California MVD Bond

California MVD Bond

California MVD Bond

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What is a California Dealer Bond? 

California Car Dealer Bonds are required by The Motor Vehicle Department "MVD" to obtain your Dealer license. The MVD Bond amount for the sale of New and used vehicles is set at $50,000.  The Auto Dealer bond ensures that the principal shall comply with the conditions of any contract made by such licensee in connection with the sale or exchange of

any motor vehicle and shall not violate any of the provisions of law relating to the conduct of the business for which it is licensed.

The State requires a Different Car Dealer bond for each license you hold:  

- $50,000 New and Used Vehicle Dealer Bond

- $10,000 Wholesale Dealer Bond   

Different parts of a bond:

There are 3 parts to a MVD surety bond. The Principal "YOU", The Surety Company, and the Obligee. The Principal is the business or individual applying for the MVD Surety Bond. The Obligee  is the individual or entity requiring the Surety Bond and the Surety Company is the company who provides the Surety Bond coverage.

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California MVD Bond Requirements and Information:

A Motor Vehicle Ownership Surety Bond (REG 5057) form or a bond alternative must be submitted when the required supporting evidence of ownership is not available and at least one of the following conditions exist: Show Citation 11

Value of the vehicle is $5,000 or more.
Value of the vessel is $2,000 or more.
Vehicle is nontransferable (goldenrod).
Release from the legal owner/lienholder cannot be obtained.
A REG 5057 is acceptable for a:        
Vehicle or vessel when regular evidence of ownership is unobtainable and a bond is required, including a vehicle or vessel from another state or country.
Vessel provided the REG 5057 correctly identifies the vessel, has a rider attached covering the vessel, and is issued by an admitted surety insurer authorized to do business in California by the Department of Insurance.
The bond must be obtained for the fair market value of the vehicle or vessel, as determined by one of the following:
Written appraisal provided by a California or other state-licensed dealer, motor vehicle insurance representative, or yacht and shipbroker.
A REG 256 giving the valuation based on information provided in a recognized industry motor vehicle valuation and pricing handbook, such as the Kelley Blue Book. The REG 256 must also include:
— The lowest and highest price valuations added together and divided by two,
to get the average price of the vehicle which shall be used as the fair market value of the vehicle or vessel.
Example: 1,000+2,000=3,000, 3,000÷2=1,500. Fair market value=$1,500.
— Any information required for the diligent effort.
The bond must be signed by the surety and the signature must be notarized. A bond preprinted with the surety’s signature and notary acknowledgement is not acceptable.

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