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Introduction
North Dakota Motor Vehicle Dealer refers to any individual or business engaged in the sale, lease, or exchange of new or used motor vehicles to the public. To operate legally in the state, dealers must obtain a license from the North Dakota Department of Transportation (NDDOT) and secure a Motor Vehicle Dealer Bond as a financial guarantee of compliance with state laws and ethical business practices.
Explanation: North Dakota Motor Vehicle Dealer Bond
A North Dakota Motor Vehicle Dealer Bond is a type of surety bond required by the North Dakota Department of Transportation (NDDOT) for individuals or businesses applying for a motor vehicle dealer license in the state. This bond serves as a financial guarantee that the dealer will operate in accordance with all applicable state laws, particularly those outlined in North Dakota Century Code Chapter 39-22.
Purpose of the Bond
The primary purpose of the motor vehicle dealer bond is to:
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Protect consumers and the state from fraudulent or unethical business practices by licensed dealers.
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Ensure that dealers pay all taxes, title fees, and registration fees they collect on behalf of the state.
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Provide a mechanism for financial compensation to harmed parties (such as customers or the state) if a licensed dealer violates relevant regulations.
Parties to the Bond
- Principal – The licensed motor vehicle dealer.
- Obligee – The North Dakota Department of Transportation.
- Surety – The bonding company that provides the financial guarantee.
When Is It Required?
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Initial licensing as a motor vehicle dealer.
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Renewing an existing dealer license.
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Changing license types or if required by the state due to dealer violations or increased risk.
Types of North Dakota Motor Vehicle Dealer Bonds
Below are the primary types of motor vehicle dealer bonds recognized by the North Dakota Department of Transportation (NDDOT):
- New Motor Vehicle Dealer Bond
- Used Motor Vehicle Dealer Bond
- Motorcycle Dealer Bond
- Trailer Dealer Bond
- Wholesale Dealer Bond
- Mobile Home Dealer Bond
- Auction Dealer Bond
- Recreational Vehicle (RV) Dealer Bond
Process to Obtain a North Dakota Motor Vehicle Dealer Bond
Getting a North Dakota Motor Vehicle Dealer Bond is a required step for licensing with the North Dakota Department of Transportation (NDDOT). Here’s a clear, step-by-step guide to help you through the process:
1. Determine Your Dealer License Type
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Identify the correct type of motor vehicle dealer license you need (e.g., New, Used, Wholesale, Trailer, RV, Motorcycle).
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Refer to the NDDOT dealer licensing guidelines to confirm eligibility and requirements.
2. Apply for a Dealer License with NDDOT
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Complete the Application for Motor Vehicle Dealer License from NDDOT.
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Gather required documents (business location, signage, insurance, lease, etc.).
3. Contact a Licensed Surety Bond Provider
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Request a North Dakota Motor Vehicle Dealer Bond from a surety agency licensed in the state.
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Provide business details, license type, and financial information for underwriting.
4. Undergo Bond Underwriting
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The surety company will evaluate your:
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Personal credit history
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Business financials (if available)
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Experience in the industry
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Your premium will typically be 1–10% of the bond amount depending on your creditworthiness.
5. Receive and Sign the Bond
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Once approved, you’ll receive the original bond.
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Sign it where required (typically as the “Principal”).
6. Submit the Bond to NDDOT
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Include the signed original surety bond with your dealer license application.
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Submit all application materials, including fees, to: North Dakota Department of Transportation
7. Maintain Your Bond Annually
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The bond must remain active to keep your license valid.
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Renew it annually or as required by your surety and NDDOT.
Summary
The North Dakota Motor Vehicle Dealer Bond is a crucial compliance requirement designed to boost honest, lawful conduct among vehicle dealers in the state. By securing this bond, dealers not only protect consumers but also exhibit financial responsibility and accountability to the NDDOT.
Frequently Asked Questions (FAQs)
Here are Frequently Asked Questions (FAQs) about the North Dakota Motor Vehicle Dealer Bond:
What happens if a claim is filed?
If the dealer violates licensing laws, a claim can be filed against the bond. If valid, the surety may pay the claimant, and the dealer must reimburse the surety.
Is a credit check required to obtain the bond?
Yes. Most surety companies will check your credit score during underwriting to assess risk and determine the premium.
Can I get bonded with bad credit?
Yes, but you may pay a higher premium, and some surety companies may require additional documentation or collateral.
What happens if my bond lapses?
If the bond lapses, your dealer license may be suspended or revoked until you provide a current, valid bond.
Can I transfer the bond to another person or company?
No. Surety bonds are non-transferable. If you sell or change the business entity, a new bond must be issued.
What is the penalty for operating without a valid bond?
Operating without a valid bond may result in denial, suspension, or revocation of your dealer license, along with possible civil penalties.
Does the bond cover all dealership locations?
No. The bond generally covers one dealership license. If you operate multiple licensed locations, you may need separate bonds or check with the DOT for specifics.