A Massachusetts car dealer bond is a type of surety bond that car dealers in the state are required to obtain in order to operate legally. Essentially, a car dealer bond is a contract between the dealer, the state of Massachusetts, and a third-party surety company. The bond ensures that the dealer will comply with all applicable state laws and regulations related to car sales and protect customers from any fraudulent or unethical practices.
If a dealer violates the terms of the bond by engaging in unlawful behavior, customers who have suffered losses can file a claim against the bond to seek compensation. The surety company that issued the bond will then investigate the claim and may pay out compensation to affected customers. However, the dealer will ultimately be responsible for repaying any amounts paid out by the surety company.
What is an Massachusetts Car Dealer Bond?
Massachusetts Car Dealer Bonds are required by the Commonwealth of Massachusetts Registry of Motor Vehicles to obtain your Dealer license. The MVD Bond amount for the sale of New and used vehicles is set at $25,000. 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.
$25,000 surety bond for New and Used Motor Vehicle Dealers, Public Consignment Auction Dealers
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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Massachusetts Automobile Dealers use Dealer Reassignment of Title (DRT-1) for:
Reassignment of Title. - When all other reassignments on the Title have been completed, the selling Massachusetts dealer completes the front side. Do not use the DRT-1 if:
Always use the first available reassignment.
Authorization for Loan Payoff. - Complete the back side as an assignment and authorization for payoff. The vehicles owner(s) must sign, print name, date, and disclose the mileage on the form. This authorizes the dealer to pay off the lien and get the title from the lienholder. Provide the lien holder a copy of the form along with payment. When you receive the title, attach the original DRT-1 to it.