehicle dealers in the state of Florida.

Just like all surety bonds, the Florida motor vehicle dealer bond serves as protection for the general public, and not as insurance for your business. In case you don't follow the rules and your obligations under the bond, a claim can be made against you. If proven to be a legitimate claim, the penal sum of the bond is used to compensate the affected parties. The surety covers the costs of claims up front, which you’ll be required to reimburse in full. This means you should avoided having any claims, as they can cause serious harm to your business and finances.

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FIADA Member Since 2014

FIADA Florida Independent Automobile Dealers Association

Florida Motor Vehicle / Auto Dealer Bond Cost

While $25,000 might seem like a large amount to pay, in reality, you only need to pay a percentage of it to get bonded, which is called the bond annual premium. The surety company will look at several factors to determine your motor vehicle dealer bond cost, most importantly, your credit score. Factors such as years licensed and years of industry experience will also play a factor in your dealer bond cost.

  • If your credit score is above 650, you’ll likely have to pay between .75% and 2% of the bond amount.

  • For applicants with credit scores between 600 and 649, the rates range between 2.5% and 4%.

Florida Motor Vehicle / Auto Dealer License and Renewal

FOLLOW THE STEPS BELOW FOR THE VI, VA, VW, OR SD LICENSE            DOWNLOAD DEALER LICENSE APPLICATION

1. ATTEND FL DEALER TRAINING PRE-LICENSE CLASS:  Complete a pre-licensing dealer training class requirement from a DHSMV approved dealer training school. The applicant will be awarded a certificate of completion by a Department approved Dealer Training School after they complete the pre-licensing class that is valid for 6 months from the date of the certificate. A copy of this certificate of completion is required with the license application.

 

 


2. DETERMINE THE BUSINESS STRUCTURE FOR DEALERSHIP:  Provide proof of registration to the DHSMV of the business entity and fictitious name, if any, with the Florida Division of Corporations.
If Corporation, a copy of Corporate Charter, Articles of Incorporation, and Minutes Reflecting Current Officers are required.
If Limited Liability Company, Articles of Organization and Operating Agreement are required.
If Partnership, a Partnership Agreement is required.
If using a Fictitious Trade Name or “DBA” (does business as), a copy of the filing with the Secretary of State is needed.

This is done on www.sunbiz.org.

3. OBTAIN A FEDERAL EMPLOYEE IDENTIFICATION NUMBER (FEIN):  Obtain a Federal Employee Identification Number (FEIN from Internal Revenue System) or Social Security Number and Affidavit. Sole Proprietors with no employees and partnerships can submit proof of identification instead of a FEID number. 

This is done on www.irs.gov

4. FIND ESTABLISHED LOCATION AND OBTAIN APPROVAL FROM YOUR LOCAL DHSMV OFFICE:  Contact the compliance examiner at a local DHSMV office to inspect and approve a motor vehicle location. Requirements for location, display space and office for motor vehicle dealers can be found in Florida Administrative Code 15C-7.003.

Office Space Location Requirements:

  • Each licensed motor vehicle dealer shall maintain an office as part of his place of business.

  • No office shall be operated from or maintained in any residence.

  • The office must be in a permanent structure at the licensed location and be a minimum of 100 square feet of interior floor space exclusive of any hallways, closets or restrooms and a minimum 7' ceiling.

  • The office must be in a permanent structure at the licensed location. In the case of an office trailer, the office must be anchored or tied down as required by Rule 15C-1.010, F.A.C.

  • If sharing building, must have separate entrance and separate address. The office must be clearly separated from any other business which is being operated in the structure or building which houses the dealership.

  • The office must be clearly separated from any other business which is being operated in the structure or building which houses the dealership.

  • Principle business must be sales.

  • Shall have a permanent sign identifying the dealership at its place of business.

  • Such sign shall clearly identify the dealership and shall use lettering or other graphic representation of sufficient size and color so as to be visible and readable at a distance of 50 yards from the public right-of-way serving the dealership.

Requirements for Display Space:

  • The display space of each licensed motor vehicle dealer will be of a sufficient size to store and display all vehicles offered for sale.

  • The display space may be located within a building.

  • Display spaces shall be under the exclusive control of the motor vehicle dealer and shall not include an area or space set aside for customer, employee or general public parking nor shall it include any public right-of-way.

  • Display spaces shall be contiguous to the dealership office or shall be situated so as to allow easy access by dealership customers.

  • Display spaces, whether outside or inside a building, shall have immediate and direct access to a public street or highway or be situated on property, owned or leased by the dealer, to which public access has been granted.

  • Display spaces shall physically be divided from any other motor vehicle dealer’s display space by a permanent barrier no less than three feet in height and erected in such a manner as to clearly distinguish one dealer’s display space from another dealer’s display space.

  • Must have enough parking spaces for the number of anticipated cars

To insure availability of the licensee, the following standards must be met and maintained by each licensee. Each dealer:

  • Shall post and maintain the hours of operation in a clear manner at or near the main entrance to the dealership office on a placard, sign or by other durable means

  • Shall provide the department with all information and telephone numbers necessary to contact the dealer. Information and telephone numbers shall be provided in writing to the Division of Motorist Services Regional Administrator.
     


5. OBTAIN A FL SALES TAX NUMBER:  Obtain a sales tax number from the Florida Department of Revenue Florida Sales Tax Number: All Florida businesses are required to have a sales tax number. If you do not have a sales tax number or wish to receive additional information regarding Florida sales tax, please contact any Florida Department of Revenue Office Service Center or write to: Department of Revenue, Tallahassee Service Center, 5050 West Tennessee Street, Tallahassee, FL 32399, or telephone (850) 488-6800. Additional information may be obtained on-line at the Department of Revenue’s website by going to www.floridarevenue.com or in your local telephone directory under State agencies.

6. OBTAIN GARAGE LIABILITY INSURANCE:  Independent dealers(VI), Auction dealers (VA), and Salvage dealers(SD) have the option to submit a copy of: 
A garage liability insurance certificate which shall include, at a minimum, $25,000 combined single limit liability coverage including bodily injury and property damage protection and $10,000 personal injury protection.
OR
A general liability insurance policy coupled with a business automobile policy, which shall included, at a minimum, $25,000 combined single limit liability coverage including bodily injury and property damage protection and $10,000 personal injury protection. (THIS IS NEALRY IMPOSSIBLE TO AQUIRE)

 

 


NOTE:  SALVAGE DEALERS (SD License) are exempt from the Garage Liability Requirement

Garage Liability Insurance Requirements:  The garage liability insurance certificate must have the following information:

  • Name of the garage liability insurance company

  • Address of the garage liability insurance company

  • Name of the garage liability insurance agency

  • Address of the garage liability insurance agency

  • Phone and fax number of the garage liability insurance agency

  • Name of the insured

  • Address of the insured

  • Garage liability box must be checked

  • Garage liability policy number

  • Effective date of the policy

  • Expiration date of the policy

  • Authorized number of dealer license plates for applicable dealers

  • Signature of the garage liability insurance agent (electronic/facsimile signature is acceptable)



Name of the certificate holder which should read:
Department of Highway Safety & Motor Vehicles
2900 Apalachee Parkway, Room A312, MS# 65 Neil Kirkman Building
Tallahassee, Florida 32399

7. OBTAIN A $25,000 SURETY BOND:  Dealer will be required to Provide the DHSMV with the original surety bond form 86020 for motor vehicle dealers

SURETY BOND REQUIREMENTS NOTICE: The surety bond must be on the form provided by the State or use the EXACT LANGUAGE contained in the form provided by the State and written on the letterhead of the Surety Bond Company. Any changes in the language of the bond, addendums or conditions will be rejected.

 

 
Original surety bond must be submitted with the application.

The surety bond must have the following information:

  • The exact business name and all fictitious names to be used by the dealership as it is registered with the Secretary of State. In the case of a sole proprietorship or a partnership the name of the owner(s), or partners must be listed on the surety bond (example John Doe d/b/a Sun Drop Auto Sales or John Doe and Robert Smith d/b/a Doe & Smith Auto Sales)

  • The name of the surety bond company

  • The bond number must appear on the face of the bond

  • The amount of coverage

  • A motor vehicle dealer applicant shall provide a surety bond in the amount of $25,000. Form HSMV 86020, Surety Bond for Motor Vehicle Dealer

  • The effective date

  • The expiration date

  • Signature of the surety agent or the attorney-in-fact

  • Address of the surety agent

  • Telephone number of the surety agent

  • Typed name of the surety agent

  • Name of the dealership

  • Signature of the principal of the dealership (original signature or facsimile signature)

  • Name of the surety bond company

  • Address of the surety bond company

  • Telephone number of the surety bond company

  • The surety bond must have the surety bond company seal or stamp or an electronic seal.*NOTE: A power of attorney for the Attorney-in-Fact must accompany the bond.


If providing a line of credit rather then Surety Bond, Dealer must Submit an irrevocable letter of credit in lieu of the surety bond for motor vehicle dealer applicants. A surety bond or an irrevocable letter of credit prescribed by Section 320.27(10), F.S., in the amount of $25,000. An irrevocable letter of credit must be issued by a bank authorized to do business in this state. The following items are required on the irrevocable letter of credit:

  • The exact business name and all fictitious names to be used by the dealership as it is registered with the Secretary of State. In the case of a sole proprietorship or a partnership the names of the owner, or partners must be listed on the surety bond (example John Doe d/b/a Sun Drop Auto Sales or John Doe and Robert Smith d/b/a Doe & Smith Auto Sales)

  • The name of the bank

  • The number assigned by the bank

  • The effective date

  • The expiration date

  • Signature of the bank officer

  • Title of the bank officer

  • Address of the bank

  • Telephone number of the bank

  • Name of the dealership

  • Signature of the principal of the dealership (original signature or facsimile signature)

  • Typed or printed name of the principal

  • Address of the dealership

  • Seal of the bank or stamp or an electronic seal


8. INSTALL SIGN AT LOCATION VISIBLE FROM THE ROADWAY:  Sign must be installed prior to submitting application. The sign must include the following:

  • Days and hours posted

  • Be visible from the roadway

  • The sign image and dimensions must be provided to the compliance coordinator in advance.



9. COMPLETE ELECTRONIC FINGERPRINTING:  Obtain electronic fingerprinting for all officers of the dealership from a Florida Department of Law Enforcement approved service provider. Provide a proof of electronic fingerprinting to the DHSMV from an FDLE service provider. Applicant must contact the FDLE approved service provider and be electronically fingerprinted. The provider will give the applicant a receipt and submit the fingerprints to FDLE. Applicant must attach a copy of this receipt with their license application.
Proof of electronic fingerprints for each person appearing on the license from a FDLE authorized service provider. Each individual listed in items 3 (A) and/or (B) on form HSMV 86056 must be electronically fingerprinted on a state and federal level.

A list of authorized service providers can be accessed at the FDLE website.
ATTENTION: You must give the fingerprint provider the following code so it will be recognized as a dealer license application for DMV:
ORI #FL921700Z
Fingerprints are approximately $60 -$100

A declaration as to whether or not the applicant, any partner or any corporate officer or director has been found guilty of a felony. If the applicant, partner or any corporate officer or director has, then you must provide an official disposition of the case (e.g., conviction, adjudication withheld, civil rights restored, etc.). Also, if you have been convicted of a misdemeanor or any violation of motor vehicle statutes or DIVISION OF MOTORIST SERVICES rules, you will also need to provide documentation. The attorney that handled your case should be able to assist you, or you may contact the Clerk of the Court in the county where the charges were filed to obtain copies of court records. If you have had your bond cancelled or denied you need to write a statement concerning the facts of the cancellation or denial.

10. SUBMIT A APPLICATION FORM 86056 TO DHSMV WITH REQUIRED DOCUMENTS:  Submit a completed application (see form 86056) to DHSMV with required documents (see below) and fee to the regional office responsible for the dealership.

Required Docs for Application:

  • Pre-License Certificate of completion is required with the license application that is dated within 6 months of the submission date of the application

  • Dealer will be required to Provide the DHSMV with the original surety bond form 86020 for motor vehicle dealers

  • If providing a line of credit rather then Surety Bond, Dealer must Submit an irrevocable letter of credit in lieu of the surety bond for motor vehicle dealer applicants.

  • Provide proof of Garage Liability Insurance to the DHSMV: A statement completed and signed on form HSMV 84254 Garage Liability Statement (Rev. 8/89), hereby adopted by reference, that garage liability insurance of the type and in the amounts prescribed in Section 320.27(3), F.S., has been obtained, including the name and address of the insurance company and the policy number

  • Provide proof of registration to the DHSMV of the business entity and fictitious name, if any, with the Florida Division of Corporations; if the dealership is a Corporation or Incorporation, then Corporation papers, corporate meeting minutes showing the election of corporate directors, and Articles of Incorporation must be included If the dealership is a Limited Liability Company, then Articles of Organization and Operating Agreement must be included or a Partnership Agreement if the dealership is a Partnership

  • Provide a copy of a lease agreement to the DHSMV *Note: Dealer will provide a lease agreement (contract) between the dealership and the landlord. If the dealer owns the property personally then the dealer will be the landlord on the lease and will need to register with the Department of Revenue for a sales tax number. Proof that the applicant owns the place of business and the date it was acquired, or, in the case of lease or rental, a true copy of the written rental or lease agreement signed by the property owner and the applicant

  • Photos to include with your application of the following:

(a) dealership entrance
(b) Sign
(c) display area
(d) Parking area and spaces

  • Two positive print photographs of the proposed licensed place of business. The photographs shall be a minimum of 3'' × 4'' in size. One photograph shall depict the exterior of the dealership from a distance to clearly show two (2) sides of the building, one side of which shall be the public entrance into the dealership. The second photograph shall show the remaining sides of the building which will house the dealership. At least one of the photographs must reflect the area to be used for display of vehicles/units offered for sale, if display space is required

  • Provide a proof of electronic fingerprinting to the DHSMV from an FDLE Service Provider If applicable, Include complete certified copy of the court records for any applicant, any partner or any corporate officer or director has been found guilty of any felony If you have been charged and convicted of a felony, you must provide an official disposition of the case (e.g., conviction, adjudication withheld, civil rights restored, etc.). Also, if you have been convicted of a misdemeanor or any violation of motor vehicle statutes or DIVISION OF MOTORIST SERVICES rules, you will also need to provide documentation. The attorney that handled your case should be able to assist you, or you may contact the Clerk of the Court in the county where the charges were filed to obtain copies of court records. If you have had your bond cancelled or denied you need to write a statement concerning the facts of the cancellation or denial

  • Proof of Identification: If the applicant is a sole proprietor with no employees or a partnership, proof of identification is required. The following are acceptable forms of identification: A Florida driver license or identification card, an out of state driver license or identification card; A US passport; A Canadian driver license, identification card, or passport; A driver license or identification card from any US Territory (American Samoa, Guam, Marianas, Puerto Rico, and the US Virgin Islands); and An out of country passport; Please note: If you are submitting a Florida Driver License or identification card as proof of identification; you must enter the Florida Driver License number or identification card number in the field provided on the application

  • Application fee of $300 for a used motor vehicle dealer
     

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Whether applying for your first auto dealer license in Florida, or renewing an existing one, you have to submit a dealer application form, together with all necessary documents that prove you meet the requirements.

When you renew your license, you’ll have to renew your Florida auto dealer bond as well. As your business finances and personal credit score can change, make sure you work on improving those stats, so that you can reduce your surety bond cost over the years.

Request a FREE Bond or Insurance Quote today!

 

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