A Florida motor vehicle dealer (MVD) bond is a surety bond required by the state of Florida that holds auto dealers accountable to regulations on a local and state level. Florida MVD bonds help protect Floridians against fraud and other car buying mishaps, such as buying a lemon. This surety bond helps consumers avoid bad dealership practices.
It’s worth noting that you will hear MVD bonds referred to by other names such as: auto dealer bond, car dealer bond, used car dealer bond, dealer bond, DMV bond, bond for dealer’s license, and motor vehicle bond.
If you own a Florida car dealership, keep reading to learn more about what Florida MVD bonds are, how they work, what they cost, and how to secure one for your dealership.
In general, MVD bonds are legally required to make sure that automotive dealers remain compliant. A Florida MVD bond is simply this type of bond as required in the state of Florida. Consumers can rest easier when they shop at a dealership that has an MVD bond as it illustrates that they are licensed and following the law.
A Florida MVD bond protects consumer interests by shielding dealership customers from shady business practices like:
Misrepresenting the condition of a vehicle
Falsifying or omitting details on the repair or accident history of the vehicle
Issuing a fraudulent certificate of title
Failing to pay the required motor vehicle fees (such as the title or registration)
Selling a car that is clear of the prior owner’s interest and liens
Not following the required tax laws
Selling a stolen vehicle
Not fulfilling a warranty
Not reporting the sale of a vehicle
There are three parties involved in a Florida MVD bond:
Principal. The automotive dealer who receives the bond.
Obligee. The party that requires dealerships to obtain the bond—most often a government agency.
Surety. The company that issues the MVD bond and guarantees to the obligee that the principal will comply with all requirements.
Let’s say a newlywed couple purchases a used car from the South Beach Car Dealer. The couple buys the car and they drive off the lot into the sunset. Imagine their surprise when the car breaks down the very next day because the dealer (aka the principal) failed to test the car’s safety before they sold it to the happy couple. Now the couple has medical and auto repair bills on their hands because of this negligence. Chances are, they’ll file a hefty claim against the principal’s Florida MVD bond to cover the cost of car repairs and any damages incurred.
In the state of Florida, dealers have to secure a Florida MVD bond in order to qualify to obtain their Dealer license. The Florida MVD bond is typically set at $25,000 and ensures that the principal (remember, this is the dealer), complies with any conditions of contracts made by such licensee in connection with the sale or exchange of any motor vehicle. They agree not to violate any of the provisions of law that relate to the conduct of the business they are licensed for.
In the great state of Florida, the following people, partnerships, and corporations must obtain a dealer license in order to operate:
Entities that buy, sell, offer for sale, display for sale, or deal three or more auto vehicles within a single 12-month period.
Entities that buy, sell, offer for sale, display for sale, or deal one more recreational vehicle or mobile home within a single 12-month period.
If you find yourself in need of a Florida Dealer bond, you’ll want to compare the bonding capacity, premium, and term of each bond you consider.
Bonding capacity. Sometimes you’ll hear the bonding capacity referred to as the bonding amount. Either way, these terms refer to the highest amount an individual can claim if the principal is found to have done something they shouldn’t do. If a maximum bonding capacity is $50,000, that is the highest amount the bond would cover in losses and damages. The maximum bonding capacity varies on a state to state basis. In Florida, the bonding capacity amount is set at $25,000.
Bond premium. This refers to what it will cost you to purchase an MVD bond. Typically MVD bonds cost between 1% and 10% of the bond amount. We have special programs that can go as low as $188 a year
Bond term. In most states, bond terms only last a year and need to be renewed annually. Florida Dealer bonds expire April 30th
Apply online for a Florida MVD bond today! Pricing starts at just $188.
A minimum surety bond of $25,000 is required with a car dealer license.
Motor vehicle, mobile home and recreational vehicle dealers must meet the licensing requirements of the Florida Department of Highway Safety and Motor Vehicles (FLHSMV) to conduct business in Florida. Please see sections 320.27, 320.77 and 320.771, Florida Statutes, and Florida Administrative Codes, 15C-7.003 and 15C-7.004 for additional information.
The following persons, partnerships and corporations require a dealer license in the state of Florida:
Applicants must complete the following steps in order to obtain their dealer license:
Step 1, Locate your nearest compliance examiner by going to our locations page, selecting your county and scroll to the Motorist Services Regional Offices section. Requirements for location, display space and office for motor vehicle dealers can be found in Florida Administrative Code 15C-7.003. Requirements for location, display space and office space for mobile home dealers and recreational vehicle dealers can be found in can be found in sections 320.77 and 320.771 (320.77(3)(g)(h)(i), 320.771(3)(g)(h)(i)), Florida Statutes.
Step 2, Obtain a Federal Employee Identification Number (FEIN from Internal Revenue System);
Step 3, Obtain a sales tax number from the Florida Department of Revenue;
Step 4, Complete a pre-licensing dealer training class requirement from a FLHSMV approved dealer training school; and
Step 5, Obtain electronic fingerprinting for all officers of the dealership from a Florida Department of Law Enforcement approved service provider.
Step 6, Submit a completed application (see form 86056) to FLHSMV with required documents (see below) and fee to the regional office responsible for the dealership;
Step 7, Provide proof of Garage Liability Insurance to the FLHSMV for a minimum of $25,000 combined single-limit liability coverage including bodily injury and property damage protection and $10,000 personal injury protection. Independent, auction and wholesale dealer applicants have the option to submit a general liability insurance policy coupled with a business automobile policy, 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 Salvage dealers are exempt from this requirement;
Step 9, Provide proof of registration to the FLHSMV of the business entity and fictitious name, if any, with the Florida Division of Corporations.
Step 10, Provide a copy of completion of dealer training to the FLHSMV; The applicant will be awarded a certificate of completion by a Department approved Dealer Training School after they complete the pre-licensing class. A copy of this certificate of completion is required with the license application.
Step 11, Provide a copy of a lease agreement to the FLHSMV
Step 12, Provide a proof of electronic fingerprinting to the FLHSMV 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.