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Utah Motor Vehicle Bond

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Utah Motor Vehicle Body Shop ($20,000) Bond
Utah Motor Vehicle Crusher ($10,000) Bond
Utah Motor Vehicle Dealer ($75,000) Bond
Utah Motor Vehicle Dealer – Self Plating ($20,000) Bond
Utah Motor Vehicle Special Equipment Dealer ($75,000) Bond

Introduction

In Utah, motor vehicle dealers are individuals or businesses licensed to buy, sell, lease, or exchange new or used motor vehicles to the public. They are regulated by the Utah Motor Vehicle Enforcement Division (MVED) under the Utah Motor Vehicle Business Regulation Act (Utah Code § 41-3).

To legally operate, dealers must meet specific requirements including business location standards, state licensing, and the posting of a surety bond to protect consumers and ensure compliance with state laws.

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Explanation: Utah Motor Vehicle Bond

A Utah Motor Vehicle Bond—also known as a Motor Vehicle Dealer Bond—is a type of surety bond required by the Utah Motor Vehicle Enforcement Division (MVED) for individuals or businesses applying for or renewing a license to operate as a motor vehicle dealer in the state of Utah.

Purpose of the Bond

The bond serves three main purposes:

  1. Protects Consumers and the State
    It ensures that the motor vehicle dealer complies with all applicable state laws and regulations, particularly those outlined in the Utah Motor Vehicle Business Regulation Act (Utah Code § 41-3).
  2. Provides Financial Recourse
    If a licensed dealer engages in fraudulent, unethical, or illegal business practices (e.g., failing to transfer titles, misrepresenting vehicles, or not paying fees), affected consumers or the state may file a claim against the bond.
  3. Acts as a Licensing Requirement
    A valid surety bond must be submitted before a license is issued or renewed by the MVED.

Who Needs the Bond?

The following license types typically require a Utah Motor Vehicle Bond:

  • New or Used Motor Vehicle Dealers

  • Motorcycle Dealers

  • Trailer Dealers (over 750 lbs GVWR)

  • Body Shops and Crushers (under certain conditions)

Bond Amount

As of the latest update, the minimum bond amount varies based on the type of dealer:

  • $75,000 – New/Used Motor Vehicle Dealers

  • $10,000 – Motorcycle, Small Trailer, and Small Vehicle Dealers

  • $20,000 – Body Shops and Dismantlers (if applicable)

Note: Amounts are subject to change per Utah Code § 41-3-503.

Parties Involved

A Utah Motor Vehicle Bond involves three parties:

  • Principal – The motor vehicle dealer obtaining the bond

  • Obligee – The Utah Motor Vehicle Enforcement Division (MVED)

  • Surety – The company issuing the bond and guaranteeing the dealer’s compliance

Step-by-Step Process of Getting the Utah Motor Vehicle Bond

Here is a concise yet detailed guide to obtaining the Utah Motor Vehicle Bond, required by the Utah Motor Vehicle Enforcement Division (MVED):

Step 1: Determine Your Bond Amount

    • Most new or used motor vehicle dealers must post a $75,000 bond.

    • Other business types (e.g., motorcycle or small trailer dealers) may require lower bond amounts (e.g., $10,000–$20,000).

    • Refer to Utah Code § 41-3-503 for specific bond amounts.

Step 2: Choose a Licensed Surety Company
Step 3: Complete the Bond Application

    • Provide personal, business, and financial information.

Step 4: Get Approved and Pay the Premium

    • Upon approval, pay the annual premium, typically:

    • 1%–10% of the bond amount based on your credit score.
Step 5: Receive and Notarize the Bond Form (TC-450)

    • The surety company will issue the Utah Motor Vehicle Bond (Form TC-450).

Step 6: Submit the Bond with Your Dealer License Application

    • Include the original, notarized bond form in your application packet (Form TC-301).

    • Submit it to the Utah MVED, along with all required documents and fees.

Step 7: Maintain Bond Continuity

    • The bond must remain active and valid as long as you are licensed.

    • Renew annually before expiration to avoid license suspension or penalties.

Conclusion

The Utah Motor Vehicle Bond is a mandatory requirement for obtaining and maintaining a motor vehicle dealer license in the state. It ensures dealers operate ethically and in compliance with state laws, providing financial protection to consumers and the state. Securing this bond is a critical step in the licensing process and must be maintained throughout the dealer’s business operations.

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Frequently Asked Questions (FAQs)

Can I use one bond for multiple business locations?

No. Each licensed location typically requires a separate bond unless otherwise approved by the Utah MVED.

What should I do if I change my business name or structure?

You must notify the MVED and update your bond to reflect the new legal or DBA name. A revised bond or rider may be required.

Can I transfer my bond to another person or company?

No. The bond is non-transferable. A new owner or entity must obtain its own bond.

How do I know if a bond company is authorized in Utah?

You can verify a surety company’s authorization through the Utah Insurance Department or by checking with the MVED.

What happens if a claim is made against my bond?

If a valid claim is filed (e.g., unpaid title fees or consumer fraud), the surety may pay the damages up to the bond amount. The dealer is then responsible for compensating the surety.

Can I get bonded with bad credit?

Yes, but your premium may be higher. Many surety companies offer bonds to applicants with less-than-perfect credit, sometimes requiring additional underwriting.

Is the bond refundable if I cancel my license?

No. The premium paid for the surety bond is generally non-refundable, even if the license is canceled or denied.