Alabama Bill Revises Motor Vehicle Dealer Requirements

Alabama Bill Revises Motor Vehicle Dealer Requirements

Date Enacted:   March 4, 2014

Date Effective:  Section 1: October 1, 2014

Section 2:  August 1, 2014

Alabama has enacted several changes to their motor vehicle dealer licensing and bonding regulations. Past laws created separate requirements for vehicle dealers and titling agents. This created confusion over the years, and Alabama sought to create a more uniform policy. Bond amounts have been increased, and exemptions have been added. Changes to these laws may present questions about getting your Alabama Motor Vehicle Dealer Bond.

HB 400 amends Sections 40-12-264, 40-12-390, 40-12-391, 4 40-12-392, 40-12-395, 40-12-396, 40-12-398, and 40-12-400, 5 Code of Alabama 1975. It was passed in order to standardize auto dealer surety bond (also known as license bond) requirements for all licensees and remove the stipulation for a separate agent surety bond. The revisions to Alabama law also create uniform licensing fees as well as updating other licensing and fee procedures.

What Has Changed About Dealer Bonds?

Several changes are affected by this bill. First, motor vehicle dealer license bond amounts have been increased. In the past, car dealer bonds were in the amount of $25,000 for new car dealers and $10,000 for any other vehicle dealer. The change now requires all dealers to post a license bond of $25,000. This means that both new car dealer and used car dealer bonds must be in the amount of $25,000.

The revisions to motor vehicle dealer bond laws stipulate that dealers acting as title agents for the Department of Revenue hold a $25,000 dealer bond rather than the previously mandatory $10,000 bond. The dealer bond is conditioned upon compliance with laws regarding these types of agents.

The new bill also changes requirements to create more uniformity. The previous licensing requirements for motor vehicle reconditioners has been eliminated. The bond obligation for reconditioners has been removed accordingly.

Steps to Obtaining Your Car Dealer Bond

Now that you know the changes this new law makes to existing laws, you may need to obtain a dealer bond.

The first step in the process is to obtain a business/license application from the Alabama Department of Revenue.

Next, complete the bond application process. Some companies have online applications. Other times you may need to visit in person to complete the application. It’s always best to work with a surety agency that works with a large network of surety companies, since they can provide the best deals. Once you’re approved, send the bond to the Alabama Department of Revenue. The process is complete!

Read the full Alabama Motor Vehicle Dealer Bond Bill here.
Do you have any thoughts about the changes to dealer bonds? Tell us what you think about this law revision in the comments.

Sandy is an in-house author and surety bond expert at JW Surety bonds, the largest bond agency in the U.S.

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