MVD Bond Requirements for Various States

Let's face it. Owning your own business is challenging enough. Along with elements relating to taxes, licensing, business planning, accounting and more, there always seems to be some "gotchas" that popup along the road to achieving business results. This is the case with surety bonds. Most small business owners are unfamiliar with surety bonds when they first startup a business. It happens to be during the licensing period of setting up the business that a surety bond is likely to pop up the most. This is because most US states have numerous surety bonding requirements for businesses that are registered within.

auto dealer bond

A surety bond is a three party agreement where one party, the obligee, requires a second party, the principal, to perform certain tasks. The surety bond is prepared and guaranteed by the third party, the surety, which is often a large insurance company. If the principal fails to perform its duties, the obligee can attempt to recover monetary losses from the surety company by way of the surety bond.



As for states requiring surety bond for various businesses, such is the situation with the automobile industry, specifically car dealerships. Many states require motor vehicle dealers to have a surety bond in order to operate their dealership within the state. The core purpose of the surety bond is to safeguard the consumer in case the dealership conducts business in a way that could harm the consumer monetarily. It is important to realize that each state has a unique set of surety bond requirements. The bonds go by a few different names, such as auto dealer bond, car dealer bond, motor vehicle dealer bond, MVD bond, and more. Below are some of the surety bond requirements for new and used (retail) car dealers in specific states:



California: A $50,000 surety bond is required.



Florida: A $25,000 surety bond is required.



The State of Georgia: A $35,000 surety bond is required for used car dealers only.



New York: Up to a $50,000 surety bond is required, depending on the type of dealership.



Texas: A $25,000 surety bond is required every two years.



Regardless of which state it is located in, auto dealers should be sure to consult with the state’s department of motor vehicles to ascertain the current bond obligations. Not only do these criteria vary by state, they are modified from time to time. The state DMV will have the most up-to-date information available concerning the bond requirements.

surety bond