A Washington Motor Vehicle Dealer (MVD) Bond is a surety bond required for motor vehicle dealers in the state of Washington. The bond is issued by a surety insurance company, and it guarantees that the motor vehicle dealer will obey all applicable Washington State laws, rules and regulations pertaining to the sale of motor vehicles. The bond is required by the Washington State Department of Licensing and must be in the amount of $50,000. The bond must be renewed annually and if any violations of the laws occur, the surety will be required to pay any costs or damages incurred by the state as a result of the violation.
Washington Car Dealer Bonds are required by Washington's Department of Licensing Business and Professions Division to obtain your Dealer license. The MVD Bond amount for the sale of New and used vehicles is set at $30,000. 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:
$30,000 surety bond for New and Used Motor Vehicle Dealers, Public Consignment Auction Dealers and for any other type of dealer
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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(1) Before issuing a vehicle dealer's license, the department shall require the applicant to file with the department a surety bond in the amount of:
(a) Thirty thousand dollars for motor vehicle dealers;
(b) Thirty thousand dollars for mobile home, park trailer, and travel trailer dealers;
(c) Five thousand dollars for miscellaneous dealers, running to the state, and executed by a surety company authorized to do business in the state. Such bond shall be approved by the attorney general as to form and conditioned that the dealer shall conduct his or her business in conformity with the provisions of this chapter.
(1) Any retail purchaser, consignor who is not a motor vehicle dealer, or a motor vehicle dealer who has purchased from, sold to, or otherwise transacted business with a wholesale dealer, who has suffered any loss or damage by reason of any act by a dealer which constitutes a violation of this chapter shall have the right to institute an action for recovery against such dealer and the surety upon such bond. However, under this section, motor vehicle dealers who have purchased from, sold to, or otherwise transacted business with wholesale dealers may only institute actions against wholesale dealers and their surety bonds. Successive recoveries against said bond shall be permitted, but the aggregate liability of the surety to all persons shall in no event exceed the amount of the bond. Upon exhaustion of the penalty of said bond or cancellation of the bond by the surety the vehicle dealer license shall automatically be deemed canceled.
(2) The bond for any vehicle dealer licensed or to be licensed under more than one classification shall be the highest bond required for any such classification.
(3) Vehicle dealers shall maintain a bond for each business location in this state and bond coverage for all temporary sub agencies.