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A Rhode Island Motor Vehicle Division (MVD) Bond is a type of surety bond issued by the Rhode Island Department of Motor Vehicles (DMV). It is required by the DMV for certain transactions, such as the registration or title transfer of a motor vehicle. The bond serves as a guarantee that the applicant will comply with all DMV regulations and laws. The bond amount is usually determined by the DMV and is usually between $5,000 and $50,000. The bond must be purchased from a surety company and is valid for one year. If the bonded applicant fails to comply with the DMV's regulations and laws, the surety company may be responsible for paying certain damages or penalties.
What is an Rhode Island Car Dealer Bond?
Rhode Island Car Dealer Bonds are required by Rhode Island's Dealers License and Regulation Office 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 Car Dealer bond for each license you hold:
$50,000 surety bond for New and Used Motor Vehicle Dealers, Public Consignment Auction Dealers and any other types of dealer
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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Program:
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Rhode Island MVD Bond Requirements and Information:
1. The proposed dealership name and location must
be approved by the Dealers’ License & Regulation Office prior to making
this application. All used car dealerships must include “Auto Sales” in their
name.
2.
Application, financial statement prepared by a
certified public accountant (CPA), and employee forms must be completed in
full, signed and notarized, and accompanied by an approved line of credit for
fifty thousand dollars ($50,000) from a financial institution, in the
dealership’s name.
3.
$50,000
surety bond (from insurance company) completed, signed, and notarized in the
D/BA name.
4.
Each owner, partner, or corporate officer must
submit a Bureau of Criminal Identification (BCI), issued by the Attorney
General’s Office, 150 South Main Street, Providence, RI, (401) 274-4400. If the
individual is not a Rhode Island resident or has moved into the state within
the past five (5) years, the individual must obtain a criminal record check,
performed by the appropriate state agency from the other state, in addition to
the Rhode Island BCI. Attach a picture ID.
5.
Copy of formal lease agreement issued to the
dealership (for one-year minimum) stating total square footage of building and
outside area, etc., signed and notarized, or a copy of deed (if property is
owned by the dealership). 2,400 sq. ft. minimum size building and 2,400 sq. ft.
minimum size for outside (total building square footage can be on separate
levels).
6.
Copy of city/town license (second-hand license),
if required, otherwise, a letter of zoning approval from city/town approving
the sales of motor vehicles at that proposed dealership address.
7.
Four (4) pictures of the outside of building
from all angles, to include the entire building and lot display area.
8.
For corporation only: Copy of articles of
incorporation, copy of the minutes showing the election of all corporate
officers, and a copy of fictitious name report (if operating under D/B/A name)
and a letter of good standing from the Rhode Island Secretary of State (LLC
requires an operating agreement).
9.
If a franchise dealer, then you must first
comply with Rhode Island General Law §31-5.1-4.2 (having the
Manufacturer/Distributor Issue Letter(s) of Intent). If no protests are
received after the 30-day protest period, your application will go before the
board. Manufacturer/Distributor must be licenses with the Dealers’ License
& Regulation Office. Upon our receipt of the above, your application will
be investigated and scheduled for a hearing before our Dealer’s Hearing Board.
If granted a license, the following documents must be received in this office
within thirty (30) days in order to finalize the application and be issued a
dealer’s license.
10.
Call the Licensing Aide (401) 462-5732 to request
license and plate numbers that have been assigned.
11.
You must
contact the Rhode Island Division of Taxation to order forms, (401) 574-8869 or
574-8895, located at One Capitol Hill, Providence, to receive your sales tax
permit and blue forms. Please submit a copy of tax permit and blue forms to
this office.
12.
Picture
of 24 sq. ft. sign (minimum size), stating the exact dealership name. Use the
D/B/A name, if you are using one.
13.
$302.50 License Fee (money order or check), made
payable to “Dealers’ License & Regulation Office.”
14.
Business
telephone number.
15.
Insurance filing (GU-1338 certificate) on dealer
plate insurance coverage, (D/B/A name only) original certificate must be sent
to the Financial Responsibility Office, located within the Cranston DMV location.
For information, contact the Financial Responsibility Office (401) 462-1384 or
462-5186.
16.
If
franchise dealer, you must supply the Dealer Agreement.
17.
Fax a blank Bill of Sale form to the Dealers’
License & Regulation Office (401) 462-5789, for approval.
18. After requirements are completed by Investigator, a Licensing Aide will contact you to make an appointment to finalize.